SFC directs company to take civil action against former directors for losses.

The SFC is making it clear that directors duties mean something. After earlier in the week banning 2 directors for failing to ensure adequate and timely disclosure to shareholders, on 18 March 2010, the SFC announced that it had obtained a court order directing Rontex International Holdings Ltd (Rontex) to bring legal proceedings against three former executive directors for compensation.

This is the first time the SFC has obtained an order in the High Court directing a listed company to commence civil proceedings to seek recovery of compensation for the loss and damage suffered by the company as a result of directors’ misconduct.

Rontex was ordered to commence proceedings within 60 days against its former executive directors, Mr Cheung Keng Ching, Ms Chou Mei and Mr Kevin Lau Ka Man.

The court also granted orders disqualifying Cheung and Chou from being a company director or being involved in the management of any company, without leave of the court, for five years (except for a private company through which they continue to conduct a business). Lau, who consented to the orders, was disqualified for a period of four years.

The breaches centred on four investments entered into by the company or its subsidiaries between 2002 and 2005, resulting in Rontex suffering losses and damages of about $19 million

For further information please see SFC obtains court order to direct listed company to commence proceedings against former directors