Hong Kong Exchange sanctions directors of ListCo for failure to cooperate with investigations

On 12 August 2025, the Stock Exchange of Hong Kong Limited imposed disciplinary sanctions against former directors of a listed company for failing to cooperate with investigations conducted by the Securities and Futures Commission and the Exchange. This is the first example of the Exchange using the disciplinary powers granted to it under Hong Kong’s listing rules in this manner.

Background

Hong Kong’s listed securities market: the regulatory environment

Hong Kong Exchanges and Clearing Limited (HKEX) operates exchanges and clearing houses in Hong Kong, including the Stock Exchange of Hong Kong Limited (Exchange)¹.

The listed securities market in Hong Kong is regulated by HKEX, via the Exchange, and by the Hong Kong Securities and Futures Commission (SFC). The Exchange and the SFC have statutory duties and powers which enable them to perform their respective market regulation roles.

The SFC has a statutory duty to supervise the listing-related functions and responsibilities of the Exchange²  and the SFC is empowered to investigate corporate misconduct and take enforcement measures. For example, the SFC approves changes made by the Exchange to the ‘Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited’ (Listing Rules) and has the power to object to a proposed listing on the Exchange.

The SFC works closely with the Exchange on investigations into and enforcement of the Listing Rules.

Regulatory investigations: the duty to cooperate

Under the Listing Rules³ , directors of companies listed on the Exchange are (amongst other things) obliged to:

• cooperate in any investigation conducted by the Listing Division of the Exchange or the SFC – including attending meetings or hearings;
• promptly and openly answer questions;
• provide information and documents to the Exchange and / or SFC; and
• provide up-to-date contact information to the Exchange upon their appointment and for of three years after they cease to be a director⁴.

Many of these obligations apply to current and former directors.

The Exchange and the SFO have wide investigative powers and can ask directors to provide information or documents which the Exchange or the SFO “reasonably considers appropriate to protect investors or ensure the smooth operation of the market” or that the Exchange requires to verify compliance with the Listing Rules.

Directors are obliged to provide information and documents “as soon as possible” or by deadlines imposed by the Exchange or SFC.

What has happened?

On 12 August 2025, the Exchange publicly censured the former executive director and independent non-executive director (together, ex-Directors) of TOMO Holdings Limited (TOMO), by issuing a Statement of Disciplinary Action (Statement) in connection with parallel investigations conducted by the SFC and the Exchange in relation to:

1. possible contraventions of Hong Kong’s Securities and Futures Ordinance by TOMO and / or persons connected with it; and
2. the ex-Directors’ compliance with their duties and obligations under the Listing Rules.

The ex-Directors failed to respond to both investigations, despite numerous rounds of correspondence being issued by the Exchange and by the SFC.

In light of the ex-Directors’ failure to cooperate with the regulators’ respective investigations, the Listing Committee of the Exchange issued the Statement censuring the ex-Directors and declaring that:

• the ex-Directors had “breached the Listing Rules by failing to cooperate with the [Exchange] and the [SFC]“;
• their “failure to discharge their responsibilities under the Listing Rules was serious“; and
• the ex-Directors are “unsuitable to occupy a position as a director or within senior management of [TOMO] or any of its subsidiaries“⁵.

Commentary

This is the first time that the Exchange has taken disciplinary action against a director solely because they failed to cooperate with regulatory investigations.

This unprecedented disciplinary action demonstrates the Exchange’s “zero tolerance for non-cooperation“, a sentiment echoed by the SFA who view cooperation with regulatory investigations as a “fundamental” responsibility of directors of listed companies⁶.

This case also demonstrates the collaborative approach taken by the regulators, and the referral process, which means that directors will be held accountable, even if they are not a SFC licensee.

Finally, this case demonstrates that there are real, and severe, consequences for directors who take this responsibility lightly. Failure to comply with an investigation by the SFC may also result in criminal liability under the Securities and Futures Ordinance.

The loss of a director, an integral part of a company’s management, will also impact affected companies (e.g. ability to manage operations, make decisions, approve financial transactions).

There are also reputational issues to consider for both.

Proposed directors of listed companies should carefully consider the legal and regulatory duties and responsibilities that their appointment entails, including the duty to cooperate with investigations, and bear in mind that the obligation to cooperate with investigations extends beyond a director’s tenure and does not lapse if the company ceases to be listed on the Exchange.

Our Hong Kong Corporate & Commercial team offers expert advice on corporate and commercial transactions, mergers & acquisitions, directors’ duties and listing rules compliance. Should you need further guidance, please contact Wing Cheung, Partner or your usual HFW contact(s). 

Andy Lam, Trainee Solicitor, assisted in the preparation of this briefing.

Footnotes

1. The Exchange is a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX).
2. More information on stock market regulation in Hong Kong can be found here.
3. Rules 3.09C and 3.20.
4. If a director fails to provide their new contact details, service of documents or notices by the Exchange or the SFC to a director’s last address on record will be deemed proper service.
5. You can read the Statement of Disciplinary Action here.
6. Joint press release dated 12 August 2025, which you can read here.