SFC obtains disqualification order against former executive director of National United Resources Holdings Limited

The Securities and Futures Commission (SFC) has obtained a disqualification order in the Court of First Instance against Mr Lo Ka Wai, a former executive director of National United Resources Holdings Limited (NUR) (Notes 1 to 3).

Lo was disqualified for a period of three years from being a director, liquidator, receiver or manager of, or being involved in the management of, any listed or unlisted corporation in Hong Kong. Lo was also ordered to pay the SFC’s costs in the proceedings (Notes 4 to 6).

The SFC found that in 2015, NUR’s subsidiary entered into two back-to-back fuel oil supply and sale transactions that constitute fictitious transactions as both the customer and the supplier were controlled by NUR or persons closely connected to it, and the supporting bills of lading were not genuine.

The disqualification order was made after Lo admitted to breaching his duties and being negligent in committing NUR’s subsidiary to the above transactions and approving payments totalling $302 million from NUR to its subsidiary for the purported settlement of the fictitious supply transaction. Had Lo properly discharged his duty as a reasonably prudent director of NUR, he would have noticed that there was little commercial sense in the transactions, including an extraordinarily thin profit margin and a serious mismatch of credit periods. Furthermore, Lo approved the publication of NUR’s 2015 annual results and report which contained false or misleading statements about the transactions.

The SFC’s proceedings against the other former directors and officers of NUR are ongoing.

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Notes:

1. NUR has been listed on the Main Board of The Stock Exchange of Hong Kong Limited (stock code: 254) since 16 November 1972. At all material times, NUR and its subsidiaries principally operated in three business segments, including trading of coking coal, aluminium rod and fuel oil; online platform business; and media and advertising business.

2. Lo was an executive director of NUR from 17 October 2013 to 19 May 2017. 

3. The SFC commenced proceedings under section 214 of the Securities and Futures Ordinance in July 2022.

4. The disqualification order excludes Lo’s involvement with Star Point Limited, a private, family-owned and property-holding company unrelated to the misconduct.

5. The orders against Lo were made following the Court’s approval that the proceedings against him could be disposed of by way of Carecraft procedure where the Court determines the appropriate orders to be made based on an agreed statement of facts and agreed proposed orders.

6. The judgment against Lo is available on the Judiciary’s website (Case No.: HCMP 896/2022).