The Hong Kong Securities and Futures Commission (SFC) has initiated legal proceedings in the Court of First Instance seeking disqualification and compensation orders against eight former directors of 3DG Holdings (International) Limited, previously known as Hong Kong Resources Holdings Company Limited. These actions stem from allegations that the directors failed to prevent the misappropriation of corporate funds amounting to $74.4 million.
The eight individuals involved were part of the board during the relevant period. Among them are the executive director and CEO, along with several other executive directors and independent non-executive directors.
An investigation by the SFC uncovered that on June 8, 2017, the company made a significant acquisition by obtaining a 100% equity interest in a firm that holds a money lender’s license. Following this acquisition, between June 2018 and March 2019, the company extended 12 loans totaling $74.4 million through its new money lending operations. Unfortunately, all loans defaulted upon reaching maturity.
As part of the ongoing legal proceedings, the SFC is pursuing compensation from these directors, targeting the full amount of $74.4 million that was disbursed for the loans. The agency posits that both the acquisition and the subsequent loans were integrated into a scheme to misappropriate funds from the company.
In its assertions for disqualification, the SFC claims that the directors breached their fiduciary duties towards the company, lacking the necessary skill, care, and diligence in executing their responsibilities. This legal action emphasizes the importance of accountability among corporate directors, particularly in safeguarding company assets and ensuring prudent financial management.