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Legal Update

SFC Confirms it will Rely on Existing Law to Impose Prospectus Liability on Sponsors

1 September 2014
Mayer Brown JSM Legal Update

The Securities and Futures Commission (SFC) has recently published its "Supplemental Consultation Conclusions on the Regulation of IPO Sponsors – Prospectus Liability" to confirm its position as follows:

  • Sponsors are already included in the broad category of persons who "authorised the issue of the prospectus" under the existing Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32 of the Laws of Hong Kong)1 (CWUMPO).
  • Accordingly, sponsors have potential statutory criminal and civil liability under the CWUMPO for untrue statements (including material omissions) in prospectuses. SFC will rely on the relevant CWUMPO provisions to take action as appropriate.
  • No further legislative amendment is required to clarify sponsors' civil and criminal prospectus liability.

1 Please refer to sections 40(1)(d), 40A(1) and 342F(1) of the CWUMPO

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