The Securities and Futures Commission (SFC) of Hong Kong announced on Friday that it has initiated legal proceedings to secure a share repurchase order aimed at protecting independent minority shareholders of LET Group and Summit Ascent.
This lawsuit was filed in the Court of First Instance due to alleged misconduct by Andrew Lo Kai Bong, chairman and controlling shareholder of both companies.
The proposed order would compel Lo, LET, and/or Summit Ascent to make an offer to buy shares from minority shareholders independent of Andrew Lo, with the price and terms determined by the Court. The SFC is also seeking to disqualify Andrew Lo for his alleged misconduct towards the companies’ members.
LET Group is involved in casino project investments and controls Summit Ascent, which operates the Tigre de Cristal casino resort in Primorye, Russia.
Both companies became non-compliant with Hong Kong stock exchange regulations in January after a wave of director resignations followed an initial attempt to sell the entity holding the gaming license for Tigre de Cristal. Shares of LET Group and Summit Ascent have been suspended from trading on the Hong Kong Stock Exchange since January 11th.
In February, the SFC began investigating both firms for a possible breach of regulations related to a proposed sale of the Russian business. The regulator stated that a prior sale agreement, later terminated, was executed without necessary shareholder approval.
The SFC’s Friday statement indicated that Andrew Lo’s alleged misconduct led to the suspension of LET and Summit Ascent shares. With uncertainty surrounding the resumption of trading, the share repurchase order aims to provide a way out for independent minority shareholders.
The investigation revealed that Andrew Lo “deliberately disregarded” listing rules and takeover regulations when announcing agreements to dispose of Russian assets in early 2024. Despite the termination of the planned asset sale, the SFC alleges that Andrew Lo failed to disclose pertinent information to shareholders and did not exercise adequate skill or diligence in his role, compromising compliance with the Listing Rules and the Takeovers Code.
In August, LET Group shareholders approved a plan to divest the group’s stake in the Tigre de Cristal resort.
