Nanshan Aluminium International and its subsidiaries (the “Group”) are a leading alumina manufacturer in Southeast Asia, committed to continually strengthening its market position in the region. Since its inception, the Group’s primary focus has been on tapping into Indonesia’s abundant bauxite and coal reserves, utilising these resources to fuel its operations. The Group’s strategic position within the Special Economic Zone amplifies its logistical and economic efficiencies, enables the Group to forge a highly efficient and technologically advanced alumina production base.

The listing of Nanshan Aluminium International constitutes a spin-off of the Group by its controlling shareholder, Shandong Nanshan Aluminium Co., Ltd., the shares of which are listed on the Shanghai Stock Exchange (600219.SH).

Nanshan Aluminium International has four cornerstone investors, Glencore International AG, Hongkong Topway Trading Co., Limited (a subsidiary of Xiamen Xiangyu Co., Ltd. (600057.SH)), Reijong International Industrial Equipment (HK) Limited and PT Indika Energy Tbk (INDY.IDX) which subscribed for a total of around 35.14 million offer shares amounted to approximately HK$934.63 million.

The sole sponsor of the listing was Huatai Financial Holdings (Hong Kong) Limited. The joint global coordinators were Huatai Financial Holdings (Hong Kong) Limited, CMB International Capital Limited, China Galaxy International Securities (Hong Kong) Co., Limited, China International Capital Corporation Hong Kong Securities Limited, CLSA Limited, Daiwa Capital Markets Hong Kong Limited, DBS Asia Capital Limited, ICBC International Securities Limited, and UOB Kay Hian (Hong Kong) Limited.

Our team was led by our partner Mr. Rodney Teoh, supported by team members including Mr. Davis Lam (senior associate), Ms. Angela Lau (associate), Mr. Austin Kot (associate) and Mr. Jay Lee (legal manager (corporate finance)).

Please contact our Mr. Rodney Teoh for any enquiries or further information.

While the majority supported the proposals outlined in the June 2024 Consultation Paper on Corporate Governance Code (“Consultation Paper”),[1] notable divergences were observed regarding the appointment of a lead independent non-executive director (“INED”) and the limit on INED’s tenure.

Following a review of the feedback, the Exchange has set the implementation date for the suggested modifications as 1 July 2025. Transitional arrangements will apply to certain rules regarding “overboarding” and tenures of INEDs. The latest guidelines will be provided by the Exchange in the first half of 2025 to facilitate the listed companies in complying with the most updated requirements.

A.  Major Revisions to the CG Code and Related Listing Rules

The following table presents the primary focuses on the fundamental changes in the CG Code and the relevant Listing Rules, namely (i) Board Effectiveness; (ii) INED’s Independence; (iii) Board and Workforce Diversity; (iv) Risk Management and Internal Controls; and (v) Dividends.

B.  Analysis and takeaways

The Exchange has strived to review and refine the Consultation Paper based on the recommendations and opinions provided by multiple industrial stakeholders and professional bodies. This has apparently reflected the Exchange’s efforts to enhance the sound corporate governance of the listed companies in multiple essential areas. The proposed amendments to the respective rules, provisions and requirements regarding Board Effectiveness, INED’s Independence, Board and Workforce Diversity, Risk Management and Internal Controls and Dividends, reveal the Exchange’s commitment to foster a structured and robust framework within the regulatory and compliance regime. As reflected in the Consultation Conclusions, the listed companies on the Exchange are expected to adhere to the most recent guidelines and their respective timelines to ensure effective compliance.

Please contact our Partner Mr. Rodney Teoh for any enquiries or further information.

This news update is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.”

[1]  Please see our news update on the Exchange’s June 2024 Consultation Paper on Corporate Governance Code here.

The revised Second-phase Assessment emphasises on ensuring the policies, procedures, systems and controls (“P&P”) of the VATP are adequately created and executed as a direct assurance engagement.

1. Licensing and regulatory procedures for VATPs

Subsequent to the on-site inspections targeting to ensure the applicants have complied with the relevant regulatory standards, the deemed-to-be-licensed VATP applicants (“Deemed Applicants”) would have to satisfy the SFC’s further regulatory expectations for improvement. They are mandated to provide a plan detailing the rectification strategies in response to the feedback from the SFC during the inspection. Upon agreement with the plan by the SFC, a conditional license will be issued to the Deemed Applicants accordingly. To satisfy the licensing requirements, the VATP is bound to carry out the rectification measures as outlined, and conduct penetration tests and vulnerability assessments performed by independent third parties. Satisfactory results must be obtained prior to functioning under a restricted operational scope by the VATP.

• Vulnerability Assessment

The independent third-party assessor should detect any susceptible risks within the VATP’s systems by adopting a thorough binary analysis of the custody system. The assessment will primarily focus on external and internal vulnerabilities, which will be categorised in accordance with their respective risk levels.

• Penetration Test

To enhance cybersecurity resilience and identify potential security loopholes in the platforms, security enhancement assessments and penetration tests are expected to be carried out by independent third-party assessors on multitudes of systems, including network devices, services, databases and e-wallets infrastructures. Following the notification by the SFC regarding its satisfactory completion of the stipulated assessments and testing, the VATP is permitted to operate within a restricted scope of business as a licensing condition. The VATP can then proceed to involve an External Assessor (“EA”) in performing the Second-phase Assessment.

2. Revised Second-phase Assessment

The Second-phase Assessment is conducted through a tripartite agreement that includes the SFC, the VATP and the EA. It focuses on evaluating whether the updated P&P have been properly established and implemented after the VATP completes the rectification plan in accordance with the inspection comments provided by the SFC. In the event of any material alterations in the P&P, the VATP must promptly notify both the SFC and the EA. Any contraventions or breaches detected during the Second-phase Assessment shall also be promptly notified by the VATP to the SFC for further investigation.

The process is a direct assurance engagement, requiring certification by a practicing public accountant to ensure compliance with the relevant regulatory standards established by the SFC. Additionally, the EA is required to determine whether the P&P are adequately structured and executed to adhere to the Guidelines for Virtual Asset Trading Platform Operators and the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Corporations and SFC-licensed Virtual Asset Service Providers). Once the Second-phase Assessment is successfully completed, the SFC will uplift the licensing conditions that limit the VATP’s scope of business. 

3. Analysis and takeaways

As indicated in the Circular, the SFC has made considerable efforts to develop and refine regulatory regimes to establish the licensing requirements of VATPs. The comprehensive regulatory framework involving external parties, such as independent third-party assessors and certified accountants, intends to protect investors’ rights and reduce the risks of fraudulent activities occurring in the sector. Such an approach demonstrates the SFC’s dedication to cultivate a healthy trading environment while reinforcing its regulatory and enforcement roles in inspecting the VATPs with transparency and accountability.

Please contact our Partner Mr. Rodney Teoh for any enquiries or further information.

 This news update is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.”

 [1] Please see our news update on the SFC’s latest licensing regime for VATPs here.

The placing agents of the offering include Sigma Capital Management Limited, Haitong International Securities Company Limited, China Industrial Securities International Brokerage Limited, Shanxi Securities International Limited, Yuan Tong Global Securities Limited, Danehill Capital Limited, Guotai Junan Securities (Hong Kong) Limited, Shenwan Hongyuan Securities (H.K.) Limited, Emperor Securities Limited, Industrial Bank Co., Ltd. Hong Kong Branch, Huatai Financial Holdings (Hong Kong) Limited, Target Securities International Limited, CCB International Capital Limited, Donghai International Securities (Hong Kong) Limited, ICBC International Securities Limited, TFI Securities and Futures Limited, Star River Securities Limited, Gentech Capital (Hong Kong) Limited, and SunRiver International Securities Group Limited.

Tai’an Financial Holdings is a core operating entity designated to provide comprehensive financial services within Tai’an City and to implement the Tai’an Municipal Government’s blueprint for enriching and developing the local financial market and economy. The group is mainly engaged in four principal business segments: financial leasing, guarantee service, private capital investment, and supply chain trading.

Our team comprised our partners Hank Lo, Gordon Tsang and Erica Cheng, senior associate Anthony Wong and trainee solicitor Selina Tsang.

Please contact our partners Hank Lo, Gordon Tsang and Erica Cheng for any enquiries or further information about this transaction.

But as Warren Buffett famously said, “only when the tide goes out do you discover who’s been swimming naked”. In the economic downturn of the last few years, cashflow dwindled and the overleveraged were weeded out. Bond defaults became rampant, and so were recovery actions by gutted bondholders.

 Recovery of bond debt was once thought straightforward. A more conservative claimant would choose to commence a civil action against the issuer company to obtain a summary judgment first. Others would either seek to petition for winding-up directly, or join in as supporting creditors.

The case below reveals how a recalcitrant issuer could complicate and drag the proceedings on for months on end.

Winding-up at First Instance

On 8 June 2023, a winding-up petition was presented by a CIES bondholder against China Zenith Chemical Group Ltd (“Company”) based on a summary judgment. After coming to terms with the Company, the original petitioner dropped out.

Several other CIES bondholders immediately applied to substitute as the petitioner. Stevenson, Wong & Co. represents one of the bondholders who have, up to the date of this article, tirelessly pursued their claims against the Company.

Rather than putting forward a scheme of arrangement / proposal for debt-restructuring (as is fashionable), the Company vigorously disputed all claims of bond default (currently 10+ and counting) in the winding-up proceedings.

The Company’s approach resulted in the Court exercising case management power to hear the (substituted) petition and the substitution applications at once. At the hearing on 3 June 2024, Hon Linda Chan J adjourned the petition together with the claims of 3 supporting creditors for substantive arguments. The substantive hearing took place before Recorder Suen SC on 19 September 2024.

Our client’s case is that he subscribed to a CIES bond through an intermediary. He adduced evidence of full payment of the subscription price to the intermediary, the bond certificate signed and sealed by the Company, and letters from the Company to the Immigration Department year after year confirming our client’s status as a bondholder.

The Company argued that it had only received partial payment of the subscription price from the intermediary, and that the bond was cancelled by some private agreements between the Company and the intermediary.

The Court criticized the Company for how its defence evolved over time (i.e. that our client agreed to extend the maturity, that the Company had received no payment of the subscription price at all, and then finally that it and the intermediary had agreed to cancel the bond). The absence of the intermediary from the proceedings did not lend credibility to the Company’s. As a result, the learned Recorder found no bona fide dispute as to the debt on substantial grounds on 10 October 2024.

The Company bargained for time to pay the debt before a winding-up order is pronounced, and the Learned Recorder allowed as such on 18 October 2024.

At this point, the creditors may think they were at the finishing line, but they would be sorely mistaken.

The Witching Hour

One has to admire the Company’s tenacity and ingenuity. In the next few months, the Company

• • • sought an extension of time to pay; and yet argued that it ought not to pay.

• • • applied for an expedited appeal on the ground that it expected to raise sufficient fund to avoid a winding-up; and then (at the polar opposite) applied for an expedited appeal on the ground that it could not raise sufficient fund to avoid a winding-up.

• • • announced a placement of shares, and procured its Financial Adviser to affirm the market’s interest; and then ironically extended the “long-stop” date of the placement when none is shown.

• • • adduced support letters from “bondholders” that further fundraising was preferred to immediate winding-up, but opted not to produce the register of bondholders or the relevant bond documents.

All these were to seek adjournments of the winding-up petition.

Fortuitously for the Company, the Court of Appeal finally ordered an expedited appeal, and while Hon. Anthony Chan J. criticized the Company’s ploy at the hearing of the Companies Court on 2 December 2024, he reluctantly adjourned the hearing of the winding-up petition until after the disposal of the appeal.

The Court of Appeal’s decision and beyond

The appeal was heard on 20 February 2025 before Hon Kwan VP, Cheung JA, and Barma JA, and judgment was handed down on 11 March 2025.

The appeal was largely an appeal on facts. The Court of Appeal found that the Company was rehashing its arguments at the Court below, and found no palpable errors in the learned Recorder’s assessment of evidence.

At the hearing before the Companies Court on 17 March 2025, DHCJ Gary Lam made a usual winding-up order against the Company despite the Company’s submission that it was carrying out yet another round of fundraising activities. It remains to be seen what tactics will be deployed to keep the bondholders at bay even in the Company’s winding-up.

Implication to bondholders

In a typical winding-up proceedings where the original petitioner drops out, it is understandable that a supporting creditor may want to defer to other creditors to apply for substitution in order to save legal costs.

As demonstrated in the present case, however, where there is sufficient commonality among the claims (all being bond defaults), the Court may exercise its case management power to hear the petition and multiple substitution applications together. This helps to exert maximum pressure, which is particularly important in a case against a recalcitrant debtor.

Our Partner Mr. Dominic Lau, solicitor advocate, appeared in the Court of First Instance on behalf of one of the bondholders / supporting creditors as sole advocate. On appeal, Counsel Mr Jeff Yau appeared on our instruction. The team was also assisted by associate Mr. Harold Chiu and trainee solicitors Ms. Kayla Yu and Ms. Selina Tsang.

Please contact our Partner Dominic Lau for any enquiries or further information.

This news update is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

此次全国涉外仲裁人才培训班（香港）由司法部与香港特别行政区律政司成立的香港国际法律人才培训学院联合举办，同时得到了中国政法大学和中国法律服务（香港）有限公司的大力支持。该培训班为期两周，吸引了众多专业人士参与，其中包括国资委推荐的内地企业法律顾问，以及各地司法局和律师协会推荐的资深法律从业者，学员总数超过 80 名。培训班特别邀请了香港国际法律人才培训专家委员会成员以及本港资深法律界人士代表授课，旨在推动两地仲裁规则相互借鉴，促进人才协同发展。

徐凯怡律师以“参与国际仲裁：机遇与挑战　(Engaging in International Arbitration: Opportunities and Challenges)”为主题展开授课，深度剖析了多个关键要点，包括中国法律从业者在国际争议市场中面临的机遇、香港国际仲裁中心 2024 年规则下的标准国际仲裁流程、国际仲裁过程中的文化与程序差异，以及国际仲裁中的不同角色等。课堂上，徐律师通过互动练习，增强了学员对课程内容的认识与理解，提升了他们在国际仲裁领域的实践能力。

如阁下有任何查询或想了解更多详情，请联络本所合伙人徐凯怡律师。