…
On 19 May 2026, the Stock Exchange of Hong Kong Limited (the “Stock Exchange”) published a Statement of Disciplinary Action against a former company secretary of a listed company, Venus Medtech (Hangzhou) Inc. (Stock Code: 2500) (the “Listco”).
- Case summary
The Listco engaged a corporate service provider (“CSP”) to provide company secretarial services, including advice on Listco’s compliance with the Rules Governing the Listing of Securities on The Stock Exchange (the “Listing Rules”), review of corporate documents such as interim reports and annual reports, and assignment of a qualified company secretary to the Listco pursuant to Rule 3.28 of the Listing Rules. The CSP assigned Mr. Wong Wai Chiu (“Mr. Wong”), a certified public accountant, to the Listco. Mr. Wong was appointed as one of the joint company secretaries of the Listco on 18 January 2021.
During the period from January 2020 to June 2023, the Listco provided unauthorised financial assistance totaling approximately RMB 2.477 billion to two of its executive directors (the “Non-compliant Transactions”). The Listco was found to be in non-compliance with the Listing Rules regarding certain Non-compliant Transactions. For the financial years ending 31 December 2021 and 2022, Mr. Wong received draft annual results and reports from the Listco for which contained references to Non-compliant Transactions. However, Mr. Wong failed to review the relevant documents. Instead, Mr. Wong delegated his company secretarial responsibilities to his colleagues at the CSP, who only provided high-level and clerical comments. As a result, the board of directors of the Listco (the “Board”) was not made aware of Listing Rules implications relating to the Non-compliant Transactions.
The Listing Committee of the Stock Exchange (the “Listing Committee”) found that Mr. Wong failed to discharge his duties as a company secretary, and was liable under Rule 2A.10B(3) of the Listing Rules for the Listco’s breaches of relevant reporting, announcement, circular and independent shareholders’ approval requirements pursuant to Chapters 13, 14 and 14A of the Listing Rules in relation to the Non-compliant Transactions. The Listing Committee considered that, had Mr. Wong reviewed the documents he received, considered the potential breaches of the Listing Rules and provided professional advice to the Board as required, the wrongdoings could have been prevented or rectified at an earlier stage. The Listing Committee also considered that Mr. Wong’s appointment as a “named” company secretary of the Listco is personal, and the involvement of external legal counsels and auditors did not relieve Mr. Wong of his professional obligations as a company secretary.
This case is notable as it is the first disciplinary action taken by the Stock Exchange against an individual in his sole capacity as a company secretary (without any other concurrent role, such as director or CFO) in a listed company.
- Advice to company secretaries of listed companies
2.1 Key legal principles
The core finding of this case is not that the company secretary “knew and failed to report”, but negligence in the form of “should have known but did not report”, which constitutes a dereliction of duty.
The Listing Committee explicitly rejected two common defences:
- “Delegation as a defence”: Even where functions are delegated to service teams, as a “personal appointment” under Rule 3.28 of the Listing Rules, the company secretary must exercise personal professional judgment in reviewing key documents. In this case, Mr. Wong merely supervised via email without personally reviewing the draft annual results and reports which contained references to the Non-compliant Transactions. Such behaviour was held to be in breach of his duty of care.
- “Reliance on professional advisors”: Reliance on auditors’ or external legal counsels’ opinions does not relieve the company secretary’s personal supervisory and advisory responsibilities. The regulator imposes a non-delegable personal duty on a company secretary as a member of senior management.
- Legal risks of “named” company secretaries
This case reveals three legal risks of “named” company secretaries:
- Liability-compensation mismatch: Corporate service providers receive professional fees, but individual practitioners named as a company secretary often receive only a modest stipend. In the event of non-compliance, the Stock Exchange’s disciplinary sanctions target the “named” company secretary. A public censure can cause lasting damage to the professional qualifications (whether as (a) a member of the Hong Kong Chartered Governance Institute, (b) a solicitor or barrister (as defined in the Legal Practitioners Ordinance), or (c) a certified public accountant (as defined in the Professional Accountants Ordinance)) and reputation of the “named” company secretary.
- “Non-employee” status is not a defence: The Stock Exchange explicitly stated in the 2021 Consultation Conclusions that there is no distinction between an “in-house company secretary” and an “outsourced company secretary”. “Named” company secretaries’ lack of familiarity with the daily affairs of listed companies is not a mitigating factor. It is a risk that “named” company secretaries shall consider and evaluate prior to their appointments.
- Serious consequences: A public censure is not merely a “reputational penalty”. Pursuant to Rule 2A.10B of the Listing Rules, a sanctioned individual may be considered unfit to serve as a senior officer or as a director of any listed company, severely impacting his or her future practice and director eligibility.
- Recommendations: Measures to mitigate
If you currently serve or intend to be appointed as a “named” company secretary of a listed company (particularly as an external service provider), you are recommended to implement the following risk control measures:
- Maintain a non-delegable personal review protocol: Clearly specify the critical documents that must be personally reviewed or approved (e.g. draft announcements, annual reports, notifiable and connected transaction circulars etc.). Do not rely solely on forwarded team emails or verbal reports.
- Review liability provisions in service agreements: Carefully examine the engagement letter between the service provider and the listed company to ensure that contractual terms do not improperly shift personal regulatory obligations. Additionally, ensure that the engagement letter grants the right to obtain all necessary information and inspect documents from the listed company, including access to original board meeting papers.
- Assess the feasibility of holding multiple secretaryships: If serving as company secretary for more than six listed companies concurrently, evaluate whether you can realistically oversee the daily affairs of each listed company. Otherwise, in the event of any compliance breach, regulators are likely to cite this situation as a factor to scrutinise whether you were “overburdened and therefore failed to discharge your personal supervisory responsibilities.”
- Directors and Officers (D&O) Insurance: You should also ensure that the listed company has arranged appropriate insurance cover in respect of legal actions against its directors and members of its senior management. The scope of the insurance should cover potential regulatory proceedings and disciplinary actions against company secretaries (whether in-house or outsourced).
- Conclusion
An alarming red line been drawn: “Named” company secretaries of listed companies are personally accountable. Individuals acting as “named” company secretaries of listed companies, whether in-house or outsourced, must discharge their duties as a member of the senior management of listed companies. This requires personal oversight, professional judgement and timely remedial actions to ensure compliance and good corporate governance.
The proportionality between the amount of compensation received by the “named” company secretaries and the legal risks involved for them to discharge their duties is irrelevant. The test is clear: As a “named” company secretary, have you personally reviewed the potential non-compliant documents and raised the necessary queries?
For more information, please see:
(Chinese version)
https://www.hkex.com.hk/-/media/HKEX-Market/Listing/Rules-and-Guidance/Disciplinary-and-Enforcement/Disciplinary-Sanctions/2026/2605192_SoDA_tc.pdf
(English version)
https://www.hkex.com.hk/-/media/HKEX-Market/Listing/Rules-and-Guidance/Disciplinary-and-Enforcement/Disciplinary-Sanctions/2026/2605192_SoDA.pdf
If you wish to assess Listing Rules compliance risks, company secretary responsibilities or risk management arrangements in relation to a specific case, please contact our Partner Terence Lau, Senior Associate Teresa Yip or Associate Michael Leung.
This article is provided for general informational purposes only. Its content does not constitute legal advice and should not be treated as such. You should not rely solely on the content of this article when making any decision or taking (or refrain from taking) any action without first obtaining specific professional legal advice based on your particular facts and circumstances. 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.