Analysis
DIRECTORS OF PUBLICLY-LISTED COMPANIES
CLEAN HANDS, PLEASE
'Clean hands' are required by those who would be trustees of the public purse.
This is essential, and is fundamental as any first-year law student will tell you.
Snell's Principles of Equity makes this point only too clearly: 'He who comes into equity must come with clean hands... he who has committed iniquity... shall not have
Equity.'
Snell's Principles of Equity also states: "The person making the appointment (of a trustee) should not appoint anyone whom the court would not appoint, e.g. when a trustee is imprisoned, or is mentally defective, or is bank- rupt.'
TARGET is not certain how many directors of compa- nies in Hongkong are mentally defective, but we could make a fair guess.
Questions are being asked as to whether or not certain directors in Hongkong who have been known to stray from the straight and narrow should be permitted to assume full or partial control of publicly-listed companies.
One must not forget that it is shareholders' money to which directors have access, and it is in the shareholders' interests that this money be put to the best possible use for the benefit of the public company not for the benefit, solely, of a single director.
The shareholders, in this case, are the beneficiaries, or cestuis que trust.
Snell's Principles of Equity states: 'In exercising his dis- cretions, a trustee must act honestly and must use as much diligence as a prudent man of business would exercise in dealing with his own private affairs.'
It is up to prospective investors, themselves, to decide whether or not they will invest in a particular company, but
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investors may not necessarily know the previous track record of the directors of a particular company.
Who is Worthy to be a 'Trustee'?
It is not stipulated in the Companies Ordinance, Chapter 32, that a director must reveal a criminal background if he/ she has one, nor is it stipulated that a director must disclose any fines that may have been imposed as a result of a breach of the rules of a club -- The Royal Hongkong Jockey Club,
for instance.
In the case of The Royal Hongkong Jockey Club, several prominent Hongkong businessmen have had a scolding of late for their unconventional interference in the sport of horse racing: You know, fixing races etc.
As reported recently, Mr Peter Lam Kin Ngok, whose family controls Lai Sun Garment Company Ltd, was dis- qualified from The Royal Hongkong Jockey Club for 9 months and fined $HK450,000.
Mr Richard Lee, Director of Jardine Strategic Holdings Ltd, Mandarin Oriental International Ltd and Chief Execu- tive of Zung Fu Company Ltd, was also fined by The Royal Hongkong Jockey Club and asked to distance himself from racing for 9 months.
The antics of several important gentlemen in their 'extra- curricular' activities have caused some concern amongst observers who are worried that this behaviour may be an indication of these people's attitudes towards business.
Messrs Lam and Lee, mentioned above, are not criminals since they have only breached The Royal Hongkong Jockey Club rules and, as such, should not be placed in the same category as criminals.