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Criminal liability is created by section 40A of the Ordinance in respect of Hong Kong companies and section 342F of the Ordinance in respect of companies incorporated outside Hong Kong. If a prospectus contains a false statement, any person who authorised its issue will be guilty of an offence unless he can establish certain specific defences.
The penalty for breaching section 40A or section 342F of the Ordinance is a fine of $500,000 or imprisonment for three years on indictment. and a fine of $100,000 and imprisonment of 12 months on summary charge.
If a merchant bank acts as a sponsor in relation to a listing, it also has to comply with the Model Code for Sponsors of the Listing Rules. The Code requires that the sponsor should be closely involved in the preparation of the listing document and in ensuring that all material statements therein have been verified and that it complies with the Listing Rules and all relevant legislation. Failure by a sponsor to meet its obligations under the Listing Rules without reasonable excuse may render that person unacceptable to the SEHK for performing the role of a sponsor in the future.
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