Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Rakon censured, fined over Chinese factory disclosure

Rakon censured, fined over Chinese factory disclosure

By Paul McBeth

March 5 (BusinessDesk) - Rakon, which makes crystal oscillators used in smart phones and navigation devices, has been publicly censured and fined $30,000 by the stock market’s disciplinary tribunal for breaching disclosure rules when it sold 80 percent of its Chinese factory last year.

The Auckland-based manufacturer breached the rules for about an hour and a half when it didn’t inform the market it had entered into a tentative agreement with Zhejiang East Crystal Electronic Co for the Chinese firm to buy its stake in a Chengdu-based facility on July 4, NZ Markets Disciplinary Tribunal said in a statement.

Rakon didn’t believe the agreement was binding until it had received a US$500,000 deposit, as both parties could reopen negotiations until that was paid.

“Rakon submitted that the uncertainty as to whether ECEC would pay the deposit meant that announcing the agreement before it was paid could have misled the market,” the tribunal said in its ruling. “However, the tribunal considered that an announcement could have been worded appropriately to ensure the market was aware of the deposit requirement.”

NZX discovered the breach after seeing a significant increase in trading volume and a price rise in Rakon shares on July 5, and found Chinese media reports of the deal. The shares were subsequently halted, and Rakon announced details of the agreement.

“There was no suggestion that Rakon deliberately breached the rules,” the tribunal said.

Both Rakon and the stock market operator agreed the deal was material information and that as soon as Chinese media reported it, disclosure was required. Where they differed was on whether it was an incomplete transaction before the announcement.

Rakon told the tribunal the agreement was governed by Chinese law, though the manufacturer didn’t seek any advice as to when the transaction would become legally effective, or ask for guidance of ECEC as to its own disclosure obligations on the Shenzhen Stock Exchange.

The tribunal decided the agreement was complete on the evening of July 4, and should have informed the NZX before the market opened the following day. Rakon was also ordered to pay costs incurred by the tribunal and NZX.

Among the mitigating circumstances for the breach was that the potential detriment to shareholders was small, the length of time of the breach was short, and that Rakon had internal processes in place to meet its listing obligations.

“The tribunal noted that it was clear that Rakon’s senior management and board were aware of the need to announce the agreement and sought to manage the timing of the announcements by Rakon and ECEC,” it said.

Rakon sold the stake in the Chinese facility to reduce its debt as it recovers from a failed global expansion before the global financial crisis and the growing commoditisation of the goods it produces.

“The company’s board and management are pleased this matter is now resolved and we accept the tribunal’s determination,” Rakon chairman Bryan Mogridge said in a statement. “The board of Rakon takes its disclosure obligations seriously and it is very disappointing that a situation outside of our control has led to this result.”

Last year, executive directors Brent and Darren Robinson breached the Takeovers Code in July when they bought about 493,000 shares from about $109,000 on market. The transactions fell foul of the code as their combined family stake, including their father Warren Robinson’s share, was more than 20 percent. The brothers had seven weeks to sell the shares.

The company’s shares were unchanged at 20 cents yesterday, valuing the manufacturer at $38.2 million.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Keep Digging: Seabed Ironsands Miner TransTasman Tries Again

The first company to attempt to gain a resource consent to mine ironsands from the ocean floor in New Zealand's Exclusive Economic Zone has lodged a new application containing fresh scientific and other evidence it hopes will persuade regulators after their initial application was turned down in 2014. More>>

Wool Pulled: Duvets Sold As ‘Premium Alpaca’ Mostly Sheep’s Wool

Rotorua business Budge Collection Limited (Budge) and sole director, Sun Dong Kim, were convicted and fined a total of $71,250 in Auckland District Court after each pleading guilty to four charges of misrepresenting how much alpaca fibre was in their duvets. More>>

Reserve Bank: Labour Calls For Monetary Policy To Expand Goals

Labour's comments follow a speech today by RBNZ governor Graeme Wheeler in which Wheeler sought to answer critics who variously say he should stop lowering interest rates, lower them faster, or that inflation-targeting should no longer be the primary goal of the central bank's activities. More>>

ALSO:

BSA Extension And Sunday Morning Ads: Digital Convergence Bill Captures Online Content

Broadcasting Minister Amy Adams has today announced the Government’s plans to update the Broadcasting Act to better reflect today’s converged market... The Government considered four areas as part of its review into content regulation: classification requirements, advertising restrictions, election programming and contestable funding. More>>

ALSO:

March 2017: Commerce Commission Delays Decision On Fairfax-NZME

The Commerce Commission has delayed its decision on the proposed merger between NZME and Fairfax Media's New Zealand assets, saying the deal is complex and it needs more time to assess the impact on both news content and the advertising market. More>>

ALSO:

Plan Plan: Permanent Independent Hearings Panel Proposed For Planning

The Productivity Commission recommends creating a permanent independent hearings panel like the one that cut through local politics to settle Auckland’s Unitary Plan, for the whole country. More>>

ALSO:

Statistics: NZ Jobless Rate Falls To 5.1% Under New Methodology

New Zealand's unemployment rate fell more than expected in the second quarter as Statistics New Zealand adopted a new way of measuring the labour market to bring the country in line with international practices, and while a growing economy continued to support jobs growth. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news