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

 

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Scoop Business: NZ Broadcasters Launch Battle Against Global Mode ISPs

New Zealand broadcasters have confirmed they’ve launched legal proceedings against internet service providers who give customers’ access to “global mode”, which allows customers access to offshore online content, claiming it breaches the local content providers’ copyright. More>>

ALSO:

Sanford: Closure Of Christchurch Mussel Processing Plant Confirmed

The decision comes after a period of consultation with the 232 staff employed at the Riccarton site, who were told on 9 April that Sanford was considering the future of mussel processing in Christchurch. Recent weather patterns had impacted on natural spat (offspring) supply... More>>

ALSO:

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news