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: NZ Dollar Catches Breath After "Goldilocks" Slump

The New Zealand dollar edged up following its dramatic slump yesterday after the Reserve Bank confirmed speculation it intervened in the currency market last month and PM John Key suggested a “Goldilocks” level far lower than at present. More>>

ALSO:

Biosecurity: Kiwifruit Claim To Hold Officials Accountable For Psa

Kiwifruit growers have joined forces to hold Biosecurity NZ accountable in the courts for its negligence in allowing 2010’s Psa outbreak that devastated New Zealand’s kiwifruit industry and exports. Foundation claimants representing well ... More>>

ALSO:

Poison: Anglers Advised Not To Eat Trout In 1080 Areas

With the fishing season opening in just a few days (1 October 2014), anglers are being warned by the Department of Conservation(DOC) not to eat trout from pristine backcountry waters and their downstream catchments, where the department is conducting 1080 poisoning operations. More>>.

ALSO:

Quotas: MPI Swoop On Suspected Fraudulent Fishing Activity

Ministry for Primary Industries (MPI) compliance officers swooped on a Hawkes Bay fishing enterprise today to secure evidence in an investigation into suspected fraudulent activity... “The investigation involves activity throughout the commercial supply chain – catching, landing, processing and exporting.” More>>

ALSO:

Scoop Business: Fonterra Slashes 2015 Milk Payout, Earnings Tumble 76%

Fonterra Cooperative Group cut its forecast 2015 milk price payout by about 12 percent, citing weaker global dairy prices and said there is a risk of further declines given strong global milk production. More>>

ALSO:

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news