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

 

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Scoop Business: Embrace Falling Home Affordability, Says NZIER

Despair over the inability to afford a house is misplaced and should be embraced as an opportunity to invest in more wealth-creating activity, says the principal economist at the New Zealand Institute of Economic Research, Shamubeel Eaqub. More>>

Productivity Commission: NZ Regulation Not Keeping Pace

New Zealand regulators often have to work with out-of-date legislation, quality checks are under strain, and regulatory workers need better training and development. More>>

ALSO:

Callaghan Innovation: Investment To Help Deepen Innovation Reporting

Callaghan Innovation, the government’s high tech HQ for Kiwi business, is to help deepen New Zealand media coverage of the commercialisation of innovation through an arms-length partnership with independent business news service BusinessDesk. More>>

ALSO:

Tax Credits, Grants: Greens $1Bn R&D Plan

In the Party’s headline economic announcement, the Greens have launched their plan to build a smarter, more innovative economy which has as its centrepiece an additional $1 billion of government investment in research and development (R&D) above current spend, including tax breaks for business. More>>

ALSO:

Inflation: CPI Increases 0.3 Percent In June Quarter

The consumers price index (CPI) rose 0.3 percent in the June 2014 quarter, Statistics New Zealand said today. This follows rises of 0.3 percent the March quarter and 0.1 percent in the December 2013 quarter. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news