SFC focuses on the role of financial advisers and valuers in advising listed companies in corporate transactions

The Securities and Futures Commission (SFC) has issued a circular to financial advisers to provide guidance on its expectations as to their role when advising listed companies on corporate transactions (FA circular). The FA circular reminds financial advisers of their obligations under the Corporate Finance Adviser Code of Conduct (CFA Code) and provides specific guidance as to steps financial advisers should take to discharge their obligations. At the same time, the SFC issued a statement to valuers (liability statement) highlighting their potential liability for valuation reports and related information in disclosure documents published by listed issuers. The SFC warns that those who fail to follow the FA circular and liability statement are at greater risk of investigation and regulatory action.

These developments come amidst concerns expressed by the SFC over certain transactions by listed companies pricing acquisitions at unreasonably high levels or selling assets at an undervalue, which have resulted in losses for shareholders. Coupled with the FA circular and liability statement, the SFC has also issued a guidance note to directors of listed companies as to their duties in respect of corporate transactions.

In this bulletin we highlight the key implications of the FA circular and liability statement for financial advisers and valuers respectively.

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