• Market misconduct tribunal (MMT) found Magic Holdings and its directors culpable of late disclosure of inside information on L’Oréal's proposed takeover of Magic in 2013.

Failure to Disclose

• In April 2013, L’Oréal and Magic’s founders agreed that an offer price of not less than $5.5 per share would be put before Magic’s board of directors for their consideration.
• Magic’s founders said they would contact their institutional investors to gauge interest, but did not disclose the information on the proposal to the public until August 2013.
• In MMT's view, Magic’s breach was due to directors not being given information in a timely manner on whether it was necessary to disclose the potential acquisition.
• Found that chairman Stephen Tang and company secretary Cheng Wing Hong failed to carry out functions, resulting in Magic’s breach of corporate disclosure requirements.
• Also found that all five directors had failed to take all reasonable measures to ensure that proper safeguards existed to prevent Magic from breaching disclosure obligation.