Hong Kong – SFC Nomura Takeover Code

Hong Kong – SFC Nomura Takeover Code

On 5 March 2018, HK SFC publicly criticized Nomura on takeover research.

  • Criticized Nomura International (HK) Limited, for breaches of HK takeover code.
  • Also cited Lee Yuen Yee, whilst acting as financial adviser to West China Cement.
  • Lee is a licensed representative of Nomura Hong Kong, for the regulated activity.
  • Work done in relation to possible mandatory offer for the shares of the company.
  • Nomura fell within the definition of "associate" of offeree company, for purposes
    of HK takeovers code on engagement as West China financial adviser November 2015.

Alleged Violations

  • Bank did not comply with limits on issuance and distribution of research reports.
  • On publishing five credit commentaries, and three weekly wraps, on West China.
  • Research contained profit forecasts, which were not reported by Lee as required.
  • Note 4 to Rule 8.1 of takeovers code provides that a financial adviser to offeree
    company should stop issuing research reports on it, except if SFC prior consent.
  • Any research reports with profit forecasts must comply with reporting per code.


  • Regulator cited public criticism of Nomura HK for their breach of takeovers code.
  • In determining sanction, SFC took account of Nomura HK and Lee’s cooperation.
  • As well as self-reporting of the breach, and the remedial measures implemented.