Evergrande Challenges SFC-PwC Settlement in High Court, Ruling Due in October
On.cc · 2 SOURCESabout 3 hours ago2 MIN
Summary
China Evergrande Group's liquidators initiated judicial review proceedings at the High Court on June 19, 2024, challenging the Securities and Futures Commission's settlement with PwC Hong Kong over the collapsed property developer's audit. The SFC announced in April 2024 that PwC Hong Kong would contribute 10 billion HKD to compensate eligible minority shareholders without admitting liability. Evergrande contends the regulator acted beyond its legal powers and bypassed established court procedures. Justice Andrew G.H. Kowalski heard arguments from all parties before postponing his ruling until October 2024, with the outcome set to impact creditors and shareholders in the liquidation.
Key Points
- China Evergrande (stock code 03333), currently under court-ordered liquidation, filed HCAL 1082/2026 seeking judicial review of the SFC-PwC settlement
- The SFC announced on April 23, 2024 that PwC Hong Kong agreed to allocate 10 billion HKD to compensate eligible Evergrande minority shareholders without acknowledging wrongdoing
- Evergrande's legal team argued the SFC exceeded its authority by negotiating a private settlement and establishing the compensation fund, claiming the regulator should have utilized Section 213 of the Securities and Futures Ordinance to pursue the matter through open court proceedings
- Evergrande requested full disclosure of the settlement agreement from the SFC but received only a summary; the regulator maintained that providing an overview was sufficient and appropriate
- Justice Andrew G.H. Kowalski presided over the June 19 hearing and will deliver his decision in October 2024
Why It Matters
The High Court's ruling will establish a precedent regarding the SFC's enforcement powers and whether regulators can settle cases involving intermediaries through private agreements rather than transparent court processes. The outcome will directly affect how hundreds of millions of dollars in compensation reach affected Evergrande investors and may reshape how similar disputes involving failed listed companies are handled in Hong Kong
The High Court's ruling will establish a precedent regarding the SFC's enforcement powers and whether regulators can settle cases involving intermediaries through private agreements rather than transparent court processes. The outcome will directly affect how hundreds of millions of dollars in compensation reach affected Evergrande investors and may reshape how similar disputes involving failed listed companies are handled in Hong Kong