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Daniel Ng is a junior associate at a law firm acting for Kowloon Crest Holdings Ltd, a listed company, on a confidential disposal. With no other link to Kowloon Crest, he buys its shares before the deal is announced. Why is he connected with the company?
Section 247(1)(c) of the SFO treats an individual as connected with a corporation if he occupies a position that may reasonably be expected to give him access to inside information because of a professional or business relationship between himself, or his employer, or a firm of which he is a partner, and the corporation. Daniel's employer, the law firm, acts for Kowloon Crest on the disposal, so he is connected and his purchase is insider dealing under s.270(1)(a). Signing the engagement letter is not required, advisers are not exempt, and regulation by the Law Society is irrelevant to the test. Source: SFO (Cap. 571) s.247(1)(c), s.270(1)(a) (as at October 2026).
Thinking only directors, employees and shareholders are insiders. Advisers' staff are connected through the professional relationship.
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