"Companies are required to inform the market as soon as a material matter is agreed", he said.
"It is very common for this to be in advance of all the legal details being completed."
Hawkins said Rakon had been one of the worst performing companies on the share market in the last few years and the cost of the latest error would have to be carried by shareholders.
He called for Rakon's directors to dip into their own pockets and make a contribution towards the fine and costs.
The Auckland-based manufacturer breached the rules for about an hour and a half when it didn't inform the market it had entered into a tentative agreement with Zhejiang East Crystal Electronic Co for the Chinese firm to buy its stake in a Chengdu-based facility on July 4, NZ Markets Disciplinary Tribunal said in a statement.
Read the Tribunal's final determination here.
See Rakon's own announcement of the decision to the NZX here.
Rakon didn't believe the agreement was binding until it had received a US$500,000 deposit, as both parties could reopen negotiations until that was paid.
"Rakon submitted that the uncertainty as to whether ECEC would pay the deposit meant that announcing the agreement before it was paid could have misled the market," the tribunal said in its ruling. "However, the tribunal considered that an announcement could have been worded appropriately to ensure the market was aware of the deposit requirement."
NZX discovered the breach after seeing a significant increase in trading volume and a price rise in Rakon shares on July 5, and found Chinese media reports of the deal. The shares were subsequently halted, and Rakon announced details of the agreement.
"There was no suggestion that Rakon deliberately breached the rules," the tribunal said.
Both Rakon and the stock market operator agreed the deal was material information and that as soon as Chinese media reported it, disclosure was required. Where they differed was on whether it was an incomplete transaction before the announcement.
Rakon told the tribunal the agreement was governed by Chinese law, though the manufacturer didn't seek any advice as to when the transaction would become legally effective, or ask for guidance of ECEC as to its own disclosure obligations on the Shenzhen Stock Exchange.
The tribunal decided the agreement was complete on the evening of July 4, and should have informed the NZX before the market opened the following day. Rakon was also ordered to pay costs incurred by the tribunal and NZX.
Among the mitigating circumstances for the breach was that the potential detriment to shareholders was small, the length of time of the breach was short, and that Rakon had internal processes in place to meet its listing obligations.
"The tribunal noted that it was clear that Rakon's senior management and board were aware of the need to announce the agreement and sought to manage the timing of the announcements by Rakon and ECEC," it said.
Rakon sold the stake in the Chinese facility to reduce its debt as it recovers from a failed global expansion before the global financial crisis and the growing commoditisation of the goods it produces.
"The company's board and management are pleased this matter is now resolved and we accept the tribunal's determination," Rakon chairman Bryan Mogridge said in a statement. "The board of Rakon takes its disclosure obligations seriously and it is very disappointing that a situation outside of our control has led to this result."
Last year, executive directors Brent and Darren Robinson breached the Takeovers Code in July when they bought about 493,000 shares from about $109,000 on market. The transactions fell foul of the code as their combined family stake, including their father Warren Robinson's share, was more than 20 per cent. The brothers had seven weeks to sell the shares.
The company's shares were unchanged at 20 cents yesterday, valuing the manufacturer at $38.2 million.
with BusinessDesk
