The Securities and Exchange Commission

[Vexari]

HONG KONG IMPROVES SECURITIES LISTINGS..

Changes planned to enhance market quality..

Hong Kong Announces New Proposals To Improve Listing Regulations, by Mary Swire, Tax-News.com, Hong Kong 30 March 2004

Following a public consultation, the government of Hong Kong has announced new measures to improve listings regulation, to “enhance market quality.”

"We are pleased to note that there is overwhelming support for giving statutory backing to certain fundamental listing requirements and expanding the dual filing system," announced the Secretary for Financial Services and the Treasury, Mr Frederick Ma.

He continued: "The proposed improvement measures set out in the Consultation Conclusions will contribute towards a quality market. They will further strengthen our position as the premier capital formation centre for the Mainland and a major international financial centre in the region."

"We will work closely with the Securities and Futures Commission (SFC), the Hong Kong Exchanges and Clearing Limited (HKEx) and all market users towards this common goal," Mr Ma said.

The Consultation Conclusions recommend codifying in the statute the more important listing requirements, i.e. financial reporting and other periodic disclosure, disclosure of price-sensitive information and shareholders' approval for notifiable transactions. This will be achieved by subsidiary legislation to be made by the SFC under s.36 of the Securities and Futures Ordinance (SFO).

In parallel, the Government will introduce a Securities and Futures (Amendment) Bill into the Legislative Council to the effect that breaches of statutory listing requirements will become a new type of market misconduct. Any persons who breach the statutory listing requirements can either be subject to civil sanctions imposed by the Market Misconduct Tribunal under Part XIII of the SFO, or criminal sanctions under Part XIV of the SFO following prosecution.

Mr Ma added: "Any breach of statutory listing requirements would not only hurt our investors, but also tarnish the reputation of our equity market. By bringing the regulatory regime for listing in line with that for other types of market misconduct, such as insider dealing and stock market manipulation, we hope to demonstrate to the local and international investors our commitment to enhancing market quality."

To address market calls for swift action to be taken by the SFC, the Government will also amend the SFO to allow the SFC to impose direct civil sanctions, namely reprimands and disqualification orders, on specific, well-defined "primary targets" for breaches of the statutory listing requirements. It is the consensual view among the regulators that these "primary targets" should be the issuers, directors and corporate officers, who are primarily accountable for corporate disclosure and other corporate activities under the listing regime.

"We shall continue to rely on the regulatory framework under the SFO, in particular the licensing regime, for the SFC to regulate IPO sponsors. We note the efforts being made by the SFC and HKEx to upgrade the regulation of sponsors," Mr Ma observed. "We recommend that they should expedite action on this front."

Mr Ma noted that the Government aimed at introducing the Securities and Futures (Amendment) Bill into the Legislative Council in early 2005, as pledged by the Financial Secretary in his Budget Speech for 2004-05.


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