Following is the speech by the Secretary for Financial Services, Mr Stephen Ip, in moving the Second Reading of the Companies (Amendment) Bill 2001 in the Legislative Council today (June 6):
I move that the Companies (Amendment) Bill 2001 be read the second time. The Bill seeks to amend the relevant provisions of the Companies Ordinance to allow listed companies incorporated in Hong Kong ("listed companies") to issue summary financial reports.
All limited companies incorporated in Hong Kong, including listed companies, are required under the Companies Ordinance to send financial documents that are to be laid before the company at a general meeting to their shareholders, debenture holders and other entitled persons ("shareholders and relevant persons") not less than 21 days before the date of the meeting. The documents comprise the balance sheet with its annexes, the director's report and the auditor's report.
Shareholders in general may not have interest in the financial documents given their length and complexity, and may not read them in detail. Taking into account overseas experience, we consider that there is room for improvement in the present arrangement. We propose to amend the Companies Ordinance to allow listed companies to send summary financial reports in lieu of the full set of financial documents to their shareholders and relevant persons. The summary financial report sets out the important information of the company in a simpler and more concise manner to facilitate better understanding of the operation, business and financial position of a listed company by general investors. Moreover, the printing of summary financial reports, in comparison with that of the full sets of financial reports, will consume less paper and hence is more environmentally friendly.
The main purpose of allowing listed companies to issue summary financial reports is to provide the shareholders and relevant persons with an additional choice and the shareholders' right of access to full corporate information will not be affected. The Bill provides that a listed company shall only send a summary financial report to shareholders and relevant persons after it has ascertained their wishes and obtained their consent to do so. Shareholders and relevant persons may still ask for a full set of financial documents from the company even if they have elected to receive the summary financial report and have received it, subject to the request being made prior to the next general meeting. The company is required to send out the documents within 14 days upon receipt of the relevant notification.
I should also point out that under the Bill, a listed company would be considered to have fulfilled its legal requirement of sending a summary financial report if he published the report on its website and notified the shareholders and relevant persons who had agreed with this arrangement of such posting. This arrangement would also apply to the sending of the full set of financial documents. This proposal would further promote electronic communication between listed companies and their shareholders.
The above proposals are set out in the Companies (Amendment) Bill 2001. As regards the details of implementation, such as the contents of summary financial reports and how to ascertain the wishes of shareholders and relevant persons, they will be provided in the form of regulations after the Bill has been passed.
In other jurisdictions such as the United Kingdom, Australia and Singapore, listed companies are allowed to issue summary financial reports and the arrangement has been accepted by listed companies and shareholders alike.
Madam President, I hope that Members will support this Bill, which not only will bring convenience to shareholders and relevant persons, but will also be environmentally friendly.
End/Wednesday, June 6, 2001