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A public consultation paper on proposed amendments to the Securities and Futures Ordinance (SFO) which seek to give statutory backing to major listing requirements was released by the Financial Services and the Treasury Bureau (FSTB) today (January 7).
The proposed legislative amendments are based on the recommendations outlined in the Consultation Conclusions on Proposals to Enhance the Regulation of Listing published on March 26, 2004.
"Building on the overwhelming support for giving statutory backing to major listing requirements, we have come up with specific proposals on how the SFO might be amended to give these listing requirements the necessary enforcement teeth," the Secretary for Financial Services and the Treasury, Mr Frederick Ma, said.
"The proposal for legislative amendments is in line with the Government's commitment to enhance corporate governance standards, thereby upgrading the quality of our market and further strengthening investor confidence."
Major legislative proposals set out in the consultation paper are as follows:
* To provide that the Securities and Futures Commission (SFC) may make rules to prescribe listing requirements and ongoing obligations of listed companies under s.36 of the SFO;
* To extend the market misconduct regime in Parts XIII and XIV of the SFO to cover breaches of the statutory listing rules made by the SFC;
* To empower the Market Misconduct Tribunal (MMT) to impose, in addition to existing sanctions such as disqualification orders and disgorgement orders, new civil sanctions, namely public reprimands and civil fines, on the primary targets, i.e. issuers, directors and officers, for breaches of the statutory listing rules made by the SFC, and,
* To empower the SFC to impose civil sanctions, namely public reprimands, disqualification orders, disgorgement orders and civil fines, on the primary targets for breaches of the statutory listing rules made by the SFC under the amended Part IX of the SFO.
"Any breach of statutory listing requirements would not only hurt our investors, but also tarnish the reputation of our 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 enhance market quality," Mr Ma said.
He noted that the Government aimed at introducing the relevant Securities and Futures (Amendment) Bill into the Legislative Council within the 2004-05 legislative year.
In parallel, the SFC today would begin consultation on the proposed amendments to the Securities and Futures (Stock Market Listing) Rules to be made by the SFC under the amended SFO. The purpose of the proposed rule amendments is to codify in the statute important listing requirements, i.e. financial reporting and other periodic disclosure, disclosure of price-sensitive information and shareholders' approval for notifiable transactions.
With the proposed legislative changes, the existing dual filing system will be expanded accordingly. The SFC will be responsible for enforcing the statutory listing rules. The Stock Exchange of Hong Kong Limited (SEHK) will continue to receive listing applications at the frontline, and no securities will be listed on SEHK unless they are approved by the SEHK Listing Committee.
"We look forward to the continuing support by the SFC, the Hong Kong Exchanges and Clearing Limited and the market for the early introduction of the proposed legislative amendments to the Legislative Council, with a view to enhancing the effectiveness of the listing regime," Mr Ma said.
The Consultation Paper on Proposed Amendments to the Securities and Futures Ordinance to Give Statutory Backing to Major Listing Requirements is available on the website of FSTB at http://www.fstb.gov.hk/fsb. The consultation will last for two months.
Ends/Friday, January 7, 2005
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