An independent panel of inquiry has been appointed by the Financial Secretary, Mr Antony Leung, to look into the circumstances leading to the recent penny stocks incident.
Announcing his decision today (July 31), Mr Leung said the non-statutory panel would also look into the arrangements for preparation and release of a consultation paper relating to delisting mechanism made public by the Hong Kong Exchanges and Clearing Limited (HKEx) last Thursday (July 25).
"The panel's review of the arrangements for the release and preparation of the consultation paper will be made in the light of its examination of existing procedures for the preparation and making of new or amended HKEx rules and regulations, including the process of consultation with the trade and the public.
"In addition, the panel will recommend measures for improvement and submit a report to me before September 10," Mr Leung said.
The independent panel comprises two members - Mr Robert Kotewall, a Senior Counsel in private practice, and Mr Gordon C K Kwong, the Executive Director and Vice President of Cosco (Hong Kong) Group Limited. Both Mr Kotewall and Mr Kwong have extensive experience serving various governance and advisory bodies relating to the financial services industry.
"The Government is fully aware of public concern over the matter and that is why I would like a panel comprising independent members to review the case and see what lessons can be learnt. The Government has been monitoring developments closely and has been in close liaison with the Securities and Futures Commission (SFC) and HKEx in taking prompt measures to address the anxiety of the market.
"After receiving the report from the panel, the Administration will brief the Legislative Council Panel on Financial Affairs," Mr Leung said.
He went on to explain that investigation by the inquiry panel had the advantage of being able to take forward the inquiry in a speedy manner, so that any recommendations could be taken into account in preparation and making of other HKEx rules and regulations as early as possible, including the revised consultation document on delisting to be issued in October this year.
In contrast, a statutory Commission of Inquiry as suggested by some legislators will follow procedures similar to legal proceedings. Investigations and drawing up of recommendations will become a long drawn out process.
Following is some background data on the experience of Mr Kotewall and Mr Kwong relevant to the financial services field:
Mr Gordon C K Kwong has served various governance bodies of HKEx and the former Stock Exchange of Hong Kong (SEHK). He is a member of the Disciplinary Appeals Committee of the HKEx, and served as a Council Member of the SEHK in 1992-1997. He was the Chairman of the Listing Committee of the SEHK in 1995-1997 and Chairman of the Compliance Committee in 1993-1995.
Mr Robert Kotewall has served different positions in various governance and advisory bodies relating to the financial services industry, including non-executive director of the SFC (1993-1998), member of the Process Review Panel for the SFC (2000-2002), member of the Banking Advisory Committee (1996-1999) and member of the Standing Committee on Company Law Reform (1990-2000).
Following is the terms of reference of the panel of inquiry :
(a) To examine the established procedures for preparation and making of new or amended HKEx rules and regulations, including the process of consultation with the trade and the public;
(b) Having regard to the findings in (a), to review arrangements for preparation and release of the Consultation Paper on Proposed Amendments to the Listing Rules relating to Initial Listing and Continuing Listing Eligibility and Cancellation of Listing Procedures;
(c) To make recommendations as to the measures to be adopted to improve the coordination in and procedures for preparation and making of similar rules and regulations in future, including the process of consultation with the trade and the public; and
(d) To submit a report with conclusions and recommendations to the Financial Secretary by September 10, 2002.
End/ Wednesday, July 31, 2002