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The Government will publish the Securities and Futures (Amendment) Bill 2011 in Gazette on Friday (June 24).
The Bill will be introduced into the Legislative Council on June 29. Its main objectives are to oblige listed corporations to disclose price sensitive information (PSI), to allow the Securities and Futures Commission (SFC) to institute proceedings before the Market Misconduct Tribunal (MMT), and to enable the SFC to establish an Investor Education Council (IEC).
A spokesman for the Financial Services and the Treasury Bureau said today (June 22), "A civil statutory PSI disclosure regime will help promote a continuous disclosure culture among listed corporations to enhance market transparency and quality, to bring our regulatory regime for listed corporations more in line with other international financial centres, and to enhance Hong Kong's strength as a premier capital formation platform."
Under the Bill, a listed corporation is required to disclose PSI as soon as reasonably practicable after it has become aware of the information. If a listed corporation has breached the disclosure requirement, an "officer" will also be in breach if the corporation's breach is a result of his intentional, reckless or negligent conduct; or he has not taken all reasonable measures to ensure that proper safeguards exist to prevent the breach. An example of such safeguards is the establishment of internal control systems in his listed corporations.
In defining PSI, the Bill proposes borrowing the concept of "relevant information" currently used in the "insider dealing" regime in the Securities and Futures Ordinance (SFO). In other words, PSI will be the same set of information currently prohibited from being used for dealing in the securities of the listed corporation concerned. This approach is similar to the practice adopted by the United Kingdom and other member states of the European Union.
"To strike a reasonable balance between ensuring market transparency and safeguarding the legitimate interests of listed corporations in preserving certain information in confidence to facilitate their operation and business development, the Bill will provide specified safe harbours," the spokesman explained.
The Bill proposes imposing civil sanctions on listed corporations and their "officers" if they breach the statutory PSI disclosure requirement, and that alleged breaches be handled by the MMT. The SFC will enforce the statutory regime with its existing investigatory powers.
The specified safe harbours and civil sanctions are set out in Annexes 1 and 2 respectively.
The Bill proposes empowering the SFC to institute proceedings before the MMT directly in respect of PSI cases. "This will allow for a streamlined process to enforce the statutory PSI disclosure requirement," the spokesman said.
In addition, for the existing six types of market misconduct stipulated in the SFO, the Bill also proposes that the SFC can institute proceedings before the MMT directly, subject to the consent of the Secretary for Justice. "This is to ensure the primacy of criminal prosecution, as these acts of market misconduct are currently subject to two alternative and mutually exclusive civil and criminal routes," he added.
The proposed establishment of a cross-sector IEC as a wholly owned subsidiary of the SFC aims to improve the financial literacy and capability of the general public and to assist them in making better financial decisions.
The Financial Services and the Treasury Bureau conducted public consultation exercises last year on the proposed statutory obligation to disclose PSI and the proposed IEC respectively. Respondents and the Legislative Council Panel on Financial Affairs generally supported the proposals.
Ends/Wednesday, June 22, 2011
Issued at HKT 12:01
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