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The Financial Services & the Treasury Bureau and the Securities & Futures Commission have decided to put on hold the proposal to empower the latter to initiate a derivative action.
A consultation paper was released on May 27, with 31 submissions received. Twenty-one were from market regulators and operators, professional organisations and trade bodies, while others were from individuals or firms.
Seven supported the proposal, eight suggest it be held in abeyance for now, 12 were against it, and four did not express any preference.
The bureau said public comments have been considered carefully against the overall picture of the measures to enhance corporate governance.
Relevant ordinances kept under review
In view of the limited support for the proposal and the numerous reservations expressed by the vast majority of respondents, both the bureau and the commission have agreed to hold the proposal in abeyance, pending:
* the passage, enactment and implementation of provisions relating to shareholder remedies under the Companies (Amendment) Bill 2003, being scrutinised by the Legislative Council;
* the accumulation of further experience in implementing the Securities & Futures Ordinance which has enhanced the commission's powers in protecting shareholder interests; and,
* the conclusion of the Civil Justice Reform.
The bureau said the implementation of the ordinance and improvements to the Companies Ordinance will be kept under review in light of market needs and public comments.
Appropriate measures to enhance investor protection and facilitate market development will also be sought.
Investor education boosts understanding
The commission will continue its efforts in investor education to enhance understanding of corporate activities and of their rights as shareholders.
Minority shareholders will be encouraged to participate more actively in the way companies are run through the exercise of their voting rights at general meetings.
In the event that the provisions of the Companies (Amendment) Bill 2003 relating to shareholder remedies are enacted, the commission will play its part in increasing investor awareness of their new statutory rights of redress as aggrieved shareholders.
For details of the consultation conclusions, click here.
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