The initiative to update the prospectus regulatory regime has received broad public support, according to consultation conclusions on Proposed Amendments to the Companies Ordinance to facilitate Offers of Shares & Debentures released today.

Sixteen submissions were received from financial institutions, professional bodies, market practitioners and organisations representing investors on proposals related to the amendments to the Companies Ordinance contained in the joint consultation paper published in March.

The submissions helped shape the Companies (Amendment) Bill 2003 tabled at the Legislative Council on June 25.

The major legislative proposals to update the prospectus regime include:

* excluding from the prospectus regime offering documentation related to specific types of offers - such as small-scale offers, offers to "professional investors" and offers to not more than 50 people;

* allowing more flexible operation of the prospectus regime by providing the Securities & Futures Commission with an additional criterion to grant exemptions from full compliance with certain prospectus requirements - that the exemption would not be prejudicial to the interests of the investing public; and,

* providing a statutory basis for proposals to permit awareness advertisements and to introduce an alternative "dual prospectus" structure to facilitate "programme" offers, as originally spelled out in guidelines issued by the commission in February.

The amendments are the second of a three-phase exercise designed to facilitate market development by overhauling the existing regulatory framework for offers of shares and debentures.

Under phase one, the commission in February issued three guidelines permitting awareness advertisements, an alternative dual prospectus structure, and relaxation of procedural requirements for registration of prospectuses. It also issued two class exemptions related to prospectuses for offers of debentures.

Phase three will involve a comprehensive review of the securities offering regime.

Secretary for Financial Services & the Treasury Frederick Ma said the Government is pleased facilitative measures implemented in phase one are bearing fruit.

A number of companies have tapped the procedural relaxation and issued retail bonds under the new guidelines promulgated in February and the class exemption notice which came into effect in May.

"We believe the phase two measures, if implemented, will further boost the development of the bond market," Mr Ma said.

Since the commission issued its guidelines on the dual prospectus structure in February, five issuers have taken advantage of the guidelines to launch "programme" debenture offers. Two of the issuers made further debenture issues on the basis of their initial programme prospectuses.

The bill is under LegCo scrutiny. Examination of prospectus-related amendments is nearing completion.

The consultation conclusions are available on the Financial Services & the Treasury Bureau website and the commission's website.