The Financial Services & the Treasury Bureau has launched a two-month consultation on proposals to amend the Securities & Futures Ordinance to give statutory backing to major listing requirements, Secretary for Financial Services & the Treasury Frederick Ma says.

The proposed amendments are based on the recommendations outlined in the Consultation Conclusions on Proposals to Enhance the Regulation of Listing published on March 26 last year.

"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," Mr Ma said.

Major legislative proposals

*To provide that the Securities & Futures Commission may make rules to prescribe listing requirements and ongoing obligations of listed companies under s.36 of the ordinance;

*To extend the market misconduct regime in Parts XIII and XIV of the ordinance to cover breaches of the statutory listing rules made by the commission;

*To empower the Market Misconduct Tribunal 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, including issuers, directors and officers, for breaches of the statutory listing rules; and

*To empower the commission 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 under the amended Part IX of the ordinance.

"Any breach of statutory listing requirements would not only hurt our investors, but also tarnish the reputation of our market," Mr Ma said. 

"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."

He hoped the relevant Securities & Futures (Amendment) Bill will be introduced into the Legislative Council within the 2004-05 legislative year.

The commission today launched a consultation on the proposed amendments to the Securities & Futures (Stock Market Listing) Rules to be made under the amended ordinance.

Consultation on listing rules starts

The purpose of the proposed rule amendments is to codify in the statute important listing requirements, such as 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 commission will be responsible for enforcing the statutory listing rules, while the Stock Exchange of Hong Kong Limited will continue to receive listing applications at the frontline, and no securities will be listed unless they are approved by the Stock Exchange's listing committee.

"We look forward to the continuing support by the commission, the Hong Kong Exchanges & 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.