The Bill extends to deposit-taking companies the audit requirements presently applicable only to banks. In particular, the Commissioner will have the power to appoint a second auditor for
deposit-taking companies.
Ownership and management
The third area relates to control on ownership and management.
Experience has shown that, for effective supervision of institutions, the supervisory authority must be able to ensure competence and integrity at the controlling level of ownership and management. The existing Ordinances are deficient in this respect. To remedy this deficiency and to accord with the common practice elsewhere two proposals are made. They apply only to institutions incorporated in Hong Kong: that is to say, 35 of the 150 banks, and the great majority - 301 of the deposit-taking
companies.
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First: after the commencement of the Bill, any person who,
individually or in concert with others, acquires shares which bring his holding to 10% or more of the voting shares of the institution, would need the Commissioner's approval before he is able to exercise his voting rights
in those acquired shares. As a sanction to support this requirement, all
resolutions of the institution made in reliance upon the unapproved voting
shares which could not otherwise have been made will be void, but the
right of third parties dealing with the institution in good faith will be
protected.
Second, after commencement, all appointments to director and company secretary posts of a local institution will be subject to the Commissioner's prior approval. Of course there is provision for appeal. The
Commissioner's control also extends to the "controller" - defined as one
who controls more than 50% of the voting shares of that institution or of