to purchase the company's own shares could be directly used to
facilitate 'de-mergers'. At the most it might provide an outlet
for surplus cash alternative to further take-overs and, when a company
hd hived-off part of its undertaking by a sale, provide it with
an alternative method of distributing the proceeds of sale to its
shareholders. As for (h) (the possibility of operating through Mutual
Fund companies rather than Unit Trusts) at the time of the Jenkins Committee
the unit trust managers showed a marked lack of interest and enthusiasm
for any such innovation. Whether that is still the view of the industry
is questionable."
1.10
Members were of the opinion that there were not the same
pressures to allow listed companies in Hong Kong to purchase their
own shares because, unlike their counterparts in Britain, they could
distribute reserves as dividends without incurring serious tax problems.
We recognised, however, that some directors were reluctant to take
advantage of this situation because they remembered uninformed public
criticism of companies which had made large distributions of reserves
as dividends in the past.
1.11
Members were concerned about the possibility of a power
for listed companies to purchase their own shares being abused to
manipulate the market prices of these shares. We noted that such
companies already had the power in Britain and the United States and
accepted the argument that since Hong Kong was moving towards international
standards in the securities field, listed companies here should have the
same power, provided that there were sufficient safeguards to prevent
its abuse. We considered, however, that there would not be sufficient
safeguards until there was satisfactory legislation in Hong Kong dealing
with
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