For decision on
22 October 1991
CONFIDENTIAL
the 100/1
XCC(91)151 Copy No. 3
MEMORANDUM FOR EXECUTIVE COUNCIL
The Stock Exchanges Unification Ordinance (Chapter 361)
THE STOCK EXCHANGES UNIFICATION (AMENDMENT) BILL 1991
M
33
подок Mr Fey
To
:carice.
ра
SEHK.
fete pre-
رے
20
%
THE PROBLEM
(a) Proxies
Abuses of the proxy voting system have become increasingly evident in elections of the governing body (the Council) of the Stock Exchange of Hong Kong Ltd. (SEHK) and need to be removed as they have contributed to the emergence of a group of Council members who are able to secure a dominating influence on Council decisions and SEHK policy and who use such influence to advance particular group interests without proper regard to the general interests of market users and the investing public as a whole.
(b) Public Duty of the SEHK
2
Although the SEHK is a statutory monopoly and is funded by a statutory levy on investors, there is at present no clear obligation in legislation requiring SEHK to act in the public interest or the interest of investors, or to maintain a fair and orderly market as in the case in other jurisdictions. This legislative gap undermines effective self-regulation by SEHK in the interests of investors and the public and needs to be closed.
RECOMMENDATION AND ADVICE SOUGHT
3
It is recommended that the Stock Exchanges Unification (Amendment) Bill 1991 (Annex) should be introduced into the Legislative Council. The Bill aims at restricting the use of proxies and imposing public duty functions upon SEHK.
Executive Council