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3. Turning to the Futures market, Mr Hay Davison said that his recommendations had been implemented. There was a new President, a new Chief Executive and more stringent capital requirements. But the Futures market had effectively been killed off by the 1987 crash and was now stagnant. He did not believe it was of any further concern.
4.
He
Lord Caithness asked whether, in Mr Hay Davison's view, the Hong Kong stock exchange was now over-regulated. Mr Hay Davison said firmly that he did not believe so. assumed that the Minister's question had been prompted by Mr Henry Keswick's criticisms. These had been fully set out in a speech delivered to the Rotary Club on 16 October by Mr Terry, Mr Keswick's Legal Adviser. Mr Hay Davison had prepared a point-by-point rebuttal which he had urged Sir Piers Jacobs to incorporate in a speech. In general he thought that there was nothing surprising in Hong Kong companies seeking "foreign passports" in the form of domiciling elsewhere. Eighty four Hong Kong companies had done so. Nor were the Hong Kong authorities seeking to impose conditions on foreign domiciled companies. But if such companies sought listings on the Hong Kong stock exchange then they had to accept Hong Kong stock exchange rules. He thought that there was an area of ambiguity which the Hong Kong Government ought to clear up. The ambiguity lay in the fact that although stock exchange rules were not statutory, they were monitored by the Securities and Futures Commission which was a statutory body. Against this background he dealt with what he saw as Mr Keswick's main concerns:
i)
ii)
iii)
Disclosure of interests: the Hong Kong Government should make clear that disclosure of interest was a requirement of the stock exchange Council and not of the Companies Act (ie it was not a statutory requirement).
AGMS: Companies domiciled abroad were entitled to hold their AGMS where they liked. But the Hong Kong stock exchange was also entitled to insist that there should be an annual public meeting in Hong Kong to enable Hong Kong shareholders to question the Board of companies in which they invested.
Buyback: Legislation in several countries (including the UK and Bermuda) allows companies to buy back their own shares. Hong Kong law at present does not.
Mr Hay Davison had recommended in his report that Hong Kong should change its law in this respect.
/iv) Takeover