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HKEX with a view to introducing legislative amendments in the 2004-05 legislative year.
In December, the SFC consulted the public on an automatic levy triggering mechanism, under which the investor compensation levy provided under the SFO would be suspended if the net asset value of the Investor Compensation Fund reached $1.4 billion and would be reinstated if the net asset value fell below $1 billion.
Company Law and Corporate Governance Reform
The Standing Committee on Company Law Reform (SCCLR), established in 1984, meets regularly to consider amendments to the Companies Ordinance to ensure that it meets the changing needs of the business community. The Companies Registry provides secretariat support for the SCCLR.
The Overall Review of the Companies Ordinance by the SCCLR resulted in 62 recommendations for reform, including a mix of amendments to specific sections of the Companies Ordinance, topics which require further research and study, and major structural proposals such as rewriting and restructuring the Companies Ordinance. Virtually all the proposals regarding amendments to specific sections of the Ordinance have been included in the Companies (Amendment) Ordinance 2003, which was implemented in February 2004. Work on topics requiring further research and study has been undertaken either independently by the SCCLR or in the context of the SCCLR Corporate Governance Review which started in mid-2000 and ended in early 2004 following the issue of the Final Recommendations in January 2004. The aim of the Corporate Governance Review was to identify and bridge any gaps in Hong Kong's corporate governance regime, making it a benchmark in the region.
Major recommendations to enhance shareholders' remedies, including the introduction of a statutory derivative action, in the Review and a complete reform of Part XI of the Companies Ordinance regarding overseas companies have been included in the Companies (Amendment) Ordinance 2004, which was enacted in July 2004. The relevant amendments of the Ordinance were to be brought into operation in phases starting from December 2004.
The remaining corporate governance related recommendations of the SCCLR which require legislative amendments and the recommendations made by the Joint Government/ HKICPA Working Group (JWG), which is reviewing the accounting and auditing provisions of the Companies Ordinance, will be considered in future legislative amendment exercises. Consideration is also being given as to how the recommendation to rewrite and restructure the Companies Ordinance can best be taken forward. Corporate governance related recommendations which do not require legislative amendments have been or are being followed up by the relevant parties, such as HKEX and the HKICPA.
The HKEX issued the Consultation Conclusions on Proposed Amendments to the Listing Rules Relating to Initial Listing Criteria and Continuing Listing Obligations in January 2004. Key changes to the Listing Rules included introduction of alternative financial standards to profit requirement, waiver of the three-financial year trading