1 HONG KONG LEGISLATIVE COUNCIL -- 25 July 1990 HONG KONG LEGISLATIVE COUNCIL -- 25 July 1990 1
OFFICIAL REPORT OF PROCEEDINGS
Wednesday, 25 July 1990
The Council met at half-past Two o'clock
PRESENT
HIS EXCELLENCY THE GOVERNOR (PRESIDENT)
SIR DAVID CLIVE WILSON, K.C.M.G.
THE CHIEF SECRETARY
THE HONOURABLE SIR DAVID ROBERT FORD, K.B.E., L.V.O., J.P.
THE FINANCIAL SECRETARY
THE HONOURABLE DAVID ALAN CHALLONER NENDICK, C.B.E., J.P.
THE ATTORNEY GENERAL
THE HONOURABLE JEREMY FELL MATHEWS, C.M.G., J.P. THE HONOURABLE ALLEN LEE PENG-FEI, C.B.E., J.P. THE HONOURABLE STEPHEN CHEONG KAM-CHUEN, C.B.E., J.P. THE HONOURABLE CHEUNG YAN-LUNG, O.B.E., J.P.
THE HONOURABLE MRS. SELINA CHOW LIANG SHUK-YEE, O.B.E., J.P. THE HONOURABLE MARIA TAM WAI-CHU, C.B.E., J.P.
DR. THE HONOURABLE HENRIETTA IP MAN-HING, O.B.E., J.P. THE HONOURABLE CHAN YING-LUN, O.B.E., J.P. THE HONOURABLE MRS. RITA FAN HSU LAI-TAI, O.B.E., J.P. THE HONOURABLE PETER POON WING-CHEUNG, O.B.E., J.P. THE HONOURABLE CHENG HON-KWAN, O.B.E., J.P. THE HONOURABLE CHUNG PUI-LAM, J.P.
THE HONOURABLE HO SAI-CHU, O.B.E., J.P.
THE HONOURABLE HUI YIN-FAT, O.B.E., J.P.
THE HONOURABLE MARTIN LEE CHU-MING, Q.C., J.P. THE HONOURABLE DAVID LI KWOK-PO, J.P.
THE HONOURABLE NGAI SHIU-KIT, O.B.E., J.P. THE HONOURABLE PANG CHUN-HOI, M.B.E.
THE HONOURABLE SZETO WAH
THE HONOURABLE TAI CHIN-WAH, J.P.
THE HONOURABLE TAM YIU-CHUNG
THE HONOURABLE ANDREW WONG WANG-FAT, J.P. THE HONOURABLE LAU WONG-FAT, O.B.E., J.P.
THE HONOURABLE GRAHAM BARNES, C.B.E., J.P. SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS
THE HONOURABLE MICHAEL LEUNG MAN-KIN, J.P. SECRETARY FOR TRANSPORT
THE HONOURABLE EDWARD HO SING-TIN, J.P. THE HONOURABLE MARTIN GILBERT BARROW, O.B.E. THE HONOURABLE PAUL CHENG MING-FUN THE HONOURABLE MICHAEL CHENG TAK-KIN, J.P. THE HONOURABLE DAVID CHEUNG CHI-KONG, J.P. THE HONOURABLE RONALD CHOW MEI-TAK THE HONOURABLE MRS. PEGGY LAM, M.B.E., J.P. THE HONOURABLE DANIEL LAM WAI-KEUNG, J.P. THE HONOURABLE MRS. MIRIAM LAU KIN-YEE DR. THE HONOURABLE LEONG CHE-HUNG THE HONOURABLE LEUNG WAI-TUNG, J.P. THE HONOURABLE KINGSLEY SIT HO-YIN THE HONOURABLE MRS. SO CHAU YIM-PING, J.P. THE HONOURABLE JAMES TIEN PEI-CHUN, J.P. THE HONOURABLE MRS. ELSIE TU, C.B.E. THE HONOURABLE PETER WONG HONG-YUEN, J.P.
THE HONOURABLE YEUNG KAI-YIN, J.P. SECRETARY FOR EDUCATION AND MANPOWER
THE HONOURABLE MRS. ANSON CHAN, J.P.
SECRETARY FOR ECONOMIC SERVICES
THE HONOURABLE MRS. ELIZABETH WONG CHIEN CHI-LIEN, I.S.O., J.P. SECRETARY FOR HEALTH AND WELFARE
THE HONOURABLE ALISTAIR PETER ASPREY, O.B.E., A.E., J.P. SECRETARY FOR SECURITY
ABSENT
THE HONOURABLE POON CHI-FAI, J.P.
PROF. THE HONOURABLE POON CHUNG-KWONG, J.P.
THE HONOURABLE MRS. ROSANNA TAM WONG YICK-MING, O.B.E., J.P. DR. THE HONOURABLE DANIEL TSE, O.B.E., J.P.
THE HONOURABLE RONALD JOSEPH ARCULLI, J.P.
THE HONOURABLE MRS. NELLIE FONG WONG KUT-MAN, J.P. THE HONOURABLE LAU WAH-SUM, J.P.
THE HONOURABLE JAMES DAVID McGREGOR, O.B.E., I.S.O., J.P.
THE HONOURABLE PETER TSAO KWANG-YUNG, C.B.E., C.P.M., J.P. SECRETARY FOR HOME AFFAIRS
IN ATTENDANCE
THE CLERK TO THE LEGISLATIVE COUNCIL
MR. LAW KAM-SANG
Papers
The following papers were laid on the table pursuant to Standing Order 14(2): Subject
Subsidiary Legislation L.N. No.
Commissioner for Administrative Complaints Ordinance
Commissioner for Administrative Complaints
Ordinance (Amendment of Schedule 1)
Order
1990..................................................................... 236/90
Hong Kong Royal Instructions 1917 to 1988 Standing Orders of the Legislative Council of Hong Kong
Ending of 1989/90
Session................................................ 238/90
Marine Fish Culture Ordinance Fish Culture Zone (Designation) (Amendment) Order
1990................................................. 239/90
Public Health and Municipal Services Ordinance
Public Health and Municipal Services (Civic Centres) (Amendment of Thirteenth Schedule)
Order
1990...................................................................... 240/90
Registration of Persons Ordinance Registration of Persons (Application for New Identity Cards) (No. 12) Order 1990.......................................................... 241/90
Public Health and Municipal Services Ordinance
Abattoirs (Urban Council) (Amendment) By-Laws
1990.............................................. 242/90
Public Health and Municipal Services Ordinance
Hawker (Urban Council) (Amendment) By-Laws 1990......... 243/90
Public Health and Municipal Services Ordinance
Pleasure Grounds (Urban Council) (Amendment) (No. 2) Bylaws 1990...................................... 244/90
Road Traffic (Public Service Vehicles) (Amendment) (No. 4)
Regulations 1989
Road Traffic (Public Service Vehicles) (Amendment) (No. 4) Regulations 1989 (Commencement) Notice
1990............................................. 245/90
Pleasure Grounds (Regional Council) (Amendment) By-Laws 1990
Corrigendum................................................................. .... 246/90
Sessional Papers 1989/90
No. 89 -- Kadoorie Agricultural Aid Loan Fund Report for the period 1st April 1989 to 31st March 1990
No. 90 -- J.E. Joseph Trust Fund Report for the period 1st April 1989 to 31st March 1990
No. 91 -- Report on the Administration of the Immigration Service Welfare Fund prepared by the Director of Immigration from 1 April 1989 to 31 March 1990
No. 92 -- Traffic Accident Victims Assistance Fund Annual Report for the year from 1st April 1988 to 31st March 1989
No. 93 -- The Second Annual Report of the Commissioner for Administrative Complaints
Hong Kong June 1990
No. 94 -- Report of the Antiquities Advisory Board 1988 and 1989
No. 95 -- Securities and Futures Commission
Annual Report 1989
Addresses by Members
Report of the Antiquities Advisory Board 1988 and 1989
MR. EDWARD HO: Sir, on behalf of the Antiquities Advisory Board, I table the Board's Biennial Report for 1988 and 1989.
The Antiquities Advisory Board was appointed by you, Sir, under the Antiquities and Monuments Ordinance, to advise on any matters referred to it relating to antiquities, proposed monuments or monuments. This is the eighth report of the Board since the Ordinance was enacted in 1976, and it deals with the years 1988 and 1989.
Many people are surprised when they learn how much remains to remind us of the story of human settlement in and around Hong Kong. Historical relics range from the sites of prehistoric settlement over 6 000 years old, to buildings erected less than 60 years ago, displaying architectural features which have all but disappeared from our concrete jungle.
Since 1976, the Antiquities Advisory Board has played its part in conserving this heritage by advising on which sites and structures merit declaration as protected monuments. Although our report sets out in detail what has been achieved in 1988 and 1989, I would like to highlight a few of the major points, such as the declaration of seven monuments in those two years, including the Kun Lung Gate House in Fanling, the Yeung Hau Kung in Yuen Long and the Flagstaff House and the former French Mission Building in Central. The Board has also expanded its work to grade various types of historic buildings, to increase education and publicity work, and to systematize reporting on archaeological excavations.
These achievements would not have been possible without the hard work and dedication of members of both the Board and its committees, and the support of the Secretary for Recreation and Culture, all officers of the Antiquities and Monuments
Office and Architectural Services Department. I should also like to express the gratitude of the Board to the Royal Hong Kong Jockey Club, whose generous support made possible restoration work at Tai Fu Tai in San Tin, and the Kun Ting Study Hall in Yuen Long.
Sir, despite the inevitable disappointments when parts of Hong Kong's heritage are swept away by development, the Board remains committed to playing its part in preserving for the community these tangible reminders of our history and traditions.
Securities and Futures Commission
Annual Report 1989
FINANCIAL SECRETARY: Sir, in accordance with Sections 12 and 16(2) of the Securities and Futures Commission Ordinance, I now table for Members' information the annual report, auditors' report and statement of accounts of the Securities and Futures Commission for the period from its establishment on 1 May 1989 to 31 March 1990. The Report describes the objectives, functions and structure of the Commission. It also covers many of the operational matters which arose during the year and the principal policy issues addressed by the Commission.
Members will recall the circumstances which led to the establishment of the Securities Review Committee in 1987, the publication of its report in 1988 and presentation of the Securities and Futures Commission Bill in early 1989, which generated considerable debate and was passed by this Council in April 1989.
Much has been achieved in a relatively short period of time and the value of the reforms we have introduced was amply demonstrated last year when our markets withstood the shock of the events in Beijing well. This was in marked contrast to what had happened in October 1987.
I recognize that there may still be those who fear that we are moving in the direction of over-regulation but let me once again reiterate that this is not the case. Our philosophy is, and will continue to be, that we only intervene in the workings of the market place where this is necessary either in the interests of the integrity of the system as a whole or of important parts of it or to protect
non-professional participants. We are as concerned as any that our markets are not stifled by a plethora of rules and regulations, but we must equally ensure that
ordinary investors, both local and international, receive an adequate degree of protection from exploitation. I believe that we have currently got the balance about right.
It often fails to be recognized that the voice of the ordinary investor is seldom heard in Hong Kong unless things go seriously wrong. This is mainly because only a small proportion of shares here are held by locally based institutional investors such as insurance companies and pension funds. Elsewhere, such institutions often have substantial voting power and, in protecting their own interests, they can in effect act as watchdogs for the whole community. As this is not the case in Hong Kong, it is largely left to the Government to protect the interests of ordinary
shareholders. Nevertheless, we shall continue to exercise this role with sensitivity and good common sense and to encourage the development of self regulation wherever this is possible and practicable.
Sir, the Securities and Futures Commission has had a fairly rough ride in its first year or so of operation but I firmly believe that the tasks it is undertaking are essential for the long-term welfare of Hong Kong's financial markets and that it therefore deserves our full support.
Oral answers to questions
Medical and health services on Lantau Island
1. MR. LAM asked (in Cantonese): In view of the impending closure of the South Lantau Hospital, will Government inform this Council what medical facilities are being planned to meet the needs of Lantau residents and holiday makers, and workers who sustain injuries during the construction of the Chek Lap Kok Airport?
SECRETARY FOR HEALTH AND WELFARE: Sir, South Lantau Hospital in Cheung Sha at present has 15 in-patient beds and provides an Accident and Emergency (A&E), a General Out-patient (GOP), dental, and a travelling dispensary service. Arrangements are in hand to ensure an adequate level of medical and health services on Lantau Island upon the impending closure of the Hospital. Services in Mui Wo will be enhanced to include A&E and GOP services at the reprovisioned Mui Wo Dispensary due for completion by the end of this year. In-patient maternity cases will be catered for at Tai O
Jockey Club Clinic. Additionally, the clinic provides an A&E as well as a GOP service. The two clinics at Tai O and Mui Wo will be able to absorb the A&E and the GOP workload previously undertaken by the South Lantau Hospital. Furthermore, a visiting clinic providing GOP service three days a week is operated at Tung Chung Clinic.
For complicated cases which require more specialized treatment and possible hospital admission, the patients would be transported for further management via launches or helicopters as appropriate to Queen Mary Hospital, Tuen Mun Hospital or Princess Margaret Hospital.
The dental service at South Lantau Hospital currently provides treatment to civil servants and their dependants, and emergency dental treatment for the general public. This can be absorbed by the dental service at Tai O Clinic and St John Hospital on Cheung Chau.
The travelling dispensary will be retained to provide service to the more remote parts of the island.
The services described above should be adequate to cater for the needs of Lantau residents and holiday makers, and workers who sustain injuries during the construction of the future Chek Lap Kok Airport.
MR. LAM (in Cantonese): The past attendance level at the South Lantau Hospital is considered to be low. In fact, this is due to inadequacies of facilities of the hospital. Will the Government consider increasing the facilities of the hospital and continuing its service for a period of time before undertaking a review on its closure?
SECRETARY FOR HEALTH AND WELFARE: Sir, medical technologies have progressed very significantly since 1960 when the South Lantau Hospital first came into service. It is no longer possible to equip a simple 15-bed facility -- which is hardly used -- with all the necessary medical equipment and support services. It is not cost
effective and the demand for such services clearly, as illustrated in the past and present, does not justify the drastic improvement measures which are not possible at that site.
MR. LAU WONG-FAT (in Cantonese): Sir, will the Administration inform this Council of the circumstances under which the authorities concerned will consider establishing a hospital on Lantau Island again?
SECRETARY FOR HEALTH AND WELFARE: Sir, I think first of all I should explain that the decision to close South Lantau Hospital was made after much soul searching. Indeed, we are very sensitive to the views expressed by honourable friends here in this Council and also local leaders who have asked similar legitimate questions and whose views have been most sympathetically considered. However, the fact is that, because of the demographic spread of the population on Lantau Island, the hospital has been over the years under-utilized and sub-standard and the staff need to be redeployed elsewhere. Like all other places in Hong Kong, there are always developments. I need to assure Members of this Council, in response to the question by my honourable friend, Mr. LAU, that the need for expansion of existing services or provision of new services in Lantau, in the light of the new airport and other developments, will be reviewed and fresh requirements will be borne in mind in our service planning.
DR. LEONG: Sir, can the Secretary inform this Council of the financial savings attained by closing the South Lantau Hospital?
SECRETARY FOR HEALTH AND WELFARE: In fact the object of the exercise is not really to achieve savings as such; therefore I must emphasize that cutting down on running costs is not our only or major reason for closing South Lantau Hospital. The greater consideration is to achieve better cost-effectiveness in the delivery of medical and health services for the whole of Lantau and to enable scarce professional manpower to be redeployed to areas where they are most needed.
MR. CHOW: Sir, the South Lantau Hospital, Mui Wo Dispensary and Tai O Jockey Club Clinic should have different roles to play as differentiated by their names. Could the Secretary enlighten me on this point and inform the Council whether the Mui Wo Dispensary and Tai O Jockey Club Clinic can really be substitutes for the South Lantau Hospital?
SECRETARY FOR HEALTH AND WELFARE: This is a very interesting question. In fact it is a very important question to answer because in a way "South Lantau Hospital" is a misnomer. It was built in the 1960s when conditions were much more rudimentary than now. It has only 15 in-patient beds and I do not think it even has an X-ray machine. So it is hardly a hospital and cannot be compared with other hospitals. But the Mui Wo Dispensary in fact will be reprovisioned to the standard of a clinic.
HIS EXCELLENCY THE PRESIDENT: I have the names of two more Members who wish to ask supplementary questions. I will draw the line at that point. I might point out to Members that this afternoon looks like being a long sitting. There are many Members who wish to speak on a number of Bills and I will try to limit Question Time to
approximately an hour, in the interests of Members themselves.
MR. CHEUNG YAN-LUNG (in Cantonese): Will the Secretary inform this Council how the Government will assist those pregnant women in Tung Chung who have to go to Tai O for delivery when night transport is hard to get?
SECRETARY FOR HEALTH AND WELFARE: I think we are talking about a different locality. The intention is on the closure of the South Lantau Hospital, -- in fact, before it is closed, -- we need to revamp and enhance the facility at Mui Wo, which, it is intended, will have an A&E facility to cater for most cases of minor injuries. But for maternity cases, where advance notice can be given, suitable arrangements will be made as appropriate.
DR. LEONG: Sir, could the Administration inform this Council whether there are any plans or whether there is any need for a full-scale hospital in south Lantau in the light of the possible emergencies that may arise from the airport and the high-speed approach roads, considering that the airport may well be opened by 1997?
SECRETARY FOR HEALTH AND WELFARE: I think the current population of the entire island is about 20 000 people, with 3 000 living in South Lantau -- of course that does not include the holiday weekend visitors. With only 15 in-patient beds, the South Lantau
Hospital is currently too small to have any significant development potential, as I explained earlier. In line with modern advancement in medical technology, a standard acute general hospital would need to have about 500 beds with various specialist services so as to be functionally and economically viable. Upgrading the South Lantau Hospital or establishing another hospital would involve consideration of factors like cost-effectiveness and justification for any establishment of hospital in our planning process.
New Territories taxis
2. MR. DAVID CHEUNG asked: In view of the rapid urbanization of the New Territories in the past decade, will Government inform this Council whether it will consider removing the distinction between urban and rural taxis so that Hong Kong has one type of taxi to serve the entire territory?
SECRETARY FOR TRANSPORT: Sir, the Government has no intention to remove the distinction between urban and New Territories (NT) taxis in the foreseeable future, but their operating boundaries will be kept under review.
New Territories taxis were first introduced in 1976 to serve residents living in remote or rural areas of the New Territories not adequately served by other forms of public transport, as well as to combat illegal "pak pai" or hired-car activities prevalent at that time. NT taxi operating boundaries were specifically drawn up to prevent their penetration into the urban areas.
To remove the distinction between urban and NT taxis will encourage the latter to operate in the more lucrative urban areas and population centres, thereby depriving New Territories residents in the remote or rural areas of a much needed service, and defeating the very objective of NT taxis. It would aggravate the traffic congestion problem in the new town centres and urban areas, and could also result in the revival of illegal "pak pai" activities.
A recent survey conducted by the Transport Department indicated a strong demand for NT taxi services in the rural areas where public transport services are inadequate. There is, therefore, a continuing need to maintain an acceptable level of NT taxi services, and it is the Government's policy to maintain the two categories of taxis
and keep them separate within well-defined geographical boundaries.
This does not mean, however, that the situation is static or that we are not responsive to changing needs. In recent years, the operating boundaries of NT taxis have been reviewed and, where appropriate, adjusted to take account of changing circumstances such as the opening of new roads, major changes in land use, the adequacy of public transport services and other factors affecting travel demand. This practice will continue.
MR. DAVID CHEUNG: Sir, will the Secretary inform the Council whether the rapid urbanization of the New Territories has greatly minimized the need for NT taxis serving the so-called remote and rural areas? Will the maxicabs serve that particular function?
SECRETARY FOR TRANSPORT: Sir, the rural population at present is over 1 million. This is a very sizeable population to serve, particularly in the remote parts of Yuen Long, Tai Po and North District. As regards maxicabs, the Department did try very hard to promote such service along some of the routes in the remote areas but operators of green minibuses are not very interested in it and there has not been much success in inviting people to operate those routes. So eventually we have to come to a view that NT taxis have still to maintain their role to serve the rural and remote areas of the New Territories.
MR. TAI: Sir, in view of the increasing need for NT taxis and bearing in mind the responsiveness of the Transport Department, may I ask why it takes so long for the Department to come to a decision regarding intra-NT transportation such as transportation services through the new Shing Mun Tunnels between Sha Tin and Tsuen Wan?
SECRETARY FOR TRANSPORT: I assume Mr. TAI refers to the Route 5 connections. A review has been completed by the Department and we are about to consult district boards and the trades concerned, including the urban and the New Territories taxi groups, both of which have very strong views on particular arrangements. We intend to consult very carefully before we put the matter to the Transport Advisory Committee. We will
then come up with a recommendation as soon as possible.
MR. DAVID CHEUNG: Sir, in his reply the Secretary has mentioned that the operating boundaries of NT taxis have been reviewed. Will the Secretary inform this Council whether there has been any review of the operating boundaries of the urban taxis?
SECRETARY FOR TRANSPORT: No, Sir. The urban taxis serve the entire territory and this has always been our policy. As regards the NT taxis, there have of course been some minor changes in the last four to five years, mainly to adjust to the needs of interchanges such as MTR stations and so on. This practice will continue, as I said earlier on.
Remuneration of directors of listed companies
3. MR. CHUNG asked (in Cantonese): The directors of certain listed companies are paid fees disproportionate to the profits of the company to the disadvantage of the shareholders. Will the Government inform this Council whether criteria for the payment of directors' fees in a listed company can be laid down to protect the interests of small shareholders and to maintain the image of Hong Kong as an international financial centre?
FINANCIAL SECRETARY: Sir, there is no statutory control over the payment of directors' fees for either listed or unlisted companies. The payment of directors' fees is regulated by a company's Memorandum and Articles of Association. The Articles usually provide for the company to determine the remuneration of directors in general meeting. Members of a company are considered in the best position to determine and approve the quantum of directors' fees as their interests are directly involved.
Any remuneration payable to the directors must be made public by disclosure in the company's annual accounts under section 161 of the Companies Ordinance. Failure to take reasonable steps to comply carries criminal penalties including a fine of $10,000 and six months imprisonment. There would be significant practical
difficulties were one to seek to lay down specific criteria for the payment of such fees as many of the factors which should be taken into account in determining what
is reasonable remuneration are highly subjective and difficult to measure, for instance, the calibre and performance of particular directors. Even the performance of the company itself, which is another important factor, must be judged within the economic environment faced by the company. It is, however, open to any member of a company who considers that the affairs of a company are being conducted in a manner unfairly prejudicial to the interests of some part of the members (including himself) to petition to the court for an order under section 168A of the Companies Ordinance. The court may make an order restraining the payment or such other order as it thinks fit.
MR. CHUNG (in Cantonese): Sir, the Secretary has mentioned in paragraph 2 of his main reply that any remuneration payable to the directors must be made public by disclosure in the company's annual accounts. But this, in my view, is only an after-the-event disclosure. Will the Secretary consider requiring, mandatorily or otherwise, a listed company to set out in the annual accounts its prescribed criteria for the payment of directors' fees for the following year, or to assign a fixed percentage share of the company's profits as remuneration for directors so that shareholders or investors can, after making allowance for the directors' remuneration, make a fair and reasonable assessment as to the net profit, dividend yield and investment value of the company?
FINANCIAL SECRETARY: Sir, I have already pointed to the difficulties of arriving at any objective criteria for determining what are or are not reasonable means of remunerating directors. I will certainly look at this particular suggestion but I do not hold out much hope of actually coming up with something which we could adopt.
MR. PETER WONG: Sir, should a major shareholder who is a director be precluded from voting on his own remuneration at the annual general meeting?
FINANCIAL SECRETARY: Yes, Sir, if it is in fact his own remuneration then he would be precluded from voting on it.
Government expenditure on consultancy studies
4. MRS. CHOW asked: Will Government inform this Council what is the total amount of fees which has been spent to date on consultants engaged by the Government on the new airport and its approach road and rail systems, what aspects have been covered by these consultancies, what other consultancies are expected to be commissioned, and the total estimate of fees Government intends to spend on the entire project?
FINANCIAL SECRETARY: Since the decision was taken in October 1989 to proceed with the project, the total amount incurred in respect of consultancies for the new airport and its approach road and rail system is $634 million. Of this $70 million has so far been disbursed.
As might be expected, the consultancies commissioned so far focus mainly on planning and feasibility aspects of the various component projects under the airport development strategy. A major consultancy for the preparation of the detailed master plan, the civil engineering design and the environmental impact assessment of the new airport was commissioned in July. Other studies are in progress on the Lantau Fixed Crossing, the Western Harbour Crossing, the Airport Railway and a part of Route 3. Two further consultancies were recently awarded for the detailed design and construction of the West Kowloon Expressway and the related West Kowloon Reclamation. Meanwhile the first phase of an overall Project Management Consultancy to deal primarily with the programming and project control aspects for this complex project got underway in May this year.
As the project advances, it will be necessary to commission further consultancies. These consultancies will include the appointment of an overall financial adviser, a study of the commercial enterprises that are to be relocated with the new airport, detailed design for the Lantau Fixed Crossing and detailed design and construction for the new airport, the North Lantau Expressway and a part of Route 3 to connect with the West Kowloon Expressway. It is also envisaged that the overall Project Management Consultancy, commissioned in May this year, could be extended in the light of requirements when its term expires in December 1991.
A very rough order of cost for these further consultancies is $1,400 million. MRS. CHOW: Sir, will the Secretary please clarify whether the total cost for
consultancies would amount to over $2 billion, in other words, cost of $634 million actually incurred up to date plus $1,400 million for further consultancies? And if this is right, does this cost match the original estimate?
FINANCIAL SECRETARY: Sir, that is correct. It is the sum of the figures I gave -- $634 million plus the $1,400 million, that is to say, just over $2 billion. As far as the original figures for the port and the airport projects were concerned, the $127 billion did include an item for consultancy fees on a broad-brush approach. These are now being defined more accurately in the light of the scope of the works to be covered by the various components.
MRS. CHOW: Sir, what is the Government doing to prevent cost overrun in this respect?
FINANCIAL SECRETARY: Sir, in the first place, before any consultants are appointed there is a competitive arrangement and therefore we do seek to get the best possible value for money in the employment of consultants. And once they are actually appointed their work is vetted by government staff. Normally, consultants are appointed on the basis of a fixed sum for the initial work, and then, as is customary, I think, in all industries, if it is in fact a question of supervising the completion of works, it will be a percentage of the total costs.
Direct elections to Legislative Council
5. MR. CHOW asked: As Hong Kong will hold its first direct elections to the Legislative Council in 1991, will Government inform this Council whether it will consider granting financial and other assistance to encourage more prospective candidates to participate in the election?
CHIEF SECRETARY: Sir, we have considered carefully the question of granting financial and other forms of assistance to candidates in elections to the Legislative Council. We have concluded that such assistance should be given both to encourage participation and to help voters in making their choices.
In the 1991 direct elections to the Legislative Council, we shall provide two rounds of free mailing for each candidate. The cost of this works out to be about $240,000 for a candidate in an average constituency with 200 000 registered electors.
The Government also distributes information leaflets to registered electors on all candidates in their constituency and provides general publicity on elections to encourage public participation.
However, we consider, Sir, that if a candidate wishes to spend more on a campaign by way of additional staff or printing of publicity materials, these costs should be met by the candidates themselves and those supporting them rather than from public funds.
MR. CHOW: Sir, the limit of election expenses of $200,000 is a huge amount of money for the majority of middle class people. If there is no partial reimbursement or financial assistance from the Government, could it be construed then that the majority of the public enjoys equality of political rights only in theory but in practice such is enjoyed only by the rich?
CHIEF SECRETARY: Sir, I think the limit of election expenses of $200,000 is just that, it is a limit. And it is not incumbent of course on any candidate to spend up to that limit. It is a choice for him to make as to whether he wishes to extend his coverage other than that provided by the public service.
MR. PETER WONG: Sir, the information leaflet distributed by the Government restricts description of the candidate to 200 words. Will this restriction be continued?
CHIEF SECRETARY: Sir, I am unsighted on that question. I will certainly look at the possibility suggested by Mr. WONG.
MR. MARTIN LEE: Sir, will the Government reconsider the question of reimbursement after the 1991 elections?
CHIEF SECRETARY: Yes, Sir.
MR. CHOW: Sir, we have to encourage more prospective candidates to participate in the election, but we have also to forestall the possibility of bribery. If a candidate is financially supported by a political party there will be no problem because the party is controlled by its system and its political platform is open to the public. But does the Government consider that granting financial assistance to the candidates can forestall the possibility of bribery?
CHIEF SECRETARY: Sir, we are urgently looking at that clause in the Prevention of Bribery Ordinance which does prevent people from soliciting funds for electioneering expenses and I hope to report back to the Council shortly.
MR. TIEN: Sir, as regards the $200,000 limit to be spent by a candidate standing for direct election, could the Government inform this Council that this sum will not have to come out of his own pocket; in other words, he could raise it from his friends and supporters?
CHIEF SECRETARY: Yes, Sir, the candidate may raise the money from friends or supporters.
Smoke emissions from restaurants
6. MISS LEUNG asked (in Cantonese): As many residents and organizations, including the Yau Tsim District Board, have lodged repeated complaints against emission of exhausts from restaurants and food premises which caused serious nuisances to the neighbourhood, will Government inform this Council whether consideration will be given to taking appropriate measures to resolve the nuisance problem under complaint?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, the Yau Tsim District is probably the most important tourist area in Hong Kong and clearly its restaurants are an essential feature of its attractiveness to tourists and also of the prosperity of
the district as a whole. Altogether there are 859 licensed restaurants, and 312 other licensed food premises within the district. During the last 12 months, 33 complaints were received about smoke emissions from these premises: three were received by the District Office, seven by the Environmental Protection Department, and 23 by the Urban Services Department and Urban Councillors. As far as I am aware, the matter has not been raised in the district board or in its sub-committees, but it was raised in January of this year in the Tsim Sha Tsui Area Committee. However, the number of complaints received in relation to the number of restaurants does not suggest that there is a serious problem in this district.
Moreover, according to the Environmental Protection Department and the Urban Services Department, none of the complaints against restaurants has been serious. In nearly all cases they have been settled by advice, including advice to improve the restaurants' exhaust scrubbing system, or to redirect its emission outlet to another location. If official advice is not followed, and the nuisance persists, action may be taken by way of a nuisance abatement notice under section 127 of the Public Health and Municipal Services Ordinance, or sections 9 and 30 of the Air
Pollution Control Ordinance. During the last 12 months only two such notices have been issued, one each for a restaurant and food premise.
MISS LEUNG (in Cantonese): Sir, when the Yau Tsim District Board had a meeting with OMELCO Members in June, the issue of exhaust emission from restaurants was raised in the hope that Members would help resolve the problem. Besides, many have written to newspapers lodging the same complaints. My question is: After complaints of
nuisance in relation to exhaust emission are received, do the staff concerned usually make checks on those restaurants and food premises under complaint during office hours, that is to say when restaurants and food premises in general are less busy?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, I understand that the majority of work is done during office hours but also the officers in both departments do make checks out of office hours as well.
MR. PETER WONG: Sir, will the Secretary please inform us how many of the 33 complaints were in respect of the same restaurant or the same group of restaurants?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, I will have to provide those figures in writing. (Annex I)
MISS LEUNG (in Cantonese): Sir, will the Secretary inform this Council, other than those from the Yau Tsim District, how many complaints of exhaust emission from restaurants and food premises the Government has altogether received in the past year and how many nuisance abatement notices have been issued?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: I will have to provide that in writing, Sir. (Annex II)
Cost of Chemical Waste Treatment Centre on Tsing Yi Island
7. MR. PETER WONG asked: Will the Administration inform this Council of the current estimate of the cost of the Chemical Waste Treatment Centre on Tsing Yi Island and how it plans to recover the cost?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, the Chemical Waste Treatment Centre was first tendered in February 1989, but has had to be retendered in June this year because none of the first tender submissions was completely acceptable. The original estimate for the Centre was about $300 million, but was probably low in the first place and has certainly been superseded since then. But as the retenders in the retendering exercise are about to be received, that is on 17 August, the Government would not wish to announce an updated figure at this moment just in case it should influence the tenders.
The Administration is committed to cost recovery and is presently exploring the feasibility of indirect charging schemes aimed at full recovery of the cost of construction and operation of the Chemical Waste Treatment Centre. To this end, a consultants' study was commissioned in November 1989 to look at possible charging schemes. The study has just been completed and the Administration is considering its recommendations. Further discussion on the issue will be necessary both within the Administration and then with industry, before we can come to a firm view and make
a recommendation to the Governor in Council.
MR. PETER WONG: Sir, there is considerable concern among industry and chemical suppliers that if the capital and 15-year recurrent costs of $6.15 billion as quoted in the South China Morning Post is to be believed, it would make this project non-viable. When will the Administration come to a firm or near-firm conclusion?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, we had come to the firm conclusion that cost recovery is feasible before we became committed to cost recovery and to going the privatized route, which involves paying annual sums to the private sector. As to precisely when we will decide on recommendations, we will need to do so in the course of this year at least.
Smuggling of firearms
8. MRS. FAN asked: Will the Government inform this Council what actions have been or will be taken to combat the illegal importation of genuine firearms into Hong Kong?
SECRETARY FOR SECURITY: Sir, the following measures are taken to combat gun smuggling --
(a) police criminal intelligence units seek to identify the suppliers of illegal firearms, and their distribution networks;
(b) police and Customs and Excise staff at border control points give the highest priority to uncovering the illegal import of firearms;
(c) individuals and syndicates known to be involved in the illegal importation and use of firearms are specifically targetted by the police and the Customs and Excise service;
(d) in-depth investigations are conducted by the police in each and every case where firearms are used illegally; and
(e) close liaison is maintained and intelligence exchanged via border liaison and
Interpol channels with the Chinese authorities. High level meetings between the Hong Kong and Chinese police are held on a regular basis to monitor the problem of illegal firearms.
MRS. FAN: Sir, the community is concerned with the increasing number of robberies and violent crimes involving genuine firearms, particularly with those shooting incidents in areas where there are large numbers of innocent bystanders. Is the Secretary for Security satisfied that the measures he has described are adequate for handling the situation? And if he is not totally satisfied with their effectiveness, what method does he have in mind to strengthen the protection?
SECRETARY FOR SECURITY: Sir, I believe that the police give the highest priority to both the prevention and detection of crimes involving firearms.
MISS LEUNG (in Cantonese): Will the Government consider increasing the penalties significantly for illegal ownership, possession or use of firearms in order to have a deterrent effect on the smuggling of firearms into Hong Kong?
SECRETARY FOR SECURITY: Sir, for crimes involving firearms, many of them carry a maximum penalty of life imprisonment. Clearly, the sentencing in any particular case is a matter for the Judiciary but the maximum penalty is sufficient to cater for any circumstances.
MR. MARTIN LEE: Sir, how does the Government propose to stop the smuggling into the territory of genuine firearms by speedboats which are much faster than those that we have got?
SECRETARY FOR SECURITY: Sir, smuggling by speedboat is certainly a problem, and I do not doubt that in certain cases firearms have been brought in this way. We have recently taken action against all forms of smuggling by speedboats and it will continue to be a high priority to try and stop this form of smuggling.
MR. TAI: Sir, what is the conviction rate regarding offenders bringing in firearms across the border, who were apprehended as a result of intelligence exchanged between the border liaison and Interpol channels?
SECRETARY FOR SECURITY: Sir, the figures I do have with me relate to seizures of firearms and arrests of people bringing them in through the border.
In 1987 -- 37 illegal firearms were seized
In 1988 -- 58 illegal firearms were seized
In 1989 -- 113 illegal firearms were seized
And so far this year -- 42 illegal firearms have been seized.
MR. EDWARD HO: Sir, I do not believe the Secretary for Security has answered Mrs. Rita FAN's question which is: Is the Secretary satisfied that the measures he described in the main reply are adequate to combat the rising rate of crimes involving firearms, especially illegally imported firearms?
SECRETARY FOR SECURITY: Sir, as I said, I believe that the police give the highest priority to tackling this problem. Certainly the use of firearms in crimes is a matter of great concern and is something that they will do their best to prevent and to detect if it occurs.
MR. MARTIN LEE: Sir, I do not believe the Secretary has answered my question either, but I shall ask another one. Has the Government stopped a single speedboat attempting to import illegally into Hong Kong firearms, or for that matter any other commodities, in the last three years?
SECRETARY FOR SECURITY: Sir, I do not have any precise figures but I certainly believe that in a number of cases firearms have been found on speedboats which have been intercepted by the police.
MR. ANDREW WONG: Sir, will the Secretary for Security inform this Council whether or not the question of firearms is on the agenda of Mr. Francis MAUDE? Or are money matters his sole concern now?
SECRETARY FOR SECURITY: Sir, I do not think that this particular problem is on the agenda of Mr. Francis MAUDE in his discussions in China.
Written answers to questions
Noise pollution
9. MISS LEUNG asked: Will Government inform this Council whether consideration will be given to taking appropriate measures to prevent serious noise pollution to the neighbourhood caused by the operation of shipyards, waterfront cargo handling areas and lighters, particularly between late hours in the night and daybreak?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, the only way to prevent noise pollution from the operation of shipyards, cargo handling areas and lighters, is to move them away from the immediate vicinity of residential areas. Our aim must be to ensure that as far as possible these facilities are relocated to areas which are sufficiently separated from residential areas. This is by no means easy, as areas which are physically and commercially suitable to shipyards are few. Nevertheless a number of proposals to remove shipyards are in train.
There are, however, other more immediate measures which can be taken to mitigate noise pollution from these areas. For example, because of the complaints about noise from the Sham Shui Po Public Cargo Working Area (PCWA), the Director of Marine has restricted its working hours from 8 am to 7 pm compared with the normal working hours of PCWAs of 7 am to 9 pm. Special permits for working at night, which are occasionally issued for PCWAs, will not be issued for Sham Shui Po PCWA. The Director of Marine has also advised the operators of private shipyards in the vicinity of residential buildings to curtail noise by staggering the early morning "start-up times" of heavy machinery and by reducing the "warm-up" period for their engines.
The noise from these facilities is also controlled under provisions in the Noise Control Ordinance (Cap. 400). Noise from shipyards and designated private cargo handling areas is subject to Noise Abatement Notices issued under section 13 of the Ordinance. Noise from public cargo handling areas is controlled under sections 4 and 5 of the Ordinance and is enforced by the police. Since January 1990, the
Environmental Protection Department have received seven complaints of noise from shipyards and 16 complaints of noise from waterfront cargo handling areas. A breakdown of these complaints and a summary of action taken are shown at Annex A.
The Administration is well aware of the noise pollution problems caused by these facilities, but is hopeful that the measures outlined above will reduce this nuisance substantially and thereby help improve the environment of nearby residential buildings.
Annex
Statistics on Complaints against Noise from
Shipyards and Waterfront Cargo Handling Areas
(1.1.90 -- 19.7.90)
Number of
Complaint
Location Cases Action taken/Remarks
Shipyards at 7 Environmental Protection Department served north Tsing Yi Noise Abatement Notices under section 13 of the Noise Control Ordinance to those shipyard
operators close to the housing estates to prohibit the noisy metal derusting process at these shipyards in the early morning and evening hours. This measure will minimize the degree of noise disturbance before the ultimate solution of relocation of the shipyards in 1992-93.
Loading activities 2 Noise in public places falls within the ambit of from barges sections 4 and 5 of Noise Control Ordinance at sea-front, which are enforced by the police. Kennedy Town
Sham Shui Po 7 Environmental Protection Department provided Public Cargo advice through Marine Department to the Working Area operators on a number of noise mitigating measures including overhaul of mobile cranes, installation of silencers to engine exhausts of the
Number of
Complaint
Location Cases Action taken/Remarks
cranes and rescheduling the operation in the area in daytime. The present operating noise complies with the noise limits of the Noise Control Ordinance.
Cargo handling 4 Cargo handling activities will be ceased with area near effect from August 1990.
Whampoa Garden
Cargo handling 1 Environmental Protection Department advised activities at operator to restrict the cargo handling activities Wong Tai Street to daytime only. Further assessment will be made in due course.
Cargo handling 1 Noise in public places falls within the ambit of area near Long sections 4 and 5 of Noise Control Ordinance Yuet Street which are enforced by the police.
Cargo handling 1 Noise in public places falls within the ambit of area at Butterfly sections 4 and 5 of Noise Control Ordinance Beach which are enforced by the police.
Civil service recruitment of Chinese secondary school graduates
10. MR. DAVID CHEUNG asked: Will Government inform this Council of the ratio of Chinese secondary school graduates to Anglo-Chinese secondary school graduates who were appointed to the Civil Service in the past five years?
CHIEF SECRETARY: Sir, appointments to School Certificate grades in the Civil Service
are made by individual heads of department or grade. The information which has been requested by the Honourable David CHEUNG Chi-kong is not kept by departments, as it is not a factor in recruitment.
I can assure the honourable Member that the civil service recruitment policy provides for all candidates who meet the prescribed entry requirements to be considered for appointment on equal terms.
Traffic flow at Shing Mun Tunnels, Lion Rock Tunnel and Tai Po Road
11. MR. ANDREW WONG asked: With the opening of the Shing Mun Tunnels and the introduction of differential toll levels for Lion Rock Tunnel and Shing Mun Tunnels since 20 April 1990, will the Government inform this Council of:
(i) the current daily traffic volumes of the Shing Mun Tunnels, Lion Rock Tunnel and Tai Po Road; and
(ii) the effect of the imposition of the differential toll levels on the traffic flows of the two aforesaid tunnels and Tai Po Road as compared to previous statistics?
SECRETARY FOR TRANSPORT: Sir, before the opening of the Shing Mun Tunnels and the introduction of differential tolls, there were on average 104 000 vehicles using the Lion Rock Tunnel and 47 000 vehicles using Tai Po Road every day.
Since the opening of the Shing Mun Tunnels and the introduction of differential tolls on 20 April 1990, the corresponding figures are now 92 000 and 41 000. An average of 29 000 vehicles use the Shing Mun Tunnels daily.
These figures indicate that --
(i) there has been a decrease of 12 000 vehicles, or 12%, using Lion Rock Tunnel every day;
(ii) there has been a decrease of 6 000 vehicles, or 13%, using Tai Po Road every day;
(iii) 29 000 vehicles, or 18% of the total number of vehicles using the three main
corridors in this area, have been attracted to use the new route through Shing Mun Tunnels.
As regards the effect of the differential tolls on the traffic flows of the two tunnels and Tai Po Road, the following conditions have been observed during a recent survey --
At Lion Rock Tunnel
(i) South-bound traffic during morning peak period (7 am - 9 am) has dropped by about 6%.
(ii) As a result, the journey time from Prince of Wales Hospital to the north portal of Lion Rock Tunnel is now nine minutes shorter; the average queue length has reduced by one kilometre.
(iii) North-bound traffic during the morning peak has also reduced by 7%, with improvements in journey time and reduced queue length.
(iv) During the evening peak period (5 pm - 6 pm), south-bound traffic has dropped from 2 800 to 2 500 vehicles: an 11% reduction, with reduced journey time, and shorter queue length.
(v) North-bound traffic during the evening peak period (6 pm - 7 pm) remains at about 3 000 vehicles, but the journey time from Wong Tai Sin, via the western Lung Cheung Road approach to the south portal of Lion Rock Tunnel, has been reduced by nine minutes.
At Tai Po Road
(vi) The south-bound traffic along Tai Po Road during the morning peak period has dropped from 2 200 to 1 600 vehicles, a 27% reduction.
(vii) The north-bound traffic during the morning peak period has dropped from 1 100 to 1 000 vehicles, a 9% reduction.
(viii) The south-bound traffic during the evening peak period has dropped from 1 400 to 1 200 vehicles, a 14% reduction.
(ix) The north-bound traffic during the evening peak period has increased from 1 200 to 1 400 vehicles, a 17% increase.
(x) No persistent traffic queues have been observed on Tai Po Road in either direction during either the morning or evening peak hours.
At Shing Mun Tunnels
(xi) Traffic flows smoothly in both directions, and no traffic queues have been observed at either end of the Tunnels.
The above traffic conditions suggest that the introduction of differential tolls of $6 at Lion Rock Tunnel and $3 at the Shing Mun Tunnels, coupled with a widened Tai Po Road, has successfully achieved the transport management objective of improving traffic flow at both Tunnels and along Tai Po Road. We can expect even more improvements when Tate's Cairn Tunnel opens to the public in the summer of 1991.
Banyan tree
12. MR. PETER WONG asked: Can the Government inform this Council of the reasons behind the decision to remove the 100-year-old banyan tree outside the West Wing of the Central Government Offices, and whether other alternatives have been considered in order to preserve this historical symbol which also manifests the Administration's commitment to environmental protection?
SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS: Sir, no decision has been taken to remove this banyan tree. On the contrary the Government has required the architects for the footbridge project to come up with a proposal that avoids any substantial interference with the tree. They are working on this now.
First Reading of Bills
HONG KONG BILL OF RIGHTS BILL 1990
ELECTORAL PROVISIONS (AMENDMENT) BILL 1990
LEGISLATIVE COUNCIL (ELECTORAL PROVISIONS) (AMENDMENT) BILL 1990 URBAN COUNCIL (AMENDMENT) (NO. 2) BILL 1990
REGIONAL COUNCIL (AMENDMENT) (NO. 2) BILL 1990
DISTRICT BOARDS (AMENDMENT) BILL 1990
CORRUPT AND ILLEGAL PRACTICES (AMENDMENT) BILL 1990
BRITISH NATIONALITY (MISCELLANEOUS PROVISIONS) (AMENDMENT) BILL 1990
Bills read the First time and ordered to be set down for Second Reading pursuant to Standing Order 41(3).
Second Reading of Bills
HONG KONG BILL OF RIGHTS BILL 1990
THE CHIEF SECRETARY moved the Second Reading of: "A Bill to implement the International Covenant on Civil and Political Rights as applied to Hong Kong; and for ancillary and connected matters."
He said: Sir, I move that the Hong Kong Bill of Rights Bill 1990 be read a Second time.
In October last year, Sir, you stated that the Government intended to enact a Bill of Rights to give effect in domestic law to the relevant provisions of the International Covenant on Civil and Political Rights (ICCPR) as applied to Hong Kong. A White Bill was published for public discussion on 6 March 1990. During the consultation on the White Bill which ended at the beginning of June, we received 800 written submissions from groups and individuals. We also discussed the White Bill with 13 district boards and the Heung Yee Kuk. The overwhelming majority of these submissions are in support of the enactment of a Bill of Rights as a further measure to protect human rights in Hong Kong.
Also, in November last year, this Council set up an ad hoc group on the Bill of Rights, under the convenorship of the Honourable Mrs. Selina CHOW. The ad hoc group, apart from meeting with representatives from the Administration, also met with members of the public and received their representations. The group forwarded its report on the White Bill to the Administration in June this year. This Council also held a motion debate on the Bill of Rights on 27 June this year.
The Administration has studied very carefully the comments made by members of the public and by the ad hoc group, and has given serious consideration to what changes should be made to improve the White Bill. The Bill now before Members reflects the outcome of this consideration and incorporates a number of changes to the White Bill. The changes mainly concern Part I of the Bill which deals with the application of the Bill.
Members are aware that the Administration takes the view that it is essential that the Bill of Rights is consistent with the Basic Law so that it can continue to be in force after 1997. This can best be achieved by making the substance of the Bill fully consistent with the ICCPR as applied to Hong Kong -- which by virtue of the Joint Declaration and Article 39 of the Basic Law will remain in force and be implemented in the laws of the Special Administrative Region; and to take care that procedural clauses within the Bill run no risk of conflicting with the Basic Law. This shall remain the basic consideration throughout our deliberations. There have been questions as to why the relevant provisions of the ICCPR should now be implemented in a single piece of comprehensive legislation, when the Basic Law envisages the continuation of their implementation through the laws of the future Hong Kong Special Administrative Region. Some fear that the entrenchment of a Bill of Rights that is supreme over other laws will drastically change Hong Kong's legal system, contrary to the provisions of the Basic Law, and also could seriously affect law and order. Some people are worried that the Bill of Rights will be repealed after 1997 because of inconsistency with the Joint Declaration and the Basic Law.
Sir, in answer to these concerns, I should like to say that we need a Bill of Rights to make all infringements of the ICCPR provisions, as reproduced in the Bill, justiciable in our courts; and to provide, through the Bill of Rights, effective remedies for all such infringements. It is the ICCPR, not the Bill, that will be entrenched in Hong Kong's constitutional document. Indeed, the Administration is quite clear that the Bill before Members today is fully consistent with the Joint
Declaration and the Basic Law. We have been aware that the Chinese authorities have some concern about the Bill and we have had many contacts with the Chinese side through a number of channels, including discussions in the Joint Liaison Group and on informal occasions. Both the White Bill and the Bill now before Members have been given to the Chinese side and explained to them. So I cannot emphasize enough that one of our overriding principles in enacting this piece of legislation has been and will be to ensure that the final product fulfils our obligations under the Joint
Declaration so that it can last beyond 1997. We can see no better way than to enact a comprehensive Bill of Rights.
The proposed freeze period is an area of major interest to the public. The majority of written submissions and district board members who expressed a view on this issue are opposed to a two-year freeze period. Some have suggested that there should be no freeze period at all. The Legislative Council ad hoc group has recommended that there should be a selective freeze for one year achieved by listing in a schedule the Ordinances likely to be affected by the Bill of Rights, and that the freeze can be extended, upon the approval of this Council for another year.
The freeze is necessary to avoid the destabilizing effects of legislative and operational vacuums which may occur if statutory laws are found to be invalid and, if for practical reasons, there are substantial delays before they can be replaced. Nevertheless, we consider that the concerns of the Legislative Council ad hoc group and the public should be accommodated as far as possible. However it is impracticable to work out a detailed schedule for a selective freeze at the outset. Indeed, the purpose of the proposed freeze was to enable us to identify Ordinances likely to be affected by the Bill and to take remedial action. We propose that there should be a blanket freeze on existing legislation for only one year instead of two after the enactment of the Bill. We further propose that during this period, the Council should,
following consultation with the Administration, decide which provisions of our Ordinances should be frozen for another year or such longer period as this Council may, by resolution, determine. To avoid any doubt, we also recommend that the Bill should make it clear that the freeze will also cover acts done under existing statutory powers including the exercise of discretionary powers. The Administration, Sir, remains committed to full application of the Bill of Rights at the earliest possible date.
Clauses 1(2) and 14 of the Bill give effect to these proposals.
A number of provisions in the Bill before the Council follow the ICCPR in allowing rights and freedoms to be restricted on the grounds of "national security" or to protect "the life of the nation". The White Bill defined these terms as including the security and life of Hong Kong. There have been suggestions to substitute them with "security of Hong Kong" and "life of Hong Kong" respectively.
These formulations would, however, permit the restriction of rights in circumstances which affect only Hong Kong, thereby widening the scope for restriction allowed by the ICCPR. It would therefore be inconsistent with the ICCPR. We have therefore concluded that the language of the ICCPR should be adopted in the Bill.
Some members of the public have commented that the phrase "the rules of interpretation applicable to other Ordinances may be disregarded" in clause 2(3) of the White Bill may be seen as advocating a departure from established legal practice and could be contrary to the Joint Declaration and the Basic Law.
We have now deleted these references from the clause. Furthermore, given the provisions in the clause that the purpose of the Bill is to implement the relevant provisions of the ICCPR in Hong Kong, we believe courts will make appropriate reference to decisions in other jurisdictions relating to the ICCPR to help interpret and apply the Bill of Rights. We have therefore decided it is unnecessary to retain clause 2(3)(b) of the White Bill.
During the public consultation, a number of representations asked whether it was necessary to include a public emergency clause. We have retained the clause as it is desirable that there should be provisions on the circumstances under which derogation from the Bill will be permissible, as provided for under the ICCPR.
There has been criticism on clause 6(1) of the White Bill which characterized a breach of the Bill of Rights as a tort. Some people argued that a tort action, which if successful normally leads to a remedy in damages, would be inappropriate in some cases for a breach of the Bill of Rights. We believe that there is some force in the argument and have now deleted this provision. In our view, clause 6 as now drafted is sufficient to enable courts and tribunals to grant an effective remedy in respect of breaches of the Bill of Rights and will enable damages to be awarded when it is appropriate and just to do so.
The obligations of individuals to each other proposed in clause 7 of the White
Bill have caused concern in the business sector. They have reservations as to whether the private sector should be bound by the rights to privacy in Article 14, freedom of information in Article 16 and the prohibition of discrimination in Article 22. Since there is at present no specific legislation governing these areas, they believe that these rights, couched in the general terms of the ICCPR provisions, could lead to confusion in the business sector over the legality of existing and contemporary contractual obligations and well-established practices. They fear that this
uncertainty could have a seriously detrimental effect on Hong Kong as a business and financial centre.
We accept that the concerns about Article 14 on the rights to privacy are valid because, in the absence of any specific legislation, it could be commercially disruptive. Since the Law Reform Commission is studying the subject of privacy with a view to making recommendations for detailed legislation, we have concluded that the application of this Article to the private sector should be deferred until such legislation is enacted. Clause 7(3) and (4) reflect this.
We do not, however, accept that the right to freedom of expression (including the freedom to seek, receive and impart information) in Article 16 and the anti discrimination provisions in Article 22 of the Bill would also be disruptive. There would not seem to be much scope for claims against the private sector under these Articles. Indeed claims based solely on these two Articles are likely to be devoid of merit, and I doubt very much whether they can be successful. An individual's freedom to receive information, for example, does not mean that data held by a
commercial concern must be disclosed to him, or indeed that anybody is obliged to give him the information he seeks. Article 16 is clearly about promoting and protecting the free exchanges of ideas between individuals. The kind of issues which could arise under this Article could include freedom of the press, literary and artistic self-expression and restrictions on or manipulation of radio and television broadcasting. Its potential for disruption in the business community is hard to see. The application of Article 22 which covers discrimination will be limited to the making of laws; it is intended to bind the legislature, not individuals, as is clear from its text which states, inter alia, that the law shall prohibit discrimination on grounds such as race, colour, sex, language and so on. The United Nations Human Rights Committee has made it clear, in two cases, that these provisions do not say what laws must be made. They do however provide that if and when legislation is enacted it must comply with the rule against discrimination. Therefore, in the view of the Administration, these two Articles do not create a duty in the private sector
to disclose information or guarantee protection against discrimination. While I cannot rule out absolutely that they could be misinterpreted by some and result in speculative litigation, litigation which is based on a misunderstanding of these Articles is unlikely to succeed and would be very costly for the claimant. The mere possibility of such unwarranted litigation does not of course call for a specific exemption of the private sector from these Articles. There have also been suggestions that if there is no exemption, then the application of these two Articles to the private sector should at least be deferred. We have concluded that there would be no point in such a deferment since unlike Article 14, we have no intention to introduce further legislation in respect of Articles 16 and 22 and there is no obligation under the ICCPR for us to legislate further on these matters.
Part II of the Bill incorporates the relevant Articles of the ICCPR as applied to Hong Kong and adhere closely to the wording of the ICCPR. We have made only two changes of substance to the corresponding part in the White Bill.
Article 17 of the White Bill states that propaganda for war or advocacy of national, racial or religious hatred "shall be prohibited by law". This Article corresponds to a provision of the ICCPR, but under a reservation entered by Her Majesty's Government, we are under no obligation to introduce further legislation in respect of this Article. However, Article 17 itself creates an obligation to legislate in respect of these matters while clause 13 which repeats the reservation says there is no such obligation. The inclusion of these contradictory provisions would be meaningless and we have concluded that both Article 17 and clause 13 of the White Bill should be deleted.
Article 22 of the White Bill referred to citizens' rights to participate in public life. However, the use of the term "citizen" is inappropriate for Hong Kong because the concept of a Hong Kong citizen is unknown to our law. What we need is a generic term which has a sufficiently wide meaning to embrace the whole range of persons in Hong Kong who now have the right to vote and to stand for election. We have concluded that "permanent resident" is such a term and it also mirrors the relevant provisions in the Basic Law. We have therefore made this substitution in the new Article 21 of Bill. May I take this opportunity to assure honourable Members that all persons who under our existing legislation have the right to vote and stand for election will continue to enjoy these rights.
We have also changed the Chinese title of the Bill of Rights from "RENQUAN XUANYAN"
to "RENQUAN FA'AN" to accord with the generally accepted translation of the term.
Sir, I would like to take this opportunity to deal with two other major issues which arose during the consultation period. Firstly, it is the question of whether the customs of the indigenous population in the New Territories would be affected by the Bill of Rights.
Since the Bill is to implement the provisions of the ICCPR, its impact on present law and policy including that in relation to customary law in the New Territories depends upon interpretation of the relevant Articles of the ICCPR.
Existing customary law on inheritance of communal land known as Tso and Tong land in the New Territories reflects an important element of the social fabric of New Territories villages. We have studied carefully the implications of the ICCPR on such customary law and have come to the conclusion that it is compatible with the ICCPR and this Bill. The fact that customary law in the New Territories treats women in a way different to men does not mean that the law is necessarily discriminatory under the Bill of Rights. The United Nations Human Rights Committee have observed that it is not every differentiation of treatment that constitutes discrimination. If the reasons for the differentiation in treatment are reasonable and objective and the purpose is one which does not contravene the ICCPR then such treatment will not be discriminatory. In this context we have noted the arguments that customary law helps preserve a traditional way of life and is essential in order to maintain the cultural life and moral values of the New Territories villages. That said, there can be no question of excluding indigenous villagers in the NT from the application of the Bill as this would clearly fail to be a full implementation of the ICCPR.
Secondly, we do not recommend any exemption to the Independent Commission Against Corruption (ICAC) and law enforcement agencies. This issue has attracted considerable discussion during the consultation period. I note that the Legislative Council ad hoc group in its report makes it abundantly clear that it does not support any exemption to any group or agency from the Bill of Rights. We all recognize that there is a need to strike a balance between protection of individual rights and the effective maintenance of law and order. I believe, Sir, this is one of the issues we have to examine with the utmost care during the freeze period. I am however confident that ways can be found to ensure, on the one hand, that the ICAC, and police and other enforcement agencies will continue to operate at a high standard of effectiveness, and on the other, that the Ordinances in question will be consistent
with the Bill of Rights. Indeed there are a number of countries where law enforcement agencies have to operate within constitutional guarantees for basic human rights and freedoms. These countries appear to me to be decent, civilized communities where law and order is maintained at enviable standards. I cannot see why, therefore, the
presence of a Bill of Rights in our law will lead to greater chances for criminals to escape the proper administration of justice.
Sir, a number of representations have suggested that a Human Rights Commission should be set up following the enactment of the Bill of Rights. The Legislative Council ad hoc group also recommends the establishment of such a commission, because of the role it could play in the education of the public about the rights guaranteed under the Bill of Rights and in fostering and monitoring the development of human rights in Hong Kong. We will certainly give further consideration to these
proposals.
There have also been different views on whether and how the Bill of Rights should be entrenched in Hong Kong's constitutional document. To give the Bill of Rights a supreme status over all local laws and to directly entrench it either constitutionally or by special procedural devices will clearly go against the provisions in the Basic Law. Instead we will propose to recommend to Her Majesty's Privy Council that the Letters Patent be amended to provide that no law shall be made that restricts the rights and freedoms of persons in Hong Kong in a manner which is inconsistent with ICCPR as applied to Hong Kong. Such an amendment will entrench in our domestic law the principle that no laws made by the legislature shall contravene the ICCPR and will reflect the similar provision in Article 39 of the Basic Law. Our present plan is to submit the recommendations to the Privy Council later this year, to coincide with the enactment of the Bill here. Members of this Council will have the opportunity to study the text of the proposed amendment before the Bill of Rights is passed.
Sir, I move that the debate on this Bill be now adjourned.
Question on the adjournment proposed, put and agreed to.
ELECTORAL PROVISIONS (AMENDMENT) BILL 1990
THE CHIEF SECRETARY moved the Second Reading of: "A Bill to amend the Electoral
Provisions Ordinance."
He said: Sir, I move that the Electoral Provisions (Amendment) Bill 1990 be read the Second time.
1991 will witness for the first time in Hong Kong's history the direct election of members to this Council by geographical constituencies. A legislative framework already exists in the Electoral Provisions Ordinance to provide for direct elections to the municipal councils and the district boards. As this legislative framework is already familiar to electors and candidates, it is logical to use it for the direct elections to this Council. The primary objective of the Bill is therefore to expand the scope of the Electoral Provisions Ordinance for this purpose.
Clauses 2, 3, 4, 10 and 12 seek to extend the existing provisions of the Electoral Provisions Ordinance to provide for the general arrangements for direct elections to this Council. Clause 11 provides that a candidate cannot be nominated for both direct election and indirect election through a functional constituency at the same time. Clauses 14, 15 and 16 make provisions in the principal Ordinance for direct elections to accord with those in the Legislative Council (Electoral Provisions) Ordinance dealing with indirect elections to this Council.
Clause 5 adds a new part to the Electoral Provisions Ordinance so as to provide for matters incidental to the direct elections to this Council, such as tenure of office, resignation, and by-election. It is modelled on Part II of the Legislative Council (Electoral Provision) Ordinance, which contains similar provisions in
respect of indirect elections.
We have also taken the opportunity to introduce a number of improvements.
At present, section 19(1)(a) of the principal Ordinance provides for a disqualification for being nominated as a candidate, or being elected, or holding office as a member in the district boards and municipal councils, on grounds of holding "any public office (other than as a member of an auxiliary force) or any office of emolument in the gift or disposal of the Urban Council, or of the Regional Council, or any committee thereof having held such office has been dismissed therefrom."
This disqualification based on the holding of a public office is intended to reflect the Government's policy that members of the judicial service and the Civil
Service should not seek political office through election. This policy is aimed at avoiding conflicts of interest and ensuring the separation of the legislature, the judiciary and the executive.
Any wider judicial interpretation of the term "public office" would have the effect of disqualifying those who are not intended to be disqualified, especially members of the public serving on government boards and committees.
Clause 10 of the Bill seeks to clarify the list of disqualifying offices in section 19(1)(a) of the Electoral Provisions Ordinance.
First, the term "public office" in the existing disqualification will be replaced by references to offices in the Civil Service and the judicial service, in the armed forces, and in a schedule of specific offices which should be disqualified on account of the public functions they perform despite their independent nature. These
specific offices include the Commissioner Against Corruption, the Chairman of the Public Service Commission and the Commissioner for Administrative Complaints. Clause 17 provides for the amendment of the schedule by the Governor in Council.
Secondly, a person holding an office of emolument in the gift or disposal of the Legislative Council will also be disqualified. At present only those employed by the two municipal councils are disqualified.
Thirdly, the existing indefinite disqualification on grounds of dismissal from the Government or the municipal councils will be removed. This disqualification is considered too harsh as other disqualifications which are based on more serious offences such as a sentence of imprisonment and conviction of corrupt and illegal practices apply for finite periods.
Fourthly, the position of the Chairmen and Vice-chairmen of the two municipal councils will be clarified beyond doubt that they are not holding an office of emolument in the gift or disposal of the respective council.
I shall move later this afternoon similar amendments to the equivalent provisions in the Legislative Council (Electoral Provisions) Ordinance, the Urban Council Ordinance, the District Boards Ordinance, and the Regional Council Ordinance. The intention is to apply the disqualifications uniformly to different categories of membership on the three tiers of representative government.
The Bill also seeks to rationalize the existing arrangements for the registration of electors.
At present, the statutory period for registration of electors in a geographical constituency is between 15 August and 30 September each year. A final register is published in January the following year. Thus the final register will not be up-to-date for the purpose of the direct elections to the Legislative Council which will be held in September 1991 and September 1995.
Registration of electors in the Legislative Council functional constituencies takes place in April and May each year and an eligible person must have been registered first as an elector in a geographical constituency under the Electoral Provisions Ordinance. Because of these requirements and procedures, an eligible person will have to go through registration under the two different registers in two successive years before he is able to vote in a functional constituency. In the Legislative Council elections in 1985 and 1988, special arrangements were made to waive the requirement of prior registration in a geographical constituency.
We propose therefore that the two registration exercises in respect of geographical constituencies and functional constituencies, respectively, should take place together in April and May each year starting from 1991, and that simultaneous registration to the two types of constituency should be permitted. The respective final registers will then be published in August of the same year, that is, about one month before the elections to the Legislative Council in 1991.
Clauses 7 and 9 seek to change the dates for the compilation of the provisional register and the final register for geographical constituencies to June and August respectively so as to bring them in line with those for the register for functional constituencies.
The Legislative Council (Electoral Provisions) Ordinance will also need to be amended to provide for simultaneous registration. Sir, I shall move the necessary amendments later this afternoon.
Registering false residential addresses can be a problem in elections based on geographical constituencies. This can take the form of a group of electors falsely registering under a common address in order to vote en bloc in a particular constituency for a particular candidate. This compromises the honesty of the
elections.
Clause 6 therefore provides that a residential address must be supplied for registration so as to enable the Registration Officer to deal with suspect registrations, subject to the existing external checks under section 15 of the principal Ordinance by a revising officer, who will be a member of the Judiciary.
Clauses 8 and 10(1)(b) provide for the disenfranchisement and disqualification from candidature and office of anyone who makes false statements in the registration process under the Electoral Provisions (Registration of Electors) Regulations and the Legislative Council (Electoral Provisions) (Registration of Electors and
Appointment of Authorized Representatives) Regulations respectively. We consider that any deliberate attempt by an applicant to falsely register as an elector, which is equivalent to an illegal practice under the Corrupt and Illegal Practices Ordinance, should be a disqualification for both registration as a voter and standing for election.
Sir, I move that the debate on this Bill be now adjourned.
Question on the adjournment proposed, put and agreed to.
LEGISLATIVE COUNCIL (ELECTORAL PROVISIONS) (AMENDMENT) BILL 1990
THE CHIEF SECRETARY moved the Second Reading of: "A Bill to amend the Legislative Council (Electoral Provisions) Ordinance."
He said: Sir, I move that the Legislative Council (Electoral Provisions) (Amendment) Bill 1990 be read the Second time.
The 1988 White Paper on political development announced that in 1991 the electoral college constituencies, with the exception of the two special constituencies of the municipal councils, should be replaced by direct elections from geographical constituencies. Following a review of the decisions contained in the 1988 White Paper in the earlier part of this year, the Government decided that the number of functional constituencies should be increased to 21. This decision was announced in this Council on 21 March 1990. The primary objective of the Bill is therefore to give effect to these decisions.
Clauses 3(1)(a) and (c) and a number of other clauses in the Bill seek to remove the provisions relating to electoral college constituencies which will be abolished.
The new functional constituencies are provided for in clause 19 which amends the Second Schedule to the principal Ordinance.
In considering the amendments to the Second Schedule, we have reviewed the grouping of functional constituencies in the light of the changes to be introduced in 1991.
At present the finance functional constutuency consists of two electoral divisions, one comprising licensed banks, and the other professional accountants. In 1991 the financial services sector will return a representative to this Council. We propose to group this sector with the banking sector to form two electoral divisions
in a reconstituted finance functional constituency. The existing accountancy division will then become the accountancy functional constituency.
At present the teaching functional constituency consists partly of full-time teachers in tertiary, post-secondary and vocational training institutions. We propose to add to the list the Hong Kong Academy for Performing Arts, the Open Learning Institute of Hong Kong and the Hong Kong University of Science and Technology.
The small electorate size of the two municipal councils requires special measures to ensure that their elections of representatives to the Legislative Council have adequate elector participation. We therefore propose in the amended Schedule that a person who is eligible to register as an elector in a municipal council constituency as well as in functional constituencies will only be allowed to register in the former. However, since the Chairman and the two Vice-Chairmen of the Heung Yee Kuk are required by law to serve on the Regional Council as ex-officio members, they will be given the choice to register as electors in either the Regional Council or the rural
functional constituency.
Clause 15 provides that a person cannot stand at the same time for both a direct election and an indirect election, that is, through a functional constituency, to the Legislative Council. Clause 11 provides that a person may be registered as an elector in one functional constituency only, even if he is otherwise entitled to be registered in more than one functional constituency.
The Electoral Provisions (Amendment) Bill 1990, which I moved earlier, proposes a number of improvements. It is proposed to amend the equivalent provisions in the Legislative Council (Electoral Provisions) Ordinance in a similar manner. These include the disqualification of civil servants, judicial officers, those in the armed forces and in other specified offices from taking part in elections, in place of the existing disqualification which is based on the concept of "public office". Other improvements are in respect of the disqualification of persons holding any office of emolument in the gift or disposal of the Legislative Council and the two municipal councils; the removal of the disqualification based on dismissal from the above
offices; the clarification that the Chairmen and Vice-chairmen of the two municipal councils are not holding an office of emolument in the gift or disposal of the councils. A new disqualification is proposed in respect of false registration as an elector. Clauses 12 and 14 give effect to these proposals.
The Electoral Provisions (Amendment) Bill which I moved earlier seeks to bring the registration period in respect of geographical constituencies to coincide with that in respect of functional constituencies. To complete this arrangement, clause 10 of the present Bill proposes to allow simultaneous application to the two
registers.
Clause 5 of the Bill provides for a four-year term for a member of the Legislative Council returned from a functional constituency, similar to that proposed for members returned from geographical constituencies. Clause 7 provides that a member returned from a functional constituency shall vacate his seat if he is returned in a direct election from a geographical constituency. Clause 8 seeks to define the circumstances under which a by-election should not be held to fill a casual vacancy in a functional constituency. An identical provision is included in the Electoral Provisions
(Amendment) Bill 1990 in respect of a geographical constituency. Clause 13 stipulates that to qualify for nomination as a candidate, a person should be registered as an elector under the Electoral Provisions Ordinance.
Sir, I move that the debate on this Bill be now adjourned.
Question on the adjournment proposed, put and agreed to.
URBAN COUNCIL (AMENDMENT) (NO. 2) BILL 1990
THE CHIEF SECRETARY moved the Second Reading of: "A Bill to amend the Urban Council Ordinance."
He said: Sir, I move that the Urban Council (Amendment) (No. 2) Bill 1990 be read the Second time.
When I moved the Electoral Provisions (Amendment) Bill 1990 earlier this afternoon to clarify the list of disqualifying offices in the Electoral Provisions Ordinance for being nominated, elected or holding an elected office, I indicated that the intention is to apply the revised disqualification uniformly to all three tiers of representative government. Clause 4 of the Bill seeks to achieve this in respect of the appointed member of the Urban Council.
Clause 2(1) of the Bill seeks to change the tenure of office of elected members from three to four years in accordance with constitutional arrangements after 1991.
Clauses 2(2) and 3 update the principal Ordinance by repealing those provisions which no longer apply after the elections in 1991.
Sir, I move that the debate on the Bill be now adjourned.
Question on the adjournment proposed, put and agreed to.
REGIONAL COUNCIL (AMENDMENT) (NO. 2) BILL 1990
THE CHIEF SECRETARY moved the Second Reading of: "A Bill to amend the Regional Council Ordinance."
He said: Sir, I move that the Regional Council (Amendment) (No. 2) Bill 1990 be read the Second time.
The proposed amendments to the Regional Council Ordinance are similar to those which I have proposed to the Urban Council Ordinance under the Urban Council (Amendment) (No. 2) Bill 1990, which I have just moved.
There are, however, two additional amendments. Clause 6 seeks to extend to an
ex-officio member the full range of disqualifications applicable to an appointed member under section 11 of the principal Ordinance. Clause 5 provides that an ex-officio member, upon disqualification, will not be allowed to attend, take part in, or vote at any meeting of the Regional Council.
Sir, I move that the debate on the Bill be now adjourned.
Question on the adjournment proposed, put and agreed to.
DISTRICT BOARDS (AMENDMENT) BILL 1990
THE CHIEF SECRETARY moved the Second Reading of: "A Bill to amend the District Boards Ordinance."
He said: Sir, I move that the District Boards (Amendment) Bill 1990 be read the Second time.
The proposed amendments are similar to those which I have proposed under the Urban Council (Amendment) (No. 2) Bill 1990 and Regional Council (Amendment) (No. 2) Bill 1990 which I have just moved. The disqualification provisions in respect of appointed and ex-officio members on the district boards are brought into line with those for an elected member. A four-year term is introduced in accordance with the constitutional arrangements after 1991.
Sir, I move that the debate on this Bill be now adjourned.
Question on the adjournment proposed, put and agreed to.
CORRUPT AND ILLEGAL PRACTICES (AMENDMENT) BILL 1990
THE CHIEF SECRETARY moved the Second Reading of: "A Bill to amend the Corrupt and Illegal Practices Ordinance."
He said: Sir, I move that the Corrupt and Illegal Practices (Amendment) Bill 1990 be read the Second time.
The purpose of the Corrupt and Illegal Practices Ordinance is to protect the honesty and integrity of elections. In general, corrupt practices, such as bribery, intimidation, undue influence, are considered to be of a more serious nature and therefore attract a higher penalty than illegal practices, such as misuse of election expenses and false statements.
A review of the current level of penalties has concluded that they are inadequate to achieve the desired deterrent effect. As corrupt practices under the Ordinance are mostly dishonest acts calculated to influence the results of an election it is considered that they should at least attract the same level of penalty as that for making a false statement in applying for registration as an elector, which attracts a maximum fine of $5,000 and imprisonment for six months upon conviction.
Clause 2 seeks to increase the penalty for corrupt practices by increasing the maximum fine from $1,000 to $5,000 and the maximum sentence of imprisonment from three months to six months on summary conviction and increasing the maximum fine from $5,000 to $10,000 on conviction on indictment.
Clause 3 of the Bill seeks to increase the penalty for illegal practices by increasing the maximum fine from $500 to $2,500 on summary conviction and from $2,000 to $5,000 on conviction on indictment. It further proposes to provide a custodial sentence for any contravention of section 17 of the principal Ordinance which regulates false claims of support in a candidate's publicity. Any false claim of support will mislead electors in voting. Recent experience has shown a significant increase in the number of complaints of this nature.
Clause 6 of the Bill seeks to increase the penalty for failure to comply with statutory requirements for declaring election expenses after an election.
The principal Ordinance provides that a person convicted of a corrupt or illegal practice in an election is disenfranchised for seven years and debarred for 10 years from appointment or election to the district boards, municipal councils and Legislative Council.
However, there is an anomaly in section 24 of the Ordinance which refers to disqualification from nomination and election for three years. This should be 10 years and clause 5 seeks to rectify the anomaly.
Electors have been known to use false residential addresses for the purpose of registration in order to vote for a candidate in a particular geographical constituency. The Electoral Provisions (Amendment) Bill 1990 which I moved earlier proposes to require the use of a local residential address for registration and to provide for disqualification for electoral franchise and election for any one convicted of an offence relating to the submission of false registration particulars.
In order to deal with the problem comprehensively, it is proposed that an offence should be created under section 14 of the Corrupt and Illegal Practices Ordinance for fraudulent voting on the basis of false registration. Clause 4 adds to the offences specified in this section the encouragement of fraudulent voting. A new sub-section is proposed to deal with fraudulent voting on the basis of a false registration as an elector.
Sir, I move that the debate on the Bill be now adjourned.
Question on the adjournment proposed, put and agreed to.
BRITISH NATIONALITY (MISCELLANEOUS PROVISIONS) (AMENDMENT) BILL 1990
THE SECRETARY FOR SECURITY moved the Second Reading of: "A Bill to amend the British Nationality (Miscellaneous Provisions) Ordinance."
He said: Sir, I move that the British Nationality (Miscellaneous Provisions) (Amendment) Bill 1990 be read the Second time. The Bill will introduce two new provisions which are needed for the implementation of the British citizenship scheme.
First, clause 4 will make it an offence for a person to make a false statement when applying for British citizenship under the scheme. The offence will carry a maximum penalty of a fine of $15,000 and imprisonment for three months. This is in line with our existing law whereby it is an offence to make a false statement in any application under the British Nationality Act 1981.
Secondly, clause 5 will make it an offence for anyone involved in the processing of applications under the scheme to disclose the identity of, or any information relating to, persons who have applied for British citizenship except in the performance of duty. The offence will carry a maximum penalty of a fine of $50,000
and imprisonment for six months. This provision is necessary because a large amount of detailed personal information will have to be provided to the Government in support of applications under the scheme. Similar provisions already exist to protect the privacy of information given to the Government under the Census and Statistics
Ordinance and the Inland Revenue Ordinance.
We need to have this legislation in place before we invite applications under the British citizenship scheme. The British Nationality (Hong Kong) Act 1990 has now completed its passage through Parliament, and is, I understand, likely to receive the Royal Assent at the end of this month. Our present plan is to start receiving applications on 1 December 1990.
Sir, I move that the debate on this motion be now adjourned.
Question on the adjournment proposed, put and agreed to.
MUNICIPAL SERVICES APPEALS BOARDS BILL 1990
Resumption of debate on Second Reading which was moved on 9 May 1990 Question on Second Reading proposed.
MRS. FAN: Sir, the purpose of this Bill is to provide that in future appeals against the decisions of the Urban Council and Regional Council and certain officers, under specified legislation, shall be to an Urban Services Appeals Board or Regional Services Appeals Board, as the case may be, and not to the Governor in Council. The specified legislation includes the Public Health and Municipal Services Ordinance, the Dutiable Commodities (Liquor) Regulations and the Places of Public Entertainment Ordinance.
The Bill provides that both Appeals Boards will have a common Chairman or one or more Vice-chairmen who are appointed by the Governor and must be legally qualified persons eligible for appointment as a District Court Judge. Each of the Appeals Boards will consist of at least five persons, namely the Chairman or a Vice-chairman who shall preside, two or more members of the relevant Council and an equal number of persons from a panel appointed by the Governor and nominated by the Secretary of the Board. Furthermore, an appeals board must not include any person, or any member of
a committee or other body who was involved in making the decision appealed against.
A Legislative Council ad hoc group has been formed to study the Bill, and the main concern of the group is the proposed composition of the Municipal Services Appeals Boards.
The group is concerned whether natural justice will be seen to be achieved from the appellant's point of view, given the presence of two members from the relevant municipal councils out of a total of five members on the Appeals Boards. The group is keen to ensure that the independence of the Appeals Boards should be able to win the confidence of the public.
The group has considered a proposal of excluding municipal councillors from the Boards. This however is not acceptable to the municipal councils who feel strongly that there should be a member of the relevant council on the Board who can inform the non-council members, if the circumstances of a particular case require, of the considerations which influenced the council when formulating the policy and how
policies actually work. They consider that the presence of two municipal councillors as presently proposed in the Bill will ensure that due regard will be given to the policies of the municipal councils when appeals are heard. Otherwise, the Appeals Boards might take decisions which would effectively undermine established policies of the councils.
After giving due weight to both the sentiment of the municipal councils and the confidence of the appellants, the majority of members of the group favoured the option to have only one municipal councillor and two non-council members on the Board. The presence of one municipal councillor will be sufficient to ensure that due regard is given to council policies in deciding appeals, and the composition can give the public greater confidence in the independence of the Appeals Boards in that the
non-council members are in a significant majority. Therefore, in future there should be a fixed membership of four including the Chairman on each Board. The group has also examined the composition of other appeals boards and tribunals and finds that this is in line with the composition of most of them. Moreover, in order to ensure that a decision can be made if a board is evenly divided over an appeal, the
Administration has proposed, and the group has accepted, that the Chairman should be given an original as well as a casting vote.
The proposed amendments have been agreed by both the Urban Council and the
Regional Council. I shall move the amendments in the Committee stage.
The Administration has also proposed a number of technical amendments to the Bill, which aim at streamlining the procedures of the Appeals Boards. The ad hoc group has agreed to these amendments.
In the course of studying the Bill, the ad hoc group notes that there appears to be no standard practice in regard to the constitutions of the various statutory appeals bodies in Hong Kong. The group is of the view that the situation should be streamlined and the Government should be asked to consider adjusting the memberships of existing statutory appeals bodies so that the number of persons who may have been directly or indirectly involved in making a decision which is subject to appeal should be reduced to the absolute minimum. The principle should also apply in any future appeals bodies to be set up.
Sir, with these remarks, I support the motion.
MR. CHEUNG YAN-LUNG (in Cantonese): Sir, it is understood that the Administration has fully sought the views of the Regional Council and the Urban Council on the membership of the Municipal Services Appeals Boards, and the issue of upholding the principle of natural justice has also been thoroughly discussed in the process of consultation.
In endorsing the original proposal of the Bill, that is, having two or more members of the relevant municipal council to sit on an appeal board, the Regional Council has considered in great detail the advice of the Legal Department that the proposed composition of the appeals boards would not contravene the principle of justice. To my knowledge, the legal advice has been given on the following basis:
(1) municipal councillors will only form a minority on each appeal board;
(2) municipal councillors who have been involved in any capacity in making the original decision under appeal will not sit on the appeal board;
(3) the appellant will have the chance to attend and be represented at the hearings of the appeal board.
As a matter of fact, the inclusion of municipal councillors on the appeals boards
will ensure that due regard will be given to the municipal council policies on matters under appeal. Members of the Regional Council consider that any decision to exclude municipal council members from the appeals boards will deny the appeals boards of the valuable opinion that they badly need. Such a decision will also signify a great distrust of the integrity of the municipal councillors.
The ad hoc group's proposal to reduce the number of members of the relevant municipal council on the appeal boards from two to one to enable non-council members to form a significant majority is a measure to give the public greater confidence in the independence and autonomy of the appeals boards. The proposal of keeping one municipal councillor on the appeals boards can ensure that due regard will be given to municipal council policies when appeals are determined. After deliberation at its full council meeting, the Regional Council has endorsed the proposed amendment which will be conducive to maintaining the co-ordinated operation of the three-tier structure of our representative government.
The Regional Council has also agreed that in future the secretary to the appeals boards can nominate any members of the Regional Council to sit on the appeal boards provided that the one nominated has not been involved in making the original decision under appeal.
Sir, with these remarks, I support the motion.
MRS. TU: Sir, I speak as the representative of the Urban Council constituency.
When this Bill was first tabled, the Government and the Urban Council had already reached agreement on its original terms, that two Urban Councillors should be appointed to the Appeals Boards. The purpose was to ensure that expertise was available on both licensed premises and on market and street traders policies.
When the ad hoc group and the In-House Meeting of the Legislative Council decided to reduce representation on the Appeals Boards to one municipal council member, the Urban Council requested that arrangements be made to hold separate hearings for the two types of appeal, so that an Urban Councillor with the relevant expertise might be present at each type of hearing.
The Urban Council's request was granted, and those arrangements have now been
made within the administrative procedures of the Municipal Services Appeals Boards, subject to formal approval by the Chairman of the Boards. Under these arrangements, the Urban Council will submit two separate lists of Councillors, one with knowledge of licensed premises and the other of markets and street traders policies.
At its meeting on 17 July, the Urban Council agreed to the new arrangements, and I am now authorized to support the Bill.
CHIEF SECRETARY: Sir, I would like to thank the ad hoc group and also the two municipal councils for coming together and finding a good compromise way of proceeding forward on this Bill. I will not go further into the details. Mrs. FAN has outlined the proposal which she is putting on membership which now has the support of the two councils and which is supported by the Administration. Mrs. TU has pointed out the point of the experienced members standing on the relevant select committees and we have also accepted the procedures which Mrs. TU has outlined, Sir.
The problem does not arise, I should say, in terms of the Regional Services Appeals Board because the Regional Council has a different committee structure from the Urban Council.
There remains only one point for me to pick up -- that made by Mrs. Rita FAN -- to the effect that there appeared to be no standard practice in regard to the constitutions of the various statutory appeals bodies in Hong Kong. We find, Sir, that it is difficult to adopt a standard practice because of the varied natures of the boards. Some of them are concerned with judicial appeals and others with administrative appeals and each has to be looked at in the light of the circumstances surrounding the appeals boards. However, we will certainly bear in mind the ad hoc group's views when considering the establishment of any future appeals bodies.
I shall move an amendment at the Committee stage to remove a loophole which has been detected in clause 5. I shall also move some amendments to improve the practical working of the appeals boards.
Question on the Second Reading of the Bill put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
COMPANIES (AMENDMENT) (NO. 4) BILL 1990
Resumption of debate on Second Reading which was moved on 30 May 1990 Question on Second Reading proposed.
MR. BARROW: Sir, I will concentrate today on only two main points of principle relating to this Bill.
This, however, does not mean that the ad hoc group has taken the Bill lightly. There have been three meetings, including two with the Administration, to consider submissions including one from the Society of Accountants. Reference has also been made to the Sixth Report of the Standing Committee on Company Law Reform for the main objections of various professional bodies against the introduction of the new
procedures for the conversion of a compulsory winding-up to a creditor's voluntary winding-up.
The first concern relates to the issue of time limit for making an application for conversion.
Under the new section 209A, an application should be made within three months of the date of a resolution passed at the first meeting of the creditors and contributories or any adjournment to that meeting or within such further period as the court may permit.
It has been suggested that if the Official Receiver's Office could function on a time-costing basis, fees for the work done in respect of a compulsory winding up prior to its conversion to a creditors' winding-up could be recovered, making it unnecessary to impose a time limit on application for conversion.
The Administration has, however, explained that the commercial basis on which the Official Receiver operates in a compulsory liquidation is a scheme of payments by results and he charges fees on a percentage of the assets recovered and distribution made. Such basis of charging is necessary since the Official Receiver would have to recover costs on a global basis so that high asset value cases subsidize low asset value cases to ensure the financial viability of his Office. This charging policy
is also set down in law under the Companies (Fees and Percentages) Order.
The change to a system of time-costing would involve substantial administrative problems and the Official Receiver would have to introduce a costing system for every liquidation on the assumption that it might be converted to a voluntary liquidation at some future time. This would be an undue administrative burden for the Receiver as in the great majority of cases, he cannot charge time-cost or the question of conversion is unlikely to arise because the assets available are insufficient to meet the cost of the time spent on the case. The Administration also advises that the Official Receiver's Office is at present running at a loss.
Having considered the views of the Administration, we feel that there are difficulties for the Official Receiver's Office to maintain a time-costing system and that regard must be given to the Administration's existing policy on the financing of that Office. We also consider it unfair if he is not paid a fee after he has carried out most of the preliminary work in a compulsory liquidation simply because of the conversion to a creditor's voluntary winding-up. It is also felt that people who use the service provided by the Receiver's Office should pay for it: there is no justification for any subsidy from the taxpayer's money.
In essence, we agree that the provision should be left as it is.
The second issue of concern relates to the Receiver's right of audience before the court on the hearing of an application for conversion.
While one submission feels that it is fair for a party being removed from an appointment in liquidation to have an opportunity to explain to the court any reasons he has for not being removed, the Society of Accountants feels that the Official Receiver should maintain a neutral stance.
The Administration points out that the Official Receiver is not obliged to appear at a hearing of the application under the new subsection 209A(7). After having submitted a report to the court regarding the application under the new subsection 209A(6), he will probably maintain a neutral position -- unless he wishes to oppose the application.
We consider that since the effect of a conversion to creditors' winding-up is to remove a liquidation from the court's supervision and there may be good reasons
in the public interest why an application should be supported or opposed, it is appropriate for the Official Receiver to be given the right to be heard on any application for conversion.
Sir, other points of concern on the Bill have been raised by the Society of Accountants. I understand my honourable colleague, Mr. Peter WONG, will speak to them and I will not therefore repeat them now. These points have however been looked at by the ad hoc group and we remain of the view that the Bill should be supported.
With these words, Sir, I support the motion.
MR. PETER WONG: Sir, I find great difficulty in supporting this Bill in which I have to declare a possible interest as my firm is involved in insolvency work. The problem started with the Legislative Council Brief which stated that this Bill "reflects a recommendation of the Standing Committee on Company Law Reform" but did not tell us that both the Hong Kong Society of Accountants (HKSA) and the Law Society were not in favour of the proposals.
The story only unfolded after my insolvency partner briefed me on the background. This elicited a three-page response from the Administration followed by a barrage of correspondence from the Administration and insolvency practitioners. I would question whether the Executive Council were given all the pertinent facts when they recommended this Bill for passage.
The main point of contention of accountants, who perform the bulk of insolvency work in the private sector in conjunction with the lawyers, is the inequitable way that liquidations undertaken by the Official Receiver is charged on a fixed percentage basis on both assets realized and bank deposit income. It is for the public good that the Official Receiver's office is established to wind up the affairs of the bankrupts and insolvent companies. But is it fair that those with high proportion of assets should subsidize those with little or no assets?
The Hong Kong Society of Accountants feels that this central issue should be addressed with a full review of insolvency legislation rather than passing a piece-meal legislation that this No. 4 Amendment Bill presents.
I believe that time costing records should be kept by all professional staff of the Official Receiver's Office so that charges can be based on work done and not on percentages. This convenient, traditional percentage way ensures that
inefficiencies are buried and individual officers are not accountable for their performance. Time records are a useful management tool for all professionals who have to organize their time wisely. I understand that the Official Receiver's Office is introducing time sheets this autumn, but would strongly urge that the Official Receiver adopts commercial discipline and also uses time spent as an alternative and fairer way of charging his fees.
I would submit that the public good requires that the Official Receiver charges his work on an individual case by case basis at time cost or actual assets available whichever is the lower. Shortfall on company insolvencies should be paid for by a standard or scaled levy on businesses registered. Individual bankruptcies should be a charge against general revenues.
The HKSA also questions the need of spelling out in section 209A(2) the 10 criteria for the judge to consider. I am given to understand that this is already standard and well tried practice, but the enactment of guidelines into law will mean that everything now has to be formalized and additional evidence of doubtful value
presented since the judge must now be formally satisfied on all 10 points.
The HKSA is also fearful that the three-month deadline for conversion under section 209A(1) will mean that in all but the most simple cases, liquidators will automatically apply for an extension of time just to protect themselves against any unforeseen circumstances. So this legislation, instead of streamlining the operation, will only create more red-tape and cost.
Sir, as I said at the start, I find it difficult to support this Bill because of the fundamental flaw in the manner in which the exercise is to be paid for. Although the amended Bill achieves the objectives set out, the exercise will not really help in streamlining insolvency work. I would have voted against the passage of the Bill but for my possible interest, and would therefore abstain.
FINANCIAL SECRETARY: Sir, I am grateful to Mr. BARROW and other members of the ad hoc group for their careful consideration of, and support for, the Bill.
In his speech, Mr. BARROW has identified two major issues over which concern was expressed to the ad hoc group by, among others, the Hong Kong Society of Accountants (HKSA). Mr. WONG has highlighted in his speech other points of concern to the HKSA.
Before addressing those issues, I wish to point out that the HKSA and the Law Society's comments were carefully considered and taken into account by the Standing Committee on Company Law Reform in making its recommendations to the Administration. I also regard the comment that we have adopted a "piece-meal" approach as misconceived. Section 209A is a provision which stands very much on its own and which can therefore be amended separately, without impinging on the other winding-up provisions of the Ordinance.
Time limit (section 209A(1))
Let me now address the issues in respect of which concern was expressed to the ad hoc group. The first relates to the time limit for an application for conversion to a voluntary winding-up and the possibility of the Official Receiver's Division functioning on a time-cost basis. Concern has been expressed that the time limit of three months from the first meeting of the creditors and contributories is too short and that it would be unnecessary to impose a time limit if the Official Receiver could charge fees on a time-cost basis. As explained by Mr. BARROW, the proposed change to a system of time-costing would pose significant practical problems for the Official Receiver. I should, however, reiterate that under the present system, creditors can seek conversion at any time during the course of a compulsory
liquidation to avoid the payment of fees to the Official Receiver for his investigatory work. Indeed the main reason which has been given in most of the successful conversions to date is that of avoiding payment of such fees. This is an unsatisfactory situation and needs to be rectified.
Our proposal to remedy this weakness is to require any application for conversion to be made within a period of three months from the statutory first meetings. We believe that this time period should in normal circumstances be sufficient for creditors to reach a decision on the way forward and for them to prepare the necessary documents. We accept, however, that there may be particular circumstances in which creditors will need more time to consider the question of conversion. Accordingly, the Bill provides for an adjournment of the meeting. Creditors can also apply to the court for an extension of the time limit. There are thus adequate safeguards available to the creditors and contributories.
Public interest (section 209A(2))
The second area of concern is in respect of the various matters relating to the
public interest to which the court should have regard, and to the Official Receiver's right of audience before the court on the hearing of an application for conversion. The HKSA considers that the various matters set out in new section 209A(2) should not be made mandatory as not all the factors will necessarily apply in each case. The purpose of section 209A(2) is to specify various matters of public interest which the court shall consider before exercising its discretion under the new subsection (1). If certain factors cannot apply in a particular case, then clearly the court would not need to have regard to them.
The HKSA has also expressed the view that the Official Receiver should maintain a neutral stance and that his right of audience under the new subsection 209A(7) should be removed. As pointed out by Mr. BARROW, it is important for the Official Receiver to have the right to be heard on any application for conversion, as there may be good reasons in the public interest for him to support, or oppose, a particular application. I am glad therefore that the ad hoc group shares our view that no amendment to section 209A(7) is required.
Sir, I beg to move.
Question on the Second Reading of the Bill put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
COMPANIES (AMENDMENT) (NO. 5) BILL 1990
Resumption of debate on Second Reading which was moved on 30 May 1990 Question on Second Reading proposed.
MR. BARROW: Sir, in his speech moving the Second Reading of this Bill on 30 May 1990, the Financial Secretary explained why the existing system for the registration of company names was considered unsatisfactory and why the introduction of a new system was called for. I shall not repeat this today but will highlight some of the issues which have been considered by the ad hoc group.
The first issue relates to the concern expressed about the disappearance of statutory safeguards for existing companies. Under the new system, the registrar is no longer required to make a decision on whether a proposed new name is too like an existing company name. A company name may be registered as long as it is not the same as that of an existing company. Such change has aroused concern that the protection for names of existing companies under the present system would disappear.
We note, however, from our discussion with the Administration that under the existing system where a fair amount of subjective judgement is required to determine whether a proposed company name resembles an existing company name too closely, it takes up to three months to incorporate a new company.
We also note that each of the 2 000 applications per month would have to be checked against the 250 000 names of existing companies and 40 000 reserved names, which is a chief reason for the delay in incorporating new companies. This is much longer than that require in other jurisdictions and is in our view against Hong Kong's interest as an international financial centre.
A more efficient system is required to cope with the needs of today's business environment. In any event we consider that the proposed legislation has provided for adequate safeguards for existing companies since a Companies Registrar may, within 12 months of the incorporation of the new company, direct the company to change its name on appeal from a pre-existing company. After the expiry of the 12-month period the pre-existing company would still be able to start passing-off actions in the courts.
These provisions, together with the Company Registry's plans to enhance public access to the index of the company names, should address the concern about safeguards for the existing companies.
The second issue relates to the potential hardship to new companies which may arise when a company is directed under the new section 22 by the Registrar within 12 months of its incorporation to change its name.
The ad hoc group, however, considers that promoters of proposed company names have the obligation not to register names that resemble existing company names too closely in the first place. With the enhancement of the system to facilitate public access to the index of company names, promoters should ensure a thorough search on
existing names is done before applying for incorporation.
Finally, we were concerned about the possibility of abuse of the new system by unscrupulous promoters seeking to blackmail existing companies by incorporating new companies with similar names deliberately.
The use of characters which are different but are identically phonetical in Chinese names may also increase the chance of abuse. We feel that the Administration should adopt a firm line against any abuse of the new system. We have also suggested that the penalties in respect of a company's failure to comply with the direction of the Registrar to change its name under the new section 22 should be increased to enhance their deterrent effect. This has been agreed by the Administration and Committee stage amendments to this effect will be moved by the Financial Secretary later today.
Sir, I should like to take this opportunity to point out that the ad hoc group has carefully examined the views expressed by various organizations before making a decision to support the Bill. And we are convinced that the new system which will help reduce the time required to incorporate a new company significantly is a change in the right direction for Hong Kong.
With these remarks, Sir, I support the motion.
FINANCIAL SECRETARY: Sir, I am grateful to Mr. BARROW and members of the ad hoc group for their careful consideration of, and support for, this Bill.
In his speech, Mr. BARROW has identified two issues over which concern was expressed to the ad hoc group. The first related to the protection for names of existing companies. As Mr. BARROW has indicated, under the proposed system, where a company name is registered which, in the opinion of the Registrar of Companies, is too similar to a name already entered in the index of companies, the Registrar may, within 12 months of registration, direct the company to change its name. I can confirm that adequate facilities for name searches will be made available to ensure that the public has ample access to the record of company names. I am glad that the ad hoc group shares our view that adequate safeguards are thus available for existing companies.
The second issue related to the possible hardship to a new company which might be directed by the Registrar to change its name within 12 months of its incorporation. Both the Administration and the ad hoc group consider that the responsibility for checking the index of companies to guard against "too like" names should rest with the private sector. It is for the promoters of any new company to ensure that a thorough search is conducted before applying for incorporation. As I have already said, we shall be ensuring that adequate facilities are made available for such
searches.
Finally, the ad hoc group itself has expressed concern about the possibility of abuse of the new system by unscrupulous promoters. We agree that a firm and hard line must be taken against any abuse of the new system. To this end, I shall be moving Committee stage amendments to increase the penalties in respect of a company's failure to comply with the Registrar's direction to change its name.
Sir, I beg to move.
Question on the Second Reading of the Bill put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
4.39 pm
HIS EXCELLENCY THE PRESIDENT: The Council still has a good deal of business to get through this afternoon. Members might welcome a short break at this point.
5.04 pm
HIS EXCELLENCY THE PRESIDENT: Council will now resume. I think we have a quorum.
HANG LUNG BANK (ACQUISITION) (AMENDMENT) BILL 1990
Resumption of debate on Second Reading which was moved on 11 July 1990
Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
SECURITIES (INSIDER DEALING) BILL 1989
Resumption of debate on Second Reading which was moved on 12 July 1989 Question on Second Reading proposed.
MR. CHEONG: Sir, I think Members probably know that I will speak for a long time and this is why they are not attending.
When the Securities (Insider Dealing) Bill was first introduced into this Council, Sir, in July 1989, the Legislative Council ad hoc group set up to study the Bill was vested with the onerous task of ensuring that the legislation that eventually passed through this Council was effective but not to the extent of killing the market. The right balance has to be struck in order that Hong Kong remains an attractive market for investors.
Thirteen months have passed and I am pleased to report back in this Council that, despite certain periods of slow progress, we have been able to reach an agreement with the Administration for a number of important changes to be made to the Bill. Let me hasten to add that such period of seemingly slow progress was not the result of inaction by the ad hoc group. It was due to the need of the Administration to seek advice from relevant quarters on major points of principles such as whether or not the taking away of the right of silence will contravene the forthcoming Human Rights Bill. Many of the changes to the Bill will go some way to address the various concerns in the market about the scope of the Bill. Since some of the amendments will be moved by my honourable colleagues on the ad hoc group later today, and they will explain in greater detail the rationale behind these amendments, I shall be brief in covering these points.
Sir, before I talk about the ad hoc group's work, I should like to express my heart-felt thanks to the 18 organizations and individuals making submissions to the
ad hoc group. The constructive comments made in the submissions have helped us focus our attention on many of the major problems associated with the Bill, and have also helped us better understand the sentiment and concern of the market as well as the Administration.
Width of the scope of insider dealing
Sir, a predominent concern expressed by the submissions relates to the width of the scope of insider dealing that arises from provisions like "connected with a corporation" (clause 3) and definition of "relevant information" (clause 7). It is felt that the resulting uncertainty may become a deterrent to market activities, and is not, therefore, conducive to the continued development of Hong Kong as an international financial centre. As a result of the discussions with the Administration, a number of changes to the Bill aimed at restricting the scope of the provisions have been agreed; a number of clarifications have also been sought.
First, in respect of the definition of what constitutes "relevant information" under clause 7, it is our concern that the two key components of the definition, namely information which is "not generally available", and information which would be likely to bring about "a material change in the price" of any listed securities of a
corporation, are wide and lack clarity.
We have, after a series of exchange, persuaded the Administration to adopt an alternative definition proposed by the ad hoc group. The new definition, which models after the wording of the United Kingdom Company Securities (Insider Dealing) Act 1985, will be moved by my colleague, the Honourable Mrs. Miriam LAU. I am sure she will explain further the rationale. Despite reservations expressed by the Administration about the lack of tested cases in the United Kingdom, and the United Kingdom's possible intention to replace the existing wording of the United Kingdom Act by that of the European Communities Council directive, which resembles the wording of the Bill more closely, we feel that the new definition proposed today has served to narrow down the scope of "relevant information" and will afford greater certainty to the market.
Secondly, the width of the definition of a person "connected with a corporation" under clause 3 has resulted in unease about the possibility of a person being caught without actually knowing that they are connected. A number of hypothetical cases have been presented to the ad hoc group to illustrate the concern.
In general, the Administration's line is that the net has to be cast wide for the legislation to be effective. Nevertheless, they have assured the ad hoc group that there are important tests, such as the test on motive, to be applied and important procedural safeguards against implicating the innocent.
Based on the hypothetical cases, however, we have persuaded the Administration to provide for a number of additional defences or exceptions in the Bill, some of which will be moved by my colleague the Honourable Peter WONG. The Administration has also, in relation to the concern about the lack of a clear distinction between a true insider dealer and a negligent person in general, proposed to introduce a new concept of an "insider dealer" in the Bill. Provisions will also be made to cater for the concern about negligent director being implicated.
Despite the agreed changes to the Bill, we feel that many of the hypothetical cases presented by the market organizations have stemmed from a lack of understanding of the procedures to be followed in the investigation into possible cases of insider dealing before a decision is made to set up a tribunal. Accordingly, the
Administration has been requested to brief us on how the mechanism is expected to work.
In short, it is envisaged that the Securities and Futures Commission (SFC) would be responsible for initial investigation, and would have to be satisfied that there is a case to be answered and investigated by a tribunal before making a recommendation to this effect to the Financial Secretary, who would then have the ultimate say on whether a tribunal ought to be set up. We believe that a clear knowledge of the mechanism will go some way in addressing unfounded fear about how the system would work. We have therefore requested the Financial Secretary to explain in greater detail these procedures today. My colleague, the Honourable Martin BARROW, will also be moving amendments to clauses 9 and 10 of the Bill to address concern about the mechanism.
The Administration has also, in the course of the discussion, obtained legal advice which confirmed that innocent principals who completely entrust the management of their stocks with third parties would not be caught by the provisions.
On the question of arbitrage and hedging, which are common market mechanisms employed by major institutional market players to safeguard their position. The
Administration considers that it is difficult to provide a specific defence under clause 9 in an acceptable manner although of course the general defence under clause 9(3) that "he enters into the transaction otherwise than with a view to the making of a profit or the avoiding of a loss by the use of relevant information" may be available.
I deal now with the second issue which is the controlling shareholders as buyers and sellers of the last resort. It actually deals with the market liquidity problem of the stocks.
Another major issue dealt with by the ad hoc group relates to the role played in Hong Kong by controlling shareholders of listed companies in acting as the buyers or sellers of the last resort in the shares of their companies. It is a common feature of the Hong Kong market that a large proportion of the shares of many listed companies are held by controlling shareholders cum management, who are from time to time
approached by brokers for the purchase or sale of large lines of the shares of their companies. Such activities of the controlling shareholders play a vital role in maintaining the liquidity of the market, which in turn is essential for maintaining the attractiveness of Hong Kong to international investors and maintaining the
viability of the Hong Kong market.
It has been argued that controlling shareholders, who respond to such unsolicited deals chiefly for the sake of ensuring liquidity of the shares of their companies, would be deterred from continuing to do so lest they should risk being brought before a tribunal to prove in public that they are innocent.
After a series of discussions with the ad hoc group, the Administration maintained that it would not be possible for them to make a blanket exception of such activities of controlling shareholders who, unlike genuine "market-makers" in other markets, have the liberty to decide whether or not to respond, largely to suit their own
circumstances.
However, a way forward was found using the "caveat emptor" principle by providing an exception in the Bill on the basis that a dealing should not be prohibited if the party to be involved in a transaction with a controlling shareholder was aware that he was dealing with a person who was a connected person and who might therefore be in possession of relevant information, that is the other party accepting the
possibility of being disadvantaged by engaging in the deal. A new clause 9(6) will
be moved by my colleague the Honourable Peter WONG and I am sure he will speak further on this particular subject.
In response to the ad hoc group's query about what would be done specifically to address the concern about liquidity of the market, the Administration has suggested that liquidity would be enhanced by three measures which would be put in place as quickly as possible. The first is a proposal to allow the buyback of shares by listed companies, which is expected to be in place by the end of 1990. The second one relates to the bringing into force of existing legislation which allows stock borrowing or lending free of stamp duty. The third relates to permitting short-selling.
The Administration has further agreed to defer the commencement of the Ordinance until legislation relating to buyback and stock borrowing are introduced possibly by the end of 1990. The group's view is that these two measures may be marginally but not significantly effective in addressing the issue of liquidity. The group accepts that short-selling will be more of an effective tool. Nevertheless, given the complexity of drafting the necessary legislation for short-selling, the group accepts that the Insider Dealing Ordinance should not be held up for a further year. Accordingly, we believe that the introduction of the "caveat emptor" provision plus the introduction of the two measures mentioned above should go some way to address the problems of market liquidity as uniquely experienced in Hong Kong.
Motive test
Sir, clause 9(3) stipulates that a person shall not be held to have been involved in insider dealing if he can prove that he did not enter into the transaction with a view to making a profit or avoiding a loss by the use of relevant information.
Despite the Securities and Futures Commission's (SFC) persistent representations that the motive test should not be retained in the Bill on the ground that such a defence would seriously hamper the effectiveness of the legislation, the ad hoc group shares the view of the Administration and the market that the defence is necessary to avoid penalizing the innocent. We feel that it would be unacceptable to remove the test, as suggested by the SFC, because it would be too much of an overkill and would only further weaken active participation by bona fide investors in the Hong Kong market.
Criminalization of insider dealing and the right to silence
We have received representations from the legal profession that it is unsatisfactory to deprive those people subject to inquiry of the right to remain silent. It has been further argued by some that insider dealing should perhaps be criminalized so that an individual would not be deprived of the right to remain silent.
The question has been a subject for discussion with the Administration, which argues that experience in other jurisdictions has proved that it would be extremely difficult to prove insider dealing if the right to silence were to be enshrined in the Bill, and would, therefore, render the legislation ineffective.
Whilst we cannot fault the logic of the legal profession's representation, we feel that, on balance, the issue of criminalizing insider dealing should not be pursued at this stage. We have, however, asked the Administration to address the concern about the possible erosion of civil liberty in the context of the Bill of Rights.
The Administration's view, in short, is that although it is not possible to rule out totally the possibility of a conflict with the Bill of Rights, there is no reason for holding up the Bill in question simply because it may happen. After all, the courts can be relied upon to resolve any doubts should they arise. We accept this line of reasoning for the time being but wish to put down a marker here that the Administration should consider conducting a review on the subject in the light of experience.
Hearings of Tribunal
As regards the concern about the potential stigmatizing effects of the public hearings of the Tribunal, we have noted the legal profession's argument that it would be in the interest of the administration of justice to have hearings in public. Furthermore, since the Tribunal will have the discretion to hold certain parts of its hearings in private, there should be safeguards for the individual's rights where necessary. This point will be elaborated further by my colleague, the Honourable David LI, when he moves an amendment to the Schedule of the Bill.
As regards procedural safeguards for persons called in to give evidence by the Tribunal, we have been assured by the Administration that a person called in by the Tribunal would be issued a "Salmon Letter", stating whether he is suspected of having
been involved in insider dealing or whether he is just being called in to give evidence. Secondly, a person would be entitled to be represented legally. He would also have a right to be heard before a finding could be made against him.
As regards a person suspected of insider dealing summoned to appear before the Tribunal half way through its hearings, the Administration has confirmed that such a person would be given access to all previous papers on the Tribunal's hearings.
Sir, there are a number of other amendments to the Bill which I shall not detail here, but they do represent a step forward in setting the provisions of the Bill in the right direction. Before I close, Sir, may I add that no change to the Bill can reflect the amount of time and effort made by members of the ad hoc group as well as the Administration in ensuring that whatever legislation is passed by this Council, the objective of a balanced regulatory environment is maintained. May I pay tribute to members of the ad hoc group, who have toiled to find acceptable solutions to the many problems associated with the Bill. I would also like to thank the Honourable Mrs. Peggy LAM in particular for her contribution in scrutinizing the Chinese text of the Bill which is a no less difficult task. Last but not least, I would like to take the opportunity and pay special tribute to the OMELCO secretariat and the OMELCO legal unit. Their dedication and hard work not only enhanced the value of the work of the ad hoc group, they are in my view, truly fine examples of the excellent quality of our Civil Service whose contribution to this society should never be underestimated by anyone at any time.
With these remarks, Sir, I support the motion.
MRS. LAM (in Cantonese): Sir, in scrutinizing the Chinese version of the Bill, the first problem we encountered is the difficulty in identifying the Chinese equivalents for the English terms.
The first term in question is "reputed spouse", the true meaning of which is a male and a female who, having lived together for a certain period of time, are recognized by others as a married couple. In the Chinese version, 公認配偶 is used. To reflect its meaning more precisely, it is now proposed that 公認配偶 be amended as ㆒般公認配偶 .
The second term is "securities instrument", which is 證券的文書 in the Chinese text. Because the word "instrument" in the Bill means document, it is proposed that
its Chinese equivalent be amended as 證券的文件 .
The third thing to be considered is the clause "whether such member or employee is temporary or permanent". In the Chinese version it reads 不論其成員或僱員職 位屬長設或臨時性質 . We consider that 長久 is more appropriate than 長設 for the word "permanent".
The fourth term is "take-over offer". According to my understanding, it is known as 收購建議 to the market practitioners. The law draftsman explained to us that, from a legal point of view, the word "offer" should be translated as 要約 rather than 建議 . According to Ci Hai (an authoritative Chinese dictionary), 要 約 is a legal term meaning with a view to entering into a contract. We accept the law draftsman's view that the term 收購要約 should be used and we hope that the coinage is also acceptable to the practitioners.
The fifth and a more important term is "material change" as mentioned in the definition of 有關消息 . The Chinese version uses the term 實質變動 which is slightly different from its meaning in English. After further consideration, the law draftsman proposed to use 不是無關重要 to express the true meaning of the word "material".
Another English term in question is "reasonably practicable". We feel that the phrase 按常理可行 in the Chinese version cannot reflect the meaning of "reasonable" in English law. 常理 is not the same as 合理 . So we propose to use 按理可行 .
As the Bill has wide legal implications, in scrutinizing the Chinese text, special attention was paid to the consistency of meanings of corresponding clauses in the Chinese and the English versions. Because of slight discrepancies in clauses 13(1) and 14(f) between the Chinese and English versions, we have amended the Chinese
version of these two clauses. Furthermore, the sentence structure of certain clauses were also altered in order to reflect the meaning more clearly.
Sir, with these remarks, I support the motion.
MR. PETER WONG: Sir, I would first of all declare my interest as the non-executive director of the Securities and Futures Commission (SFC) in this as well as a subsequent number of Bills in connection with the securities field. Sir, I have all along
disagreed with the fundamental tenet of this Bill to give the regulatory authority draconian powers and to impose very severe fines but falling just short of criminalizing the act and hence denying the full protection of the criminal code against self-incrimination. We are adopting a unique Hong Kong solution and thus defy the wisdom of the major powers in the securities field which is firmly fixed on criminal sanctions. I have reluctantly bowed to this policy decision and tried to make the non-criminalization method work.
I am disappointed that the Administration has given in to the ad hoc group's new definition of "relevant information" which is based upon the existing United Kingdom definition of "inside information".
I have been informed by the staff of the SFC that the United Kingdom definition is shortly to be replaced by a new definition which is contained in the European Community Directive in respect of which the United Kingdom Department of Trade and Industry played a very active part. This means that we will adopt a definition which will soon be outdated and therefore we are unlikely to get much help from the decisions of the European courts to assist us to interpret the fine points of the definition.
I will therefore be pleased to hear the Financial Secretary's full explanation for this rejection of the European Community definition in favour of the United Kingdom one. I would also welcome the Financial Secretary's confirmation that the definition will be reviewed once the United Kingdom adopts the European Community definition.
The United Kingdom definition refers to persons "who are accustomed to or would be likely to deal" in particular securities. This may be all very well in the United Kingdom where the Stock Exchange and Reuters information systems can be used as the yardstick for dissemination of information. We have no such clear yardstick in Hong Kong and hence the definition is likely to lead to uncertainty.
There is concern that if the price of a certain share moved because of dealings between a connected person and a small limited number of other persons to whom the information was confined, the Insider Dealing Tribunal, having no criteria to guide it, may be forced to draw the conclusion that those limited number of persons are persons who are accustomed to deal or who would be likely to deal in those securities. This may give rise to effectively legalizing small insider dealing clubs.
I understand that one of the reasons for the new wording is to assist financial analysts who might be passing on their recommendations in relation to particular securities to a selected number of clients. It is difficult to see how such recommendations could amount to inside information if they are based on research into publicly available information. If, on the other hand, they result from tips from directors in possession of inside information, the analyst should not be dealing or encouraging his clients to deal on the basis of such tips.
I feel that it would be better to leave the text as it was in the previous draft of the Bill and which is currently in the existing legislation and that is the insider must show the information was "generally available". In practice, this has meant publication in the financial media. I note that similar phraseology is being used in the European Community directive definition where the test is that the information must have been made public. That is the latest thinking and one finds it hard to see therefore why we are departing from existing language which has proven to be uncontroversial in the three insider dealing inquiries which have been conducted to date.
Hong Kong is not unique in having to solve this very difficult problem of insider trading which is making use of privileged information for personal and unfair gain. We have to give the SFC, our designated regulatory authority, effective means to bring those insider dealers to book. We also have to balance those means against the
possible intrusions upon the rights of the individuals. In this Bill, we have been attempting to balance those powers and intrusions.
Sir, I have expressed a strong reservation of the definition of relevant information, but this does not prevent me from supporting the Bill as a whole because there are many areas, such as in appeal, which are to the benefit of the whole. These have been elaborated upon by my colleagues.
Sir, I support the Bill.
FINANCIAL SECRETARY: After I introduced the Securities (Insider Dealing) Bill to this Council in July last year, an ad hoc group under the chairmanship of Mr. Stephen CHEONG was established to study the Bill. An enormous amount of time and effort has gone into this task and I would like to express my appreciation to Mr. CHEONG and members of the ad hoc group for their helpful and constructive approach to this subject.
At the Committee stage a number of amendments will be moved by members of the ad hoc group and myself. I shall be brief when moving the amendments, highlighting only the essential points and major amendments of special interest to the securities industry or this Council.
In the course of studying the Bill, members of the group addressed a number of issues in respect of which concern had been expressed to them. The first related to the proper balance between the powers of the Insider Dealing Tribunal and the rights of the individual. Several separate points were made.
Criminalization
The first point was whether or not insider dealing should be criminalized. As I made clear when introducing the Bill to this Council, our view remains that insider dealing should not for the present be made a criminal offence but that the position should be reviewed in the light of experience of the effect of increased Tribunal sanctions and the effectiveness of enforcement action. Criminal sanctions have in fact proved ineffective elsewhere because of the difficulties of prosecution and of securing convictions. We firmly believe that at the present time the tribunal
approach represents the most flexible and effective way to tackle the problem in Hong Kong.
Right to silence
The second point concerned the so-called "right to silence". It has been suggested that, given the quasi-criminal sanctions being made available to the Tribunal, the non-application of this right should be lifted. We do not support this suggestion. The privilege against self-incrimination or "right to silence" applies to criminal proceedings. Insider dealing is not a criminal offence, notwithstanding the Tribunal's power to impose penal sanctions. The whole purpose of retaining the tribunal system is to ensure that as far as possible the Tribunal is able to get at the truth. We believe this approach is necessary to tackle more effectively the problem of insider dealing which, by its nature, is most difficult to prove.
Bill of Rights
Concern has been expressed by the ad hoc group about the implications of the Bill
of Rights in relation to the "right to silence". The Attorney General's Chambers have been consulted and their advice is that it would be most unlikely for the courts to find the legislation to be in conflict with the Bill of Rights. The courts can be relied upon to resolve doubts should the need arise. We firmly believe that clause 16, which is central to the effectiveness of the tribunal approach, should be
retained.
Hearings in public
The third point concerned the hearings of the Tribunal. We continue to favour hearings in public with a discretion for the Tribunal to hold sittings, or part thereof, in private if the interests of justice so require. The virtue of public hearings is that public scrutiny assists in preventing oppressive or unfair procedures being employed. Public awareness of what is taking place dispels suspicion of oppression and unfairness. We believe that the wider public interest calls for public hearings. But to meet the legitimate concern about possible injustice, there must be a discretion to hold sittings in private. The Tribunal is best placed to exercise this discretion.
Procedural safeguards (Right to be heard)
The fourth point concerned the procedural safeguards: whether they were adequate and whether they should be enshrined in the law.
We believe the Tribunal procedures to be adequate and that they need not be enshrined in the law. First, the Insider Dealing Tribunal, like any other tribunal, is subject to the rules of natural justice. The Tribunal has a duty to act in a judicial and fair manner and no person shall be condemned unless he has been given prior notice of the allegations against him and an opportunity to be heard -- the principle of audi alteram partem.
Secondly, their enshrinement would impose unnecessary restraints upon the Tribunal. The Tribunal's proceedings are investigative or inquisitorial by nature. The flexibility which this approach affords is the main attraction of the tribunal system. Any attempt to lay down formal procedural requirements would inhibit the Tribunal and would undermine the very flexibility which is crucial to the effectiveness of the system. We prefer therefore to allow the Tribunal to set its own procedures in the light of the circumstances of each inquiry, bearing in mind its duty to observe the rules of natural justice.
Scope of the Bill and market activities
A second issue of concern related to the scope of the Bill and its effect on market activities. Here again there were a number of separate points.
Definition of "a person connected with a corporation"
The first point concerned the definition of "connected person" under clause 3. It was suggested that a person might be regarded as an insider dealer even though he did not know that the information he possessed was relevant information or that he was a connected person.
Knowledge that the information is relevant information is already a test under clause 8. In fact we would expect most people to deal precisely because they know the information in their possession to be relevant, that is, price sensitive. We do not think the definition of "connected person" is unnecessarily wide. Nor do we believe the definition will cast doubt on normal commercial deals.
Investigation procedures
In our view, the net must be cast wide to be effective. There are important tests which have to be applied and there are also important procedural safeguards. I can assure Members that there will be a careful screening process. Clause 13(1) of the Bill empowers the Financial Secretary to institute an inquiry by the Tribunal, whether following representations by the Securities and Futures Commission or otherwise. In actual fact, we envisage that an investigation will usually be initiated by the
Securities and Futures Commission (SFC), and the Commission would not make representations to the Financial Secretary unless it had reasonable grounds to believe that insider dealing had taken place, that is, that there was a prima facie case to be investigated by a tribunal. The Financial Secretary will only institute an inquiry if he is satisfied that a prima facie case has been established and that it would be in the public interest to have a full investigation. He will normally seek legal advice before deciding whether an inquiry should be instituted.
Negligent directors
The second point related to negligent directors. The ad hoc group has expressed
concern about the lack of protection for negligent officers, that is, officers of a corporation who do not consent to or connive at an insider dealing, but are negligent about taking precautions to prevent such dealings. To address the problem, we now propose that the Bill should refer to an "insider dealer" instead of "a person involved in insider dealing". This will allow a distinction to be drawn between a true insider dealer and a negligent officer, without restricting the Tribunal's discretion to have regard to the nature of involvement of all persons concerned.
Definition of relevant information
The third point concerned the definition of "relevant information" in clause 7. It is the view of the ad hoc group that the proposed definition is vague and that the uncertainty would cast a wide net on what would constitute insider dealing under clause 8. After considerable discussion and debate we have agreed that a revised definition along the lines of the definition in the United Kingdom Company Securities (Insider Dealing) Act should be adopted subject to minor modifications. The ad hoc group considers that the new definition will narrow down the scope of relevant
information and bring greater certainty to the market. I should point out, however, that, as Mr. Peter WONG has identified, it is understood that the present United Kingdom definition will shortly be replaced by the definition used in the European Communities Council Directive co-ordinating regulations on insider dealing. In the circumstances, we will wish to consider in due course whether the European Community's definition should be adopted. It is, therefore, our intention to review this issue in the light of experience of the legislation in operation.
Transactions not insider dealing
The fourth point concerned transactions which are not to be regarded as insider dealing for the purpose of the Ordinance.
We accept that an off-market transaction between two insiders should be exempted if the parties concerned can establish that each had the same level of information when they entered into the transaction. Another defence to be included will be the so-called "caveat emptor" provision. Under this provision, a person who enters into a transaction in which the other party is aware, or ought reasonably to be aware, that he is dealing with a connected person will not be held to be an insider dealer. The connected person would, however, be well advised to take the precaution of
obtaining a written acknowledgement from the other party that he has the required
awareness and to report the details of the transaction to the SFC. Market liquidity
Concern has been expressed by both the ad hoc group and the securities industry about the effect of the Bill on market liquidity. We believe the long-term solution to the "liquidity" problem is to encourage the development in Hong Kong of dealers who are able to act as market makers in the proper sense of the term and have the capital to support such operations. Any marginal reduction in liquidity over the short term will, in our view, be more than offset over time by the extra investment which will be attracted by greater public confidence in the integrity of the market and by improved perception internationally.
We were asked by the ad hoc group to consider the possibility of granting exemption to major shareholders to help market liquidity. The exemption of off-market deals between two insiders and the "caveat emptor" provision of which I have already spoken will in fact provide a measure of exemption to such persons but, this apart, it is our firm view that insider dealers, big or small, should be caught by the law. It would be utterly unfair to exempt insider dealing by major shareholders simply for the sake of market liquidity. This would not be in the interest of the investing public and would tarnish the image of Hong Kong as an international financial centre. If the Bill is to have any real deterrent effect, it must equally apply to all investors.
Instead, there are a number of measures which are currently being developed which will, we believe, significantly improve the liquidity of the market. These include proposals to allow the buyback of shares by listed companies, stock lending and borrowing free of stamp duty and short-selling.
The first two of these proposals are in fact close to being finalized and, in recognition of the concern of the securities industry and the ad hoc group, we have agreed not to bring this Bill into operation until they have been implemented. Draft legislation is currently under preparation in respect of the buyback of shares by listed companies; if everything goes according to plan, it will be enacted by end of the year. As regards stock borrowing and lending, the Stamp Duty (Amendment) Ordinance 1989 has already been enacted and will be brought into effect once a proper risk management system for stock borrowing and lending is in place. Good progress is being made and there is a good prospect of bringing the Ordinance into force in about three months' time.
Sir, with these remarks, I beg to move.
Question on the Second Reading of the Bill put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1). SECURITIES AND FUTURES COMMISSION (AMENDMENT) BILL 1990
Resumption of debate on Second Reading which was moved on 18 July 1990 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
COMMODITIES TRADING (AMENDMENT) BILL 1990
Resumption of debate on Second Reading which was moved on 18 July 1990 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
STOCK EXCHANGES UNIFICATION (AMENDMENT) BILL 1990
Resumption of debate on Second Reading which was moved on 18 July 1990 Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
SECURITIES AND FUTURES COMMISSION ( AMENDMENT ) (NO. 2) BILL 1990 Resumption of debate on Second Reading which was moved on 18 July 1990
Question on the Second Reading of the Bill proposed, put and agreed to. Bill read the Second time.
Bill committed to a Committee of the whole Council pursuant to Standing Order 43(1).
WATER POLLUTION CONTROL (AMENDMENT) BILL 1990
Resumption of debate on Second Reading which was moved on 23 May 1990 Question on Second Reading proposed.
MR. EDWARD HO: Sir, the Water Pollution Control (Amendment) Bill 1990 seeks to introduce a number of amendments to the Water Pollution Ordinance which is the principal legislation for the control of pollution of the aquatic environment in Hong Kong.
Under the existing legislation, discharges in existence when a water control zone is declared are, subject to certain conditions, entitled to be exempt from control unless and until they have increased by more than 30%. This provision, coupled with the practical difficulty the Director of Environmental Protection has experienced in the past few years with the administration of the Ordinance, have meant that harmful effluents and toxic metals continue to pollute the local waters.
The Bill seeks to introduce three important changes to existing provisions on exemptions. Firstly, the right of exemption from licensing is deleted entirely for discharges in future water control zones. Secondly, in existing water control zones, the right of exemption from licensing is deleted entirely after two years and replaced by a right to a licence under specified conditions. Thirdly, when setting licensing conditions, the Director of Environmental Protection is to be guided by effluent