1974-HKRS28-16-22_Part02 — Page 25

104

otherwise, but, if it had been, might reasonably be expected to have materially affected the market price of the securities of the cor- poration, The Firal-mentioned person shall not deal directly or indirectly in those securities in Hong Kong if by so doing he gains an advantage, whether by making a profit or avoiding a loss, for bimself or another person.

(4) Where subsection (1), subsection (2), or subsection (3), has been contravened and an advantage referred to in either of those subsections is gained from a dealing in securities to which the contravention relates, a person who gained the advantage shall, whether or not a person has been prosecuted for or con- victed in respect of the contravention, be—

(a) liable to any other person for the amount of any loss incurred by that other person by reason of the gaining of the advantage: and

(b) liable to the corporation which issued those securities for any profit accrued to the first-mentioned person as a result of the gaining of that advantage.

(5) Where a loss or profit referred to in subsection (4) is incurred by reason of an advantage gained from a dealing in securities, the amount of the loss or profit is the difference between

(a) the price at which the dealing was effected; and (b) the price at which, in the opinion of the court before which it is sought to recover the amount of the loss or profit, the dealing would have been effected at the time when it was effected if the specific information used to gain that advantage had been generally known at that time.

(6) For the purposes of subsection (4)(b), a profit shall be deemed not to have accrued where the price referred to in sub- section (5)(b) is lower than the price referred to in subsection (5Xa).

(7) The Commissioner may, if he considers it to be in the public interest to do so, bring an action in the name of and for the benefit of the corporation or other person for recovery of a loss or profit referred to in subsection (4).

(8) An action to recover a loss or profit referred to in sub- section (4) may not be brought after-

105

(a) the expiration of the period of 2 years following the dealing in securities to which the action relates; or

(b) the expiration of the period of 12 months following the discovery of the relevant facts by the person who suffered the loss or seeks to recover the profit,

whichever first occurs.

(9) For the purposes of subsections (1) to (3), a person is associated with a corporation-

(a) if, in the case of a corporation, he is-

(i) a director or secretary or former director or secretary;

(i) an officer who is or has been concerned in the management; or

(iii) an employee.

of the corporation or a corporation deemed by section 4 to be related to it;

(b) if he acts, or has acted, in the capacity of banker, solicitor, auditor, consultant, or professional adviser, or in any other capacity (whether similar to any of the foregoing capacities or not), for or to the corporation; (c) if he has a beneficial interest in any shares in the corporation and the aggregate of the nominal amounts of those shares is not less than one-tenth of the aggregate of the nominal amounts of all the issued shares of the corporation;

(d) where the person who has such an association with a corporation as is referred to in paragraph (b) or paragraph (c) is a corporation, if he is a director, manager, or secre- tary of the corporation; or

(e) if he is an employee of a person to whom paragraph

(b) relates.

(10) Subject to subsection (11), any person who contravenes subsection (1), subsection (2), or subsection (3) shall be guilty of an offence, and shall be liable on conviction on indictment to a fine of $50,000 and to imprisonment for 2 years.

(11) This section does not prohibit a person from dealing is any securities if-

(a) his sole purpose is the acquisition of qualification shares required by him as a director or intending director of a corporation;

E