1974-HKRS28-16-22_Part02 — Page 6

Short selling prohibited.

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shall be guilty of an offence and shall be liable on conviction to a fine of $5,000.

(11) An offence against subsection (10) is not committed by reason only that a circular or other written communication is issued to a person whose business involves the acquisition, dis- posal, or holding of securities.

80. (1) A person shall not sell securities at or through a stock exchange uoless, at the time he sells them-

(a) he has or, where he is selling as agent, his principal

has: or

(b) he reasonably and honestly believes that he has or, where he is selling as agent, that his principal has,

a presently exercisable and unconditional right to vest the securities in the purchaser of them.

(2) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine of $10,000 and to imprisonment for 6 months.

(3) For the purposes of subsection (1)–

(2) a person shall be deemed to be selling securities if be-

(i) purports to sell the securities;

(ii) offers to sell the securities:

(iii) holds himself out as entitled to sell the securi- ties: or

(iv) instructs a dealer to sell the securities;

(b) a person who, at a particular time, has a presently exercisable and unconditional right to have securities vested in him or in accordance with his directions shall be deemed to have at that time a presently exercisable and unconditional right to vest the securities in a purchaser of them; and

(c) a right of a person to vest securities in a purchaser thereof shall not be deemed not to be unconditional by reason only of the fact that the securities are charged or pledged in favour of some other person to secure the repayment of money.

(4) Subsection (1) does not apply to or in relation to- (a) a person acting in good faith in the reasonable and honest belief that he has a right, title, or interest to or

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in securities that he purports to sell, offers for sale, holds himself out as capable of selling:

(b) a dealer acting in good faith for or on behalf of some other person in the reasonable and honest belief that such other person has a right, title, or interest to or ia Securities that be purports to sell, offers for sale, or holds himself out as capable of selling;

(c) a sale of securities by a stockbroker acting as principal when he acts as an odd lot specialist in accordance with the rules of the stock exchange of which he is a member, being a sale made solely for the purpose of- (1) accepting an offer to purchase an odd lot of securities; or

(ii) disposing of a parcel of securities that is less than one board lot of securities, by means of the sale of one board lot of those securities; or

(d) a sale of securities falling within a class of transaction prescribed by regulations for the purposes of this para- graph.

documents.

81. (1) Where securities that are not the property of a dealer Disposition (including an exempt dealer) and for which the dealer, or any of security nominee controlled by the dealer, is accountable are held for safe custody in Hong Kong, the dealer shall, subject to subsection (2). either cause the securities--

(a) (not being bearer securities) to be registered as soon as practicable in the name of the person to whom the dealer or nominee is accountable or in the name of the dealer's nominee; or

(b) to be deposited in safe custody in a designated account with the dealer's bankers or with any other institution which provides facilities for the safe custody of docu- ments to the satisfaction of the Commissioner.

(2) The Commissioner may, on the application of a dealer in writing, exempt the dealer from the provisions of subsection (1), but in granding the exemption may impose such conditions as he thinks fit.

(3) No dealer shall, without the authority in writing of the person to whom he is accountable, deposit any securities of which the dealer is not the owner as security for loans or advances made to the dealer.