XN000022-1976-06-25 — Page 6

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FRIDAY, JUNE 25, 1976

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SECURITIES (AMENDMENT) BILL 1976

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THE SECURITIES (AMENDMENT) BILL 1976, AIMED AT CORRECTING CERTAIN ANOMALIES WHICH HAVE BECOME APPARENT FROM THE WORKINGS OF THE SECURITIES ORDINANCE SINCE IT CAME INTO OPERATION SOME TWO YEARS AGO, IS PUBLISHED IN TODAY'S GAZETTE.

THE AMENDMENTS ARE MAINLY CONCERNED WITH CLARIFICATION AND APPLICATION, AND NONE INVOLVES A CHANGE IN THE BASIC PRINCIPLES OF THE PRINCIPAL ORDINANCE,

INCLUDED IN THE BILL IS A PROPOSAL TO AMEND THE DEFINITION OF +DEALING IN SECURITIES+ TO EXCLUDE AGREEMENTS MADE WHEREBY SECURITIES ARE TRANSFERRED OR DEPOSITED WITH A PERSON AS COLLATERAL FOR A LOAN. SINCE ALL COMPANIES WHO ACCEPT DEPOSITS FROM THE GENERAL PUBLIC NOW FALL WITHIN THE AMBIT OF THE DEPOSIT-TAKING COMPANIES ORDINANCE, IT IS CONSIDERED APPROPRIATE THAT THE POWER TO REGULATE SUCH COMPANIES SHOULD NOW BE EXCISED FROM THE SECURITIES ORDINANCE.

IN RESPONSE TO A REQUEST FROM THE HONG KONG SOCIETY OF ACCOUNTANTS. THE DEFINITION OF +FINANCIAL YEAR+ WOULD BE REPLACED BY A MORE FLEXIBLE ONE WHICH PERMITS REGISTERED DEALERS TO ADOPT THEIR OWN FINANCIAL YEAR.

IT IS ALSO PROPOSED TO AMEND THE DEFINITION OF STOCK BROK ING BUSINESS+ TO INCLUDE ANY BUSINESS CONNECTED WITH SECURITIES CONDUCTED BY COMPANIES OPERATED BY OR UNDER THE CONTROL OF A STOCKBROKER. THIS WILL ENABLE RECOURSE TO BE MADE TO THE STOCK EXCHANGES COMPENSATION FUND ESTABLISHED UNDER PART X OF THE ORDINANCE IN THE EVENT OF A DEFAULT BY ANY SUCH COMPANY RUN BY A STOCKBROKER.

ANOTHER PROPOSAL IS TO AMEND SECTION 123 RELATING TO THE COMMISSIONER'S POWERS TO REQUIRE THE DISCLOSURE OF INFORMATION ABOUT THE NAMES OF PERSONS FROM, OR TO, OR THROUGH WHOM, OR ON WHOSE BEHALF, SECURITIES ARE BOUGHT OR SOLD, AND THE NATURE OF INSTRUCTIONS GIVEN IN RESPECT OF A PURCHASE OR A SALE. THE PURPOSE OF THIS AMENDMENT IS TO MAKE IT CLEAR, IN ACCORDANCE WITH THE ORIGINAL INTENTION OF THE PRINCIPAL ORDINANCE, THAT NOMINEE COMPANIES ARE OBLIGED TO DISCLOSE SUCH INFORMATION TO THE COMMISSIONER, EVEN THOUGH THEIR INSTRUCTIONS HAVE TAKEN THE FORM OF A REQUEST TO DELIVER SHARES TO A REGISTERED DEALER, THE CLIENT HIMSELF, OR A THIRD PARTY RATHER THAN AN EXPLICIT INSTRUCTION TO SELL.

COMMENTING ON THE BILL, A GOVERNMENT SPOKESMAN SAID: +THE LIKELIHOOD OF SUCH AMENDMENTS WAS FORESEEN AT THE TIME THE SECURITIES BILL WAS BEING CONSIDERED, IT WAS POINTED OUT THEN THAT, DUE TO THE COMPLEX NATURE OF THE SUBJECT, GAPS AND SHORTCOMINGS IN THE PROPOSED LEGISLATION WERE INEVITABLE, AND THAT AMENDMENTS WERE THEREFORE TO BE EXPECTED FROM TIME TO TIME.

+THE POSSIBILITY THAT AMENDMENTS WOULD BE NEEDED WAS ALSO REFERRED TO BY THE FINANCIAL SECRETARY IN THE LEGISLATIVE COUNCIL, WHEN HE STATED THAT, DUE TO THE CONSTANTLY EVOLVING NATURE OF THE SECURITIES INDUSTRY, THE BILL COULD NOT BE DEFINITIVE AND THAT AMENDMENTS WERE INEVITABLE IN THE LIGHT OF PRACTICAL EXPERIENCE.+