XN000022-1977-10-07 — Page 2

FRIDAY, OCTOBER 7, 1977

WIDER POWERS TO CURB INSIDER DEAL ING

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THE COMMISSIONER FOR SECURITIES AND THE INSIDER DEALING TRIBUNAL ARE TO BE GIVEN EXTENSIVE POWERS TO QUESTION PERSONS SUSPECTED OF INSIDER DEAL ING UNDER A BILL PUBLISHED TODAY.

THE SECURITIES (AMENDMENT) BILL 1977, EMPOWERS THE COMMISSIONER, AMONG OTHER THINGS, TO QUESTION PERSONS WHOM HE BELIEVES TO HAVE DEALT IN SECURITIES THROUGH NOMINEES OR TRUSTEES, OR HELD SECURITIES THROUGH NOMINEES OR TRUSTEES,

UNDER THIS AMENDING BILL, SECTION 123 OF THE SECURITIES ORDINANCE IS TO BE REPEALED AND REPLACED BY A NEW SECTION 123 THAT CONTAINS THIS POWER.

THE COMMISSIONER WILL ALSO HAVE POWER TO QUESTION DEALERS, NOMINEES AND TRUSTEES ABOUT PURCHASES, SALES AND HOLDINGS OF SECURITIES, AND IN PARTICULAR, HE CAN REQUIRE A DEALER, NOMINEE OR TRUSTEE TO DISCLOSE THE IDENTITY OF THE PRINCIPAL FOR WHOM HE ACTED.

TO REFUSE A REQUEST FOR INFORMATION BY THE COMMISSIONER UNDER THIS SECTION, OR TO GIVE HIM FALSE INFORMATION, WILL BE AN OFFENCE, PUNISHABLE BY FINE OR IMPRISONMENT OR BOTH.

THE BILL ALSO PROPOSES TO REPEAL SECTION 140 OF THE SECURITIES ORDINANCE. THIS SECTION, WHICH HAS NEVER BEEN BROUGHT INTO EFFECT, MADE INSIDER DEALING A CRIMINAL OFFENCE, I.E., IT IS INCONSISTENT WITH THE APPROACH PROPOSED IN THIS BILL.

UNDER SECTION 141A, INSIDER DEAL ING CANNOT TAKE PLACE UNLESS THE SECURITIES DEALT IN ARE EITHER CURRENTLY LISTED ON A HONG KONG STOCK EXCHANGE OR ELSE WERE FORMERLY LISTED ON A HONG KONG STOCK EXCHANGE, DELISTING HAVING TAKEN PLACE WITHIN THE FIVE YEARS PRECEDING THE DEALING.

UNDER SECTION 141B, INSIDER DEALING TAKES PLACE :

(A) WHEN A DEALING IN A CORPORATION'S SECURITIES IS MADE,

PROCURED OR OCCASIONED BY A PERSON CONNECTED WITH THE CORPORATION WHO IS IN POSSESSION OF RELEVANT INFORMATION ABOUT THE SECURITIES. (BY +RELEVANT INFORMATION+ IS MEANT UNPUBLISHED INFORMATION WHOSE PUBLICATION WOULD BE LIKELY TO CAUSE A MATERIAL MOVEMENT IN A SECURITY'S PRICE.)

(B) WHEN RELEVANT INFORMATION ABOUT A CORPORATION'S

SECURITIES IS DISCLOSED TO ANOTHER PERSON BY A PERSON CONNECTED WITH THE CORPORATION, WHETHER DIRECTLY OR INDIRECTLY, AND THE PERSON DISCLOSING THE INFORMATION KNOWS OR HAS REASONABLE GROUNDS FOR BELIEVING THAT THE OTHER PERSON WILL DEAL IN THOSE SECURITIES ON THAT INFORMATION.

/SECTION 141C....