XN000022-1986-02-26 — Page 2

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WEDNESDAY, FEBRUARY 26, 1986

MOTION MOVED TO AMEND SECURITIES REGULATIONS

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A MOTION TO AMEND THE SCHEDULE OF THE SECURITIES (STOCK EXCHANGE LISTING) RULES 1986 WAS MOVED BY THE HON MARIA TAM IN THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).

EXPLAINING THE BACKGROUND OF THE REGULATIONS, MISS TAM SAID PARAGRAPH 7 OF THE SCHEDULE DEALT WITH NOTIFICATION OF ACQUISITION OR DISPOSAL OF THE ASSETS OF LISTED COMPANIES TO THE COMMISSIONER OF SECURITIES.

SHE SAID PARAGRAPH 7(1)(A)(11) OF THE SCHEDULE AS DRAFTED PLACED AN ONUS ON THE LISTED COMPANY TO NOTIFY ITS SHAREHOLDERS OF ACQUISITION OR DISPOSAL OF ASSETS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES +WHERE THE ASSETS ARE REQUIRED FROM OR DISPOSED OF TO ANY OF THE COMPANY'S OR ITS SUBSIDIARY'S DIRECTORS OR CHIEF EXECUTIVE, OR ANY ASSOCIATE OR ANY SUCH DIRECTOR OR CHIEF EXECUTIVE.

MISS TAM SAID THE AD HOC GROUP STUDYING THESE REGULATIONS UNDER HER CONVENORSHIP HAD RECEIVED REPRESENTATIONS FROM THE BUSINESS SECTOR EXPRESSING FEAR THAT THE INTERPRETATION OF THIS PARAGRAPH, IF CARRIED TO ITS LOGICAL EXTREME, MIGHT CREATE AN ABSURD EFFECT.

SHE CITED AS AN EXAMPLE THAT THE DIRECTOR OF A HOLDING COMPANY PURCHASING A BOTTLE OF MILK FROM A SUBSIDIARY COMPANY WOULD IMPOSE UPON THE HOLDING COMPANY THE OBLIGATION TO NOTIFY ALL ITS SHAREHOLDERS OF SUCH A TRANSACTION.

WHILE THE AD HOC GROUP WAS AWARE THAT THE COMMISSIONER OF SECURITIES COULD WAIVE ANY REQUIREMENT FOR NOTIFICATION UNDER ANOTHER SECTION OF THE REGULATIONS, THEY FELT THAT THE ASSETS IN QUESTION SHOULD BE CONFINED TO THE EQUITY OF THE COMPANY OR SUBSIDIARY COMPANY,

MISS TAM SAID THEY HAD MET WITH THE COMMISSIONER TO LOOK INTO ALL THE REPRESENTATIONS ON THE ISSUE.

AS TO THESE REPRESENTATIONS, SHE NOTED THAT THE VIEWS OF THE HONG KONG SOCIETY OF ACCOUNTANTS AND THE LAW SOCIETY WERE DIVIDED.

SHE SAID THE HONG KONG SOCIETY OF ACCOUNTANTS WAS IN FAVOUR OF THE EXISTING WORDING WHILE THE HONG KONG LAW SOCIETY WISHED TO SEE THE OBLIGATION OF NOTIFICATION REMOVED FOR ACQUISITION AND FUR DISPOSAL OF TRADING ASSETS IN THE ORDINARY COURSE OF BUSINESS.

ON BALANCE,