XN000022-1987-08-08 — Page 2

SATURDAY, AUGUST 8, 1987

"B" SHARE ISSUE REPORT PUBLISHED

THE GOVERNMENT TODAY (SATURDAY) PUBLISHED THE REPORT PREPARED BY THE STANDING COMMITTEE ON COMPANY LAW REFORM (SCCLR) ON THE ISSUE OF "B" SHARES.

THE FINANCIAL SECRETARY, MR PIERS JACOBS, HAS NOW DIRECTED THAT THE SECURITIES COMMISSION BE CONSULTED ON

SCCLR'S

RECOMMENDATIONS.

THE

THE SECURITIES COMMISSION WILL BE ASKED TO CONSIDER, AMONG OTHER THINGS, WHETHER THE EXISTING STATUTORY LISTING RULES UNDER SECTION 14 OF THE SECURITIES ORDINANCE ARE ADEQUATE TO CONTROL THE ISSUE OF "B" SHARES AND, IF NOT, WHETHER ANY AMENDMENTS ARE REQUIRED.

то ISSUE VALUE IS INTEREST,

THE SCCLR WAS ASKED BY THE FINANCIAL SECRETARY IN APRIL THIS YEAR TO CONSIDER THE SUBJECT OF "B" SHARE ISSUES AND, IN PARTICULAR, TO ADVISE "WHETHER OR NOT THE PRESENT ABILITY OF COMPANIES SHARES WITH VOTING RIGHTS DISPROPORTIONATE TO THEIR NOMINAI IN THE GENERAL INTEREST OF SHAREHOLDERS, AND IN THE PUBLIC AND IF NOT, ΤΟ IDENTIFY WHETHER ANY CHANGES ΤΟ LEGISLATIVE FRAMEWORK ARE DESIRABLE".

THE SCCLR HAS NOW COMPLETED ITS DELIBERATIONS AND REPORT TO THE FINANCIAL SECRETARY.

THE

PRESENT

SUBMITTED A

THE SCCLR IS OPPOSED TO THE INDISCRIMINATE ISSUE OF "B" SHARES BY LISTED COMPANIES, WHICH IT CONSIDERS COULD BE USED BY SUBSTANTIAL SHAREHOLDERS AS A MEANS OF TRANSFERRING CAPITAL OUT OF HONG KONG WHILE MAINTAINING ACTUAL CONTROL

THE CONCERNED. IN TRONG HONG AS A

OF

THE COMPANIES SCCLR BELIEVES THAT THIS COULD ERODE CONFIDENCE MAJOR FINANCIAL CENTRE.

THE SCCLR CONSIDERS, HOWEVER, THAT THERE MAY BE A LEGITIMATE NEED FOR THE CONTINUED AVAILABILITY OF "B" SHARES IN EXCEPTIONAL

WHERE IT CIRCUMSTANCES, FOR EXAMPLE,

IS IN THE INTEREST OF THE COMMUNITY AS A WHOLE FOR ULTIMATE CONTROL OF A PARTICULAR COMPANY ΤΟ BE CONCENTRATED IN PARTICULAR HANDS.

THE SCCLR 1S OF THE UNANIMOUS VIEW THAT PRIVATE AND UNLISTED PUBLIC COMPANIES SHOULD BE FREE ΤΟ ARRANGE THEIR CONSTITUTIONS TO

THERE SHOULD MEET THEIR OWN NEEDS, AND THAT

BE NO CHANGE IN THE ORDINANCE EXISTING PROVISIONS OF THE COMPANIES

RELATING ΤΟ SUCH A BASIC FUNDAMENTAL AS VOTING RIGHTS.

THE SCCLR HAS RECOMMENDED IN ITS REPORT THAT PRIOR APPROVAL FOR THE FUTURE ISSUE OF "B" SHARES SHOULD BE CONSIDERED ON A CASE BY CASE BY THE BASIS IN ACCORDANCE WITH STATUTORY LISTING RULES PROMULGATED SECURITIES COMMISSION UNDER SECTION 14 OF THE SECURITIES ORDINANCE.

SOUGHT AND

HAD IN ARRIVING AT ITS RECOMMENDATIONS, THE SCCLR RECEIVED COMMENTS FROM LISTED COMPANIES, PROFESSIONALS AND COMMERCIAL ORGANISATIONS, AS WELL AS MEMBERS OF THE PUBLIC. IT HAD ALSO CONSIDERED SUBMISSIONS MADE TO THE SECURITIES AND EXCHANGE COMMISSION OF THE UNITED STATES WHICH IS CONSIDERING THE SAME SUBJECT.

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