XN000022-1988-06-29 — Page 4

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WEDNESDAY, JUNE 29, 1988

"THERE IS NOTHING NEW IN HONG KONG IN THE CONCEPT OF RESTRICTING THE HOLDING OF VOTING SHARES OF A LICENSEE BY PERSONS OR COMPANIES WHICH DO NOT SATISFY CERTAIN RESIDENTIAL QUALIFICATIONS,

HE NOTED.

T

"SIMILARLY, THERE IS NOTHING NEW IN REQUIRING THE DISCLOSURE OF CERTAIN INFORMATION ABOUT THE BENEFICIAL OWNERS OP VOTING SHARES OF A LICENSEE.'

BOTH PROVISIONS WERE ENSHRINED IN THE EXISTING ORDINANCE.

THE BILL BROUGHT UP ΤΟ DATE THE RESIDENTIAL QUALIFICATIONS DISTINGUISHING BETWEEN "LOCAL" AND "NON-LOCAL" SHAREHOLDERS, MR TSAO

SAID.

IT ALSO INTRODUCED A CEILING ON THE HOLDING OF VOTING SHARES BY INDIVIDUAL "NON-LOCAL" SHAREHOLDERS, IN ADDITION TO A CEILING ON THE AGGREGATE SHAREHOLDING BY SUCH PERSONS.

STRICTER REQUIREMENTS ON NOTIFICATION AND DISCLOSURE OF

'NON-LOCAL" PERSONS AND COMPANIES WERE INTRODUCED.

SHAREHOLDINGS BY

UNDER THE NEW RESIDENTIAL QUALIFICATIONS, MR TSAO SAID A "LOCAL" PERSON WAS DEFINED AS ONE WHO WAS ORDINARILY RESIDENT IN HONG KONG, AND WHO HAD, AT SOME TIME, BEEN ORDINARILY RESIDENT IN HONG KONG FOR A CONTINUOUS PERIOD OF AT LEAST SEVEN YEARS.

IN THE CASE OF A COMPANY, A "LOCAL" COMPANY WAS ONE WHICH WAS "ORDINARILY RESIDENT IN HONG KONG" AS DEFINED IN THE ORDINANCE,

MR TSAO POINTED OUT THAT THE EXISTING DEFINITION AS REGARDS COMPANIES INCLUDED A REQUIREMENT THAT THE MAJORITY OF DIRECTORS ACTIVELY PARTICIPATING IN THE DIRECTION OF THE COMPANY MUST BE COMMONWEALTH CITIZENS ORDINARILY RESIDENT IN HONG KONG.

THE BILL AMENDED THIS TO TAKE ACCOUNT OF THE NEW RESIDENTIAL REQUIREMENTS FOR INDIVIDUALS, AND ALSO REPEALED THE REFERENCE ΤΟ COMMONWEALTH CITIZENS.

TURNING TO THE QUESTION OF HOLDING COMPANIES AND SUBSIDIARIES, MR TSAO STRESSED THAT THE ELEMENT OF INDEPENDENCE OF A LICENSEE COMPANY WAS THE "SPIRIT" AND REAL INTENTION OF THE TELEVISION ORDINANCE.

THE LEGISLATIVE PROPOSALS IN THE BILL WERE NECESSARY BECAUSE THE EXISTING SECTIONS OF THE ORDINANCE HAD PROVED INEFFECTIVE IN ACHIEVING THAT SPIRIT.

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MR TSAO SAID THAT 11 IMPORTANT PROVISIONS IN THE ORDINANCE COULD BE AND INDEED HAD BEEN CIRCUMVENTED BY THE SETTING UP OF HOLDING COMPANIES OF WHICH THE LICENSEES HAD BECOME SUBSIDIARIES.

/EXAMPLES WERE