XN000022-1990-05-02 — Page 9

7

WEDNESDAY, MAY 2, 1990

"THE STOCK EXCHANGE IS THEN REQUIRED TO PUBLISH THE INFORMATION RECEIVED IN SUCH MANNER AND FOR SUCH PERIOD AS THE COMMISSION MAY SPECIFY," THE FINANCIAL SECRETARY EXPLAINED.

SIR PIERS SAID THE GOVERNMENT CONSIDERED THAT THESE NOTIFICATION PROCEDURES WERE UNSATISFACTORY.

"THEY DO NOT ENSURE THE PROMPT RELEASE OF PRICE SENSITIVE INFORMATION TO THE PUBLIC. FURTHERMORE, THEY CREATE AN OPPORTUNITY FOR INSIDER DEALING.

"FOR EXAMPLE, OFFICERS OF THE LISTED COMPANY CONCERNED CAN BE IN POSSESSION OF PRICE-SENSITIVE INFORMATION FOR UP TO TWO DAYS BEFORE IT IS PASSED ON TO THE STOCK EXCHANGE FOR PUBLICATION, HE SAID.

THE GOVERNMENT PROPOSED THEREFORE, THAT WHERE A DUTY OF DISCLOSURE AROSE UNDER THE ORDINANCE, THE PERSON CONCERNED SHOULD BR REQUIRED TO NOTIFY BOTH THE LISTED COMPANY AND THE STOCK EXCHANGE, AND TO ENSURE THAT THE NOTIFICATION WAS RECEIVED BY THE STOCK EXCHANGE BEFORE IT WAS RECEIVED BY THE LISTED COMPANY, SIR PIERS SAID.

FAILURE TO COMPLY WITH THESE REQUIREMENTS WILL BE AN OFFENCE.

THE FINANCIAL SECRETARY POINTED OUT THAT TO AVOID POSSIBLE INJUSTICE, IT WOULD BE A DEFENCE FOR A PERSON TO SHOW THAT HE HAD TAKEN ALL REASONABLY PRACTICABLE STEPS TO NOTIFY THE STOCK EXCHANGE BEFORE THE LISTED COMPANY CONCERNED.

"ONCE IT HAS BEEN NOTIFIED THE STOCK EXCHANGE WILL BE STATUTORY DUTY TO PUBLISH THE INFORMATION NOTIFIED, HE SAID.

UNDER A

HAVING REGARD TO THE LARGE VOLUME OF NOTIFICATIONS EXPECTED AND THE NEED TO PROCESS AND PUBLISH THE INFORMATION QUICKLY, SIR PIERS SAID THE GOVERNMENT CONSIDERED THAT THE STOCK EXCHANGE SHOULD BE PROTECTED FROM LEGAL ACTIONS FOR DAMAGES ARISING FROM THE PUBLICATION IN GOOD FAITH OF INCORRECT INFORMATION.

"WE PROPOSE THEREFORE THAT NO LIABILITY SHOULD BE INCURRED BY THE STOCK EXCHANGE OR ITS EMPLOYEES IN THE PERFORMANCE IN GOOD FAITH OF ANY DUTY IMPOSED ON THE STOCK EXCHANGE UNDER THE ORDINANCE," HE ADDED.

TWO MINOR AMENDMENTS PROPOSED UNDER THE BILL ARE: -

* FIRST, THE TERM "UNIFIED EXCHANGE" BE REPLACED BY "EXCHANGE COMPANY" WHEREVER THE DUTIES IMPOSED UNDER THE ORDINANCE APPLY ΤΟ THE LICENSED COMPANY, THE STOCK EXCHANGE OF HONG KONG LIMITED, AND NOT TO THE STOCK MARKET ITSELF.

THE PRESENT METHODS

OF

* SECONDLY, IN ADDITION TO

NOTIFICATION, NAMELY BY POST OR PERSONAL DELIVERY, NOTIFICATIONS SHOULD BE CAPABLE OF BEING MADE IN SUCH OTHER MANNER AS MAY BE PRESCRIBED BY SUBSIDIARY LEGISLATION.

/"THIS IS