XN000022-1993-07-07 — Page 40

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WEDNESDAY, JULY 7, 1993

MR CARTLAND SAID A SHORTER TIME FRAME WOULD GIVE MORE TIMELY INFORMATION TO DEPOSITORS, THE GENERAL PUBLIC AND THE REGULATORS.

FURTHERMORE,

IT WILL HELP THE AUDITORS TO CO-ORDINATE THEIR AUDIT WORK ON AUTHORISED INSTITUTIONS WITH THE REPORTS WHICH THEY SUBMIT TO THE HKMA UNDER THE ORDINANCE.

DEBATE ON THE BILL WAS ADJOURNED.

PRELIMINARY INSPECTIONS ON COMPANIES

* * * * *

A BILL AIMING AT FACILITATING THE INVOCATION OF THE FINANCIAL SECRETARY'S POWER UNDER THE COMPANIES ORDINANCE TO CONDUCT PRELIMINARY INVESTIGATIONS ON COMPANIES WAS INTRODUCED INTO THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).

MOVING THE SECOND READING OF THE COMPANIES (AMENDMENT) (NO. 4) BILL 1993, THE SECRETARY FOR FINANCIAL SERVICES, MR MICHAEL CARTLAND, SAID PRELIMINARY INSPECTION REPRESENTED A DISCREET AND LESS COSTLY WAY TO ASSESS WHETHER A FULL-SCALE INVESTIGATION WAS WARRANTED.

"SUCH ENQUIRIES CAN AVOID THE POTENTIAL DISRUPTION TO A COMPANY THAT MIGHT BE CAUSED BY A FULL-SCALE INVESTIGATION," HE SAID.

AT PRESENT, IF THE FINANCIAL SECRETARY'S ATTENTION IS DRAWN TO A SITUATION SUGGESTING FRAUD, MISFEASANCE OR OTHER MISCONDUCT IN THE MANAGEMENT OF THE AFFAIRS OF A COMPANY, HE MAY INVOKE SECTION 152A OF THE ORDINANCE TO AUTHORISE A PUBLIC OFFICER TO REQUIRE THE COMPANY CONCERNED TO PRODUCE ITS BOOKS OR PAPERS AND TO ASK QUESTIONS ABOUT THEM.

AN ALTERNATIVE OR SUBSEQUENT MEASURE WOULD BE TO INITIATE A FULL-SCALE INVESTIGATION UNDER SECTION 143 OF THE ORDINANCE.

INVOKED.

MR CARTLAND POINTED OUT THAT SECTION 152A HAD NEVER BEEN

"ONE OF THE PROBLEMS WITH THE EXISTING PROVISION: IS THAT THE ORDINANCE REQUIRES A PUBLIC OFFICER TO BE AUTHORISED FOR THIS PURPOSE, WHILE THE GOVERNMENT DOES NOT HAVE STAFF WITH EITHER THE TIME OR THE RELEVANT SKILL FOR THIS TYPE OF WORK, HE SAID.

MOREOVER, THE FINANCIAL SECRETARY CAN ONLY AUTHORISE PRELIMINARY INVESTIGATION IF HE REACHES THE SAME STATE OF MIND WOULD BE REQUIRED TO INITIATE A FULL-SCALE INVESTIGATION.

A AS

AS A RESULT, THE PROVISION FOR PRELIMINARY INSPECTIONS HAS IN EFFECT BEEN RENDERED REDUNDANT.

THE BILL SEEKS TO LOWER THE THRESHOLD FOR INVOKING THE POWER TO AUTHORISE PRELIMINARY INSPECTIONS AND TO REMOVE THE REQUIREMENT THAT ONLY A PUBLIC OFFICER CAN BE APPOINTED AS AN INSPECTOR.

/MR CARTLAND

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