XN000022-1995-01-25 — Page 44

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Investigations of conduct of listed companies

Following is a question by the Hon Chim Pui-chung and a written reply by the Secretary for Financial Services, Mr Michael Cartland, in the Legislative Council today (Wednesday);

Question:

Will the Government inform this Council of the number of listed companies investigated by the Securities and Futures Commission last year under Section 33 of the Securities and Futures Commission Ordinance (Chapter 24), and the number of such companies which have been formally prosecuted or convicted?

Answer:

Section 33 of the Securities and Futures Commission Ordinance (SFCO) does not empower the Securities and Futures Commission (SFC) to investigate the conduct of listed companies. The only power available to the SFC to investigate the conduct of listed companies is section 29A of the SFCO. Section 29A provides a limited power Since the of inspection of books and records if grounds set out therein exist. enactment of section 29A in July 1994, the SFC has commenced three investigations. Two of the investigations resulted in High Court proceedings which are pending before the Court. The one remaining investigation is ongoing. Section 33 of the SFCO, however, does enable the SFC to investigate suspicious dealings by persons in the shares of listed companies. Such investigations may be commenced where contraventions of various ordinances and codes are suspected, for example, the Securities (Insider Dealing) Ordinance, the Securities (Disclosure of Interests) Ordinance, the Code on Takeovers and Mergers and certain of the Stock Exchange's Listing Rules. A total of 31 such investigations were commenced during 1994. Of these, five have been finalised, with two of them resulting in prosecutions and convictions and one resulting in administrative action by the SFC. The remaining investigations are still ongoing.

End/Wednesday, January 25, 1995