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(i) Codes on Takeovers and Mergers and Share Repurchases. These codes set out the duties of the Takeovers and Mergers Panel and make provision, amongst other things, for disciplinary proceedings and decisions;

(ii)

Code on Unit Trusts and Mutual Funds which sets out the Commission guideline for approving mutual fund corporations and unit trusts; and

(iii) "The Fit and Proper Criteria" which sets out the conditions to be

met by persons wishing to be registered as intermediaries.

It can be seen that the Commission, through the publication of these and other relevant publications, has already been open and transparent regarding its power and criteria for discharging its functions. A full list of the relevant publications is at the Annex.

(c) The exercise of the Commission's power is subject to the requirement for due process and the rules of natural justice governing the exercise of administrative authority. Any alleged abuse of authority may, of course, be referred to the Court for a determination in the normal way. Depending on the nature of the allegation, such complaints may also be referred to the Office of the Commissioner for Administrative Complaints for investigation.

Within the Commission, there is an established system of checks and balances. for preventing abuse of authority. There is a strict system of delegation of powers which clearly identifies who has the power to do what, with the more important powers reserved for either the Committees of the Commission or the Commission itself. The Committees of the Commission consist predominately of industry practitioners. In the case of the Commission itself, all members are appointed and can be removed by the Governor. Moreover, five members are Non-Executive Directors whose presence provides further checks and balances on the Executives serving on the Board.

It is also relevant that the Commission is subject to the direction of the Governor. The Ordinance provides that the Governor may give to the Commission such direction as regards the performance of any of its functions as he considers appropriate. In addition, senior executives of the Commission also holds regular meetings with the Financial Secretary and with the Secretary for Financial Services to discuss important policy issues. They also appear before the LegCo Panel on Financial Affairs to brief Members and to answer questions. All these safeguards have served to prevent abuse of authority under the Commission's codes and guideline.

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