XN000022-1995-12-06 — Page 46

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Answer:

(a) In the 3-year period ending 30 November 1995, 13 companies publicly listed on the Stock Exchange of Hong Kong have voluntarily delisted. Of these, five involved take-over action by major shareholders, or what the market has termed "privatised". In addition, there is one case of proposed take-over ultimately not proceeded with. Details are in the Appendix.

(b)&(c) The SFC has received a total of six complaints. The Stock Exchange of Hong Kong has not received any complaint, and we have no information of complaints directly lodged with the companies concerned.

Of the six complaints, one was against Lafe International Holdings Ltd. (Lafe). The complaint alleged that the take-over offer price was too low.

The remaining five complaints were in respect of Fountain Set (Holding) Ltd (Fountain) which was subsequently aborted. Here, the minority shareholders not only complained about the low take-over offer price, but also alleged that certain shareholders were not independent.

In both the Lafe and Fountain cases, the SFC conducted full investigations. To the extent that the SFC does not pass judgement on the commercial merits of the take- over offer prices, SFC's investigations were restricted to establishing whether all shareholders had been treated equally. In both cases, the SFC concluded that they

were.

The SFC regulates all transactions involved in a take-over by ensuring that the parties concerned comply with the relevant provisions of the Hong Kong Code on Takeovers and Mergers. Under the Code, the board of the company being taken over is required to appoint an independent financial adviser to consider the merits of the proposal and give appropriate recommendations to the minority shareholders. It also requires a take-over proposal to be approved by a majority of shareholders in number representing 90% in value of those shares that are voted either in person or by proxy at a duly convened general meeting by shareholders other than the person seeking to privatise the company and persons acting in concert with him. The SFC routinely examines the relevant voting results, and where appropriate, would seek to confirm the independence of the shareholders who voted in the exercise.