TNAG-1765-FCO40-2519-Hong-Kong-stock-market-and-exchange-rate-1989 — Page 32

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Comment or recommendation

supervised and (c) that inactive dealers should have their registration suspended by the new SC.

Action taken by the HKFE

shares. The fact is. that if there is no third party willing to purchase the shares, then, with the best will in the world, a shareholder cannot comply with the requirement to dispose of his shares. The provisions of Hong Kong company law do not permit companies to purchase their own shares. In view of the large number of shareholders who are not registered Members at the moment, we have anticipated that the implementation of this

particular recommendation would result in the Exchange requiring

a large number of shareholders to dispose of their shares, but those shareholders being unable

to comply with this requirements. This, we felt, did not meet the problem which the Committee in its

recommendation is trying to

attack. We believe that the principle which the Committee is proposing is that all

shareholders should be Members. If not, they should forgo the rights of a shareholder. We have therefore tackled this problem in two ways. The provisions of Article 17 require existing shareholders who are not Members to transfer their shares. the same time, the provisions of Article 37 require the voting rights of non-Member

At

shareholders to be suspended. Article 37 also states that a shareholder who is suspended as

a Member is not entitled to

vote. We believe that the combination of these provisions addresses the concerns of the

Commission. As to the

recommendation that the new