Mr Morris HKD
WH 312
COVERING SECRET
10
FROM:
PAUL FIFOOT
DATE:
5 APRIL 1988
HKC 105
EXCHANGE FUND ORDINANCE
1.
3
Under section 3 (2) of the Ordinance the Secretary of State may approve the investment of the Fund in "securities". Para 4 of Hong Kong telno 1243 refers to "interest-bearing shareholder loans" as the proposed object of the current investment. There is therefore a question whether such loans are securities within the meaning of the Exchange Fund Ordinance. If the loans are secured on the assets or undertaking of HACTL then, no doubt, they would fall into this category. But one would need to be convinced that an un-secured loan constituted a security.
We therefore need further information from Hong Kong as to the nature of the loan.
2.
3.
In the case referred to in the first paragraph of Hong Kong telno 1243, we were asked to approve purchase of shares. There is authority for shares constituting a security.
5 April 1988
Paul Fifoot
Legal Advisers K 164
COVERING SECRET
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