HONG KONG LEGISLATIVE COUNCIL ·
5 July 1989
香港立法局 ——————一九八九年七月五日
17
PROTECTION OF INVESTORS (AMENDMENT) BILL 1989
THE FINANCIAL SECRETARY moved the Second Reading of: "A Bill to amend the Protection of Investors Ordinance."
He said: Sir, I move that the Protection of Investors (Amendment) Bill 1989 be read the Second time.
The main purpose of this Bill is to amend the Protection of Investors Ordinance to streamline the procedures regarding advertisements in respect of certificates of deposit (CD) and commercial paper (CP) issues.
CD and CP issues fall within the definition of investment arrangements under the Protection of Investors Ordinance, the main purpose of which is to provide a measure of protection to ordinary investors in securities and other property by requiring the adequate disclosure of relevant information. As the law now stands, advertisements in respect of capital market issues must be authorized by the Securities and Futures Commission before such issues can be marketed in Hong Kong. In recent years, there has been a substantial increase in the number of advertisements requiring authorization. This has created considerable work for the commission and has led to some delays in authorization.
We consider that there is some scope for simplifying the present procedures without compromising the protection of ordinary investors. To this end, we propose that, in addition to the exceptions specified in section 4(2) of the Ordinance, advertisements relating to CD and CP issues should be exempted automatically from authorization, provided that certain minimum denomination and capitalization tests are met. It would be a requirement that all exempt issues are reported to the commission on a post facto basis. Advertisements in respect of issues that do not qualify for such exemption will continue to require authorization from the commission in the normal way.
Clause 3(1) of the Bill exempts advertisements in respect of three main classes of capital market instrument. First, CD issues by banks and deposit- taking companies licensed or registered under the Banking Ordinance will be exempted as they are already subject to prudential supervision by the Commissioner of Banking. Such CDs are generally in a standard form and readily recognized by investors. This exemption will not affect the present restrictions on the taking of deposits by licensed or registered deposit-taking companies under the relevant provisions of the Banking Ordinance.
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