TNAG-1856-FCO40-2631-Legislative-Council-of-Hong-Kong-memoranda-and-minutes-of-me-1989 — Page 34

HONG KONG LEGISLATIVE COUNCIL

5 July 1989

香港立法局———————————一九八九年七月五日

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Secondly, CD issues by overseas banks not licensed in Hong Kong and by specified multilateral agencies (for example, the World Bank and the Asian Development Bank) will be exempted subject to a minimum denomination of HK$1 million or equivalent and, in the case of overseas banks, to their being adequately supervised, in the opinion of the Commissioner of Banking, in their place of incorporation or principal place of business.

Thirdly, CP issues by specified bodies (including major public listed companies, government and public sector bodies, authorized institutions under the Banking Ordinance and multilateral agencies) will also be exempted provided that there is a minimum denomination of HK$1 million or equivalent and that, in the case of a corporation with a share capital, the issuer or parent company guaranteeing the issue has a minimum paid-up share capital of HK$75 million or equivalent.

The proposed minimum denomination of HK$1 million or equivalent is intended to keep these last two classes of instrument out of the hands of ordinary investors. These instruments are for the most part designed for, and traded in, the wholesale markets and this is, I believe, a necessary safeguard if we are to ensure adequate investor protection. Where in particular cases a smaller denomination is considered appropriate it will always be open to the issuer to approach the commission to seek express authorization of an advertisement to this effect.

Clause 4 of the Bill sets out the reporting requirements. All exempt issues will need to be reported to the commission within 10 working days of the date of issue. This is to enable the commission to monitor the development of the market. Failure to report an issue will be an offence.

The opportunity is also being taken to remove an anomaly in the Ordinance. Clause 3(4) of the Bill makes it clear that the exemption presently available to professional persons to market "securities" does not extend to any unit in unit trust or shares in mutual funds that have not been authorized by the commission under the Securities Ordinance.

Sir, I move that the debate on this motion be now adjourned.

Question on the adjournment proposed, put and agreed to.