TNAG-1943-FCO40-2769-Stock-market-and-exchange-rate-in-Hong-Kong-1989 — Page 309

Securities and Futures Commission Bill

Note of major points

Appendix to Annex F

The Commission

1.

The

2.

Commission will have not less than 10 directors, half of which, including the Chairman and Deputy Chairman, will be executive directors, and the other half of which will be non-executive directors. All the directors will be appointable and removable by the Governor, who will also determine their remuneration, allowances and expenses. The Chairman will have a casting vote,

in accordance with the decision of the Executive Council.

The Governor will have power to give directions to the Commission on matters of policy, and the Commission will be obliged to provide the Financial Secretary with such information regarding policy as he may specify.

The Commission will prepare annual accounts, to be audited by an external auditor, and will submit an annual budget to the Governor for approval. An annual report of the activities of the Commission is to be submitted to the Financial Secretary, to be laid on the table of the Legislative Council.

Securities and Futures Board of Appeal

It is felt that it such matters as the

is primarily for the regulator to make judgements about "fitness and properness" of dealers and others to undertake particular types of securities and futures business, and that a consistent policy on such matters should be allowed to develop. This led to the view that the appeal tribunal should be composed of non-executive directors of the Commission.

On the other hand, the proposal that the Board should be made up entirely of non-executive directors is considered by many to lack the independence necessary to give public confidence that justice can be seen to be done.

The Bill therefore proposes a system which is designed to achieve both objectives. The Board will consist of a Chairman and Deputy Chairman, who will both be legal practitioners, appointed by the Governor, 5 other independent persons of practical experience also appointed by the Governor, and 5 non-executive directors. From this panel, 3 members will hear each individual case sitting as a tribunal. Of the three, one must be either the legally qualified Chairman or Deputy Chairman, one must be an independent, and the other a non-executive director of the Commission. There will therefore always be a voice on the tribunal with knowledge of the Commission's policy, but he will be in a minority, and the majority will be independent of the Commission.