TNAG-1950-FCO40-2778-Hong-Kong-Exchange-Fund-1989 — Page 65

PJ YAKC

CONFIDENTIAL

Reference..

Mr Edwards, Legal Adviser

HKC 105/1

EXCHANGE FUND ORDINANCE APPROVED INVESTMENTS

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1 Hong Kong sought approval last year (telno 1243) to invest in interest-bearing shareholder Loans. Legal Advisers questioned whether such an investment constituted a security We Left Hong Kong to look further into the matter. (FCO telno 1586 to Hong Kong).

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We have now received Hong Kong telno 2034 in which they report that they have decided to pursue the debenture route, with the investment now doubled to HK$30 million.

3. I should be grateful if you would advise whether the debenture investment Hong Kong now propose falls within the provisions of the Exchange Fund Ordinance and whether it can consequently be approved.

CODE 18-77

3 July 1989

CONFIDENTIAL

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سبانيا

FB Holroyd

Hong Kong Department WH312

270 2653

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