TNAG-2027-FCO40-2889-Hong-Kong-freezing-of-Kuwaiti-and-Iraqi-assets-1990 — Page 9

EXCHANGE LISTING RULES AMOUNT TO EXTRA-TERRITORIALITY NOR DO WE BELIEVE WOULD ANY LAWYER. IT IS NOT THE FACT THAT A LISTED COMPANY IS REGISTERED IN HONG KONG OR OVERSEAS WHICH IS OF

I.E. WHICH IMPORTANCE. IT IS WHERE IT HAS ITS PRINCIPAL LISTING, IS THE PLACE WHERE MOST INVESTORS BUY OR SELL ITS SHARES. IT IS OUR VIEW THAT IN THE INTERESTS OF INVESTORS THE SAME GROUND RULES SHOULD APPLY TO ALL STOCKS AND SHARES LISTED ON OUR STOCK EXCHANGE. THIS IS VERY MUCH IN LINE WITH THE PHILOSOPHY IN OTHER CENTRES AND WE SEE IT AS LITTLE DIFFERENT FROM THE REQUIREMENT THAT ALL MEMBERS OF A CLUB ABIDE BY THE RULES OF THAT CLUB IRRESPECTIVE OF THEIR NATIONALITY OR COUNTY OF ORIGIN. THE CURRENT POSITION IS THAT LOCALLY REGISTERED COMPANIES ARE STILL PROHIBITED BY LAW FROM BUYING THEIR OWN SHARES BUT WE HAVE AGREED IN PRINCIPLE TO ALLOW BUY-BACKS SUBJECT TO SPECIFIC SAFEGUARDS WHICH ARE STILL BEING FORMULATED. WE EXPECT TO BE ABLE TO ENACT LEGISLATION BY THE END OF THE YEAR. THE SAFEGUARDS WILL NEED TO APPLY TO BOTH LOCALLY AND OVERSEAS REGISTERED COMPANIES. MEANWHILE OVERSEAS REGISTERED COMPANIES (WHICH NOW ACCOUNT FOR SOME 25 2ER CENT OF ALL SHARES LISTED ON OUR EXCHANGE) ARE PREVENTED FROM EXERCISING ANY RIGHT OF BUY-BACK WHICH MAY BE PERMITTED UNDER COMPANY LEGISLATION IN THEIR PLACE OF INCORPORATION (BOTH BERMUDA AND THE CAYMAN ISLANDS FOR INSTANCE ALLOW BUY-BACKS WITHOUT ANY RESTRICTIONS). THE STOCK EXCHANGE WILL BE AMENDING THEIR LISTING RULES IN LINE WITH THE NEW BUY- BACK PROVISIONS AS AND WHEN THESE ARE FINALISED.

LAST MONDAY JARDINE MATHESON (JM) APPROACHED THE STOCK EXCHANGE ASKING FOR SPECIAL PERMISSION TO BUY BACK SOME OF THEIR SHARES AND THREATENING TO GO AHEAD AND DO SO ANYHOW IF THEY DID NOT GET PERMISSION. THE STOCK EXCHANGE CONSIDERED THE REQUEST AND CAME TO THE VIEW THAT IT SHOULD BE REFUSED, THEY THEN CONSULTED THE SECURITIES AND FUTURE COMMISSION WHO AGREED WITH THEIR CONCLUSION AND IM WERE SO INFORMED. THE THREAT WAS NOT CARRIED OUT. WE SUPPORT THE ACTION TAKEN BY THE STOCK EXCHANGE. IN THE ABSENCE OF PROPER SAFEGUARDS SUCH PURCHASES COULD RESULT IN SERIOUS ABUSES. IT IS NOT THAT JM THEMSELVES WOULD NECESSARILY ABUSE THE RIGHT BUT IF PERMISSION WERE GIVEN TO ONE IT SHOULD PROPERLY BE GIVEN TO ALL AND THERE WOULD CERTAINLY BE SOME WHO WOULD ABUSE IT. WE ARE ALSO MINDFUL OF THE FACT THAT A TEMPORARY PERMISSION GIVEN TO MAJOR SHAREHOLDERS OF LISTED COMPANIES AT THE TIME OF THE OCTOBER 87 CRASH TO BUY SHARES BEYOND THE POINT WHERE IT WOULD NORMALLY TRIGGER A TAKE-OVER BID CAME UNDER VERY HEAVY INTERNATIONAL FLAK AND WAS ALSO CRITICISED IN THE SECURITIES REVIEW COMMITTEE REPORT. AN UNRESTRICTED ABILITY FOR FAMILY CONTROLLED COMPANIES SUCH AS JM TO ENGAGE IN BUY-BACKS WOULD AMOUNT TO MUCH THE SAME THING. WE ARE SENDING YOU BY FAX AN EXTRACT FROM THIS WEEK'S FAR EAST ECONOMIC REVIEW WHICH YOU MAY FIND OF INTEREST,

FORD

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