ENG-2003 — Page 129

FINANCIAL AND MONETARY AFFAIRS

(b) streamlined and enhanced regulation of market intermediaries and levelling the playing field between brokers and banks in their conduct of securities business and other regulated activities;

(c) facilitating market innovation;

(d) greater effectiveness in combating market misconduct;

(e) greater market transparency;

(f) enhanced investor compensation arrangements; and

(g) provision of a responsive regulatory framework through prescribing the detailed

and technical regulatory requirements in subsidiary legislation.

Implementation of the SFO has been smooth since April 1, 2003. The SFC has endeavoured to provide continuous guidance to the market to assist practitioners in their understanding of the new law. Apart from posting relevant materials in connection with the SFO on its website to facilitate easy access by market participants and providing dedicated hotlines and e-mail boxes to answer questions from the industry, the SFC also organised or participated in more than 67 seminars to introduce the new law to the industry.

Migration of financial intermediaries to the new single licensing regime gathered pace. Around 7 420 intermediaries, representing 42 of all those who would migrate, had either migrated or lodged their migration applications as at year-end. More than 4 400 have already received their new licences.

Company Law and Corporate Governance Reform

The Standing Committee on Company Law Reform (SCCLR), established in 1984, meets regularly to consider amendments to the Companies Ordinance to ensure that it meets the changing needs of the business community. The Companies Registry provides secretariat support for the SCCLR.

The Overall Review of the Companies Ordinance by the SCCLR has resulted in 62 recommendations for reform, including a mix of amendments to specific sections of the Companies Ordinance, topics which require further research and study, and major structural proposals such as rewriting and restructuring the Companies Ordinance. Virtually all the proposals regarding amendments to specific sections of the Companies Ordinance have been included in the Companies (Amendment) Ordinance 2003 which was enacted in July 2003. Work on topics requiring further research and study has been undertaken in the context of either the SCCLR Corporate Governance Review or independently by the SCCLR. The results of some of this work are contained in the Companies (Amendment) Bill 2003. This bill, which was introduced into the Legislative Council in June 2003, is being scrutinised by a Bills Committee. Consideration is now being given as to how the recommendation to rewrite and restructure the Companies Ordinance can best be taken forward.

The Corporate Governance Review by the SCCLR, which aims to identify and bridge any gaps in Hong Kong's corporate governance regime, making it a benchmark in the region, has continued to make good progress. A consultation document on the Phase II of the review setting out a large number of proposals on directors' duties and responsibilities, shareholders' rights and the disclosure of corporate information was published for public consultation on June 11, 2003. Depending on the outcome of the review, appropriate amendments will be made to the Companies Ordinance, the Listing Rules and the Code of Best Practice.

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