Hong Kong Ushers In New Prospectus Regulatory Regime
by Mary Swire, Tax-News.com, Hong Kong
12 October 2004

Hong Kong’s Secretary for Financial Services and the Treasury, Frederick Ma, has announced that a date of December 3rd, 2004 has been set for the commencement of the territory’s new prospectus regime, which is designed to improve the regulatory framework surrounding share offerings.

A government spokesman explained: "The prospectus-related provisions will help to ease (the) compliance burden and accommodate new offering structures and offering methods, thereby enhancing flexibility and versatility in the issuance activities in the local capital market, yet in keeping with the regulatory perspective."

Major improvement measures contained in the ordinance include the exemption of 12 types of offer from the prospectus regime.

Changes unveiled include exempting offers to ‘professional investors’ and offers to not more than 50 people; permitting the issue of awareness advertisements; and allowing the issue of ‘multiple prospectuses’ to facilitate programme offers made through successive tranches.

The amendments to the prospectus regime are the second part of a three-phase exercise reviewing the existing regulatory framework for offers of shares and debentures, which has been endorsed by the Financial Secretary, Henry Tang, as one of the initiatives to facilitate market development and the introduction of new products.

The Companies (Amendment) Ordinance 2004, passed by the Legislative Council in July 2004, contains legislative amendments to improve the prospectus regime and registration requirements for overseas companies, in addition to measures to enhance shareholder remedies.

Provisions on overseas companies and shareholder remedies will be brought into operation in 2005 after the necessary court rulings, a fee order and an enhancement to the Company Registry's computer system have been made.

The commencement notice is to go before the Legislative Assembly tomorrow (October 13).

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