Hong Kong Listings Row Bubbles Away

by Mary Swire, Tax-News.com, Hong Kong

08 July 2002

The controversy in Hong Kong over the future of the quasi-independent committee which reviews stock exchange listing applications broadened on Friday when a top legal official said that a completely independent body should be set up to take on the function.

Earlier in the week, the Government itself had backed off proposals to allow Hong Kong Exchanges and Clearing (now a listed company) to take back control of the listing process fully into its own hands from the existing committee, in the face of criticisms that HKEx would suffer from conflicts of interest. Other commentators would go further and hand control of the listing process to the Securities and Futures Commission, whose powers were greatly expanded under the recently-gazetted Securities and Futures Ordinance.

Democratic Party financial affairs spokesman Sin Chung-kai, for one, believes that the government should be radical and move the role of regulator of listed companies on to the Securities and Futures Commission. "The HKEx is a listed company and it should not regulate other listed companies. There are huge conflicts of interests," he said.

Now Justice Anthony Rogers, chairman of the Standing Committee on Company Law Reform, has said that an independent body with expanded powers should be set up to take over the functions of the listing committee. "This will help to address the problem of conflict of interest in the HKEx acting as the regulator of listed companies," he said.

Mr Justice Rogers said the standing committee - which recommends company law improvements - would study reform of the listing structure and present proposals to the government later this year. Applications for listing are currently made direct to HKEx, which passes them on to the 'independent' committee for final approval. But some members of the committee are HKEx officials, while others represent companies which might be in competition with a new listing.

Newly appointed Secretary for Financial Services and the Treasury, Frederick Ma Si-hang, said last week that he would introduce measures by the end of this month to strengthen the workings of the listing approval process, and that the independent committee should be retained, as a check and balance on the exchange.

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