Following the enactment of the Securities and Futures (Amendment) Ordinance 2012 in May this year, Hong Kong’s statutory regime for the disclosure of inside information by listed companies came into operation on January 1, 2013.
A spokesman for the Financial Services and the Treasury Bureau said that: "A civil, statutory regime governing the disclosure of inside information will help promote a continuous disclosure culture among listed corporations to enhance market transparency and quality."
He pointed out that: “The regime will bring our regulatory regime for listed corporations more in line with other international financial centers and enhance Hong Kong's strength as a premier capital formation platform."
Listed corporations must disclose price sensitive information (PSI) to the public in a timely manner. Compared with existing listing rules, the statutory regime will now provide clearer PSI disclosure requirements, with obligations and safe harbours explicitly set out in the law, and backed by civil sanctions for non-disclosure.
Under the new legislation, a listed corporation must disclose PSI to the public as soon as reasonably practicable after the PSI has come to its knowledge. The Securities and Futures Commission (SFC) would be the enforcement authority and the Market Misconduct Tribunal (MMT) would determine whether a breach of the PSI disclosure requirement has occurred.
The SFC can directly institute proceedings before the MMT, without having to first refer the case to the Financial Secretary for his decision, to enforce PSI disclosure requirement, and to deal with the existing six types of market misconduct under the Securities and Futures Ordinance - insider dealing, false trading, price rigging, disclosure of information about prohibited transactions, disclosure of false or misleading information inducing transaction and stock market manipulation.
The SFC has also launched a consultation service with a view to assisting listed corporations in understanding and complying with the statutory disclosure provisions.
"To help listed corporations prepare for the commencement of the statutory regime, the SFC has been giving presentations for professional organisations and trade bodies," the SFC spokesman added. "The SFC and the Hong Kong Exchanges and Clearing Limited have also organised several seminars in Hong Kong, Shanghai and Beijing."A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
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