英文證券卷五 HKSI Paper 5 第一章

All of the above are laws and rules that govern corporate finance activities.

Laws and rules that govern corporate finance activities in Hong Kong include:
I. Main Board Listing Rules
II. GEM Listing Rules
III. Takeovers Code
IV. Share Buy-backs Code

Corporate Finance Division:
(a) administers The Codes on Takeovers and Mergers and Share Buy-backs and regulates takeovers, mergers and share buy-backs of applicable companies;
(b) supervises the listing-related activities of The Stock Exchange of Hong Kong Limited (“SEHK”).

SFC belongs to Hong Kong rather than China.

Corporate Finance Division:
(a) administers The Codes on Takeovers and Mergers and Share Buy-backs and regulates takeovers, mergers and share buy-backs of applicable companies.

The duties that the Corporate Finance Division of the SFC includes:
I. Administer the Takeovers and Mergers Code and Share Repurchase Code. Regulate takeovers, mergers and share buy-backs of applicable companies.
II. Supervises the SEHK’s listing related functions and responsibilities.
III. Review and make suggestions to Main Board Listing Rules and GEM Listing Rules
IV. Reviews prospectuses and grant exemptions
V. Administers the dual filing regime

The function of the Corporate Finance Division of the SFC includes:
1. Supervises the SEHK’s listing-related functions and responsibilities.
2. Reviews prospectuses of unlisted issuers for authorization and grants exemptions for prospectuses issued by listed and unlisted issuers.

The SFC’s Corporate Finance Division monitors listed companies’ announcements and identifies misconduct or non-compliance by listed companies.

Corporate Finance Division:
(a) administers The Codes on Takeovers and Mergers and Share Buy-backs and regulates takeovers, mergers and share buy-backs of applicable companies

Licensing Department:
(b) issues codes and guidelines concerning the competence and suitability of corporations and individuals to remain licensed.

Corporate finance advisers requiring a Type 6 licence will obtain it from the Licensing Department of the SFC.

Since Kaohsiung Enterprises controls more than 10% of Kaohsiung Securities, Kaohsiung Enterprises is the substantial shareholder of Kaohsiung Securities. Mr. Ko controls more than 35% shares of Kaohsiung Enterprises, so he indirectly becomes a substantial shareholder of Kaohsiung Securities.

SFC’s approval is only required if a non-substantial shareholder becomes a substantial shareholder. As Mr. Ko has been a substantial shareholder of Kaohsiung Securities, there is no need for the approval of the SFC.

Licensing Department:
(a) licenses corporations and individuals seeking to conduct business in Hong Kong in the regulated activities for which a licence is required under the SFO.

The Intermediaries Supervision Department supervises the business conduct of licensed corporations and individual licensees, monitors the financial integrity of licensed corporations on an ongoing basis and maintains communication with intermediaries and the industry on relevant policy and regulatory issues. There will be ongoing supervision by this department of Type 6 licensees via both on-site and off-site monitoring and reviews.

Intermediaries Supervision Department:
(a) supervises the business conduct of licensed corporations and individual licensees on an ongoing basis, by conducting on-site inspection and off-site monitoring; and
(b) monitors the financial integrity of licensed corporations.

Except in relation to the management of business risk, and the enforcement of their own listing, trading, clearing and settlement rules, HKEX, the exchanges and the clearing houses are not responsible for front-line prudential and conduct regulation of market participants, which is carried out by the SFC.

The licensing department of the SFC is not responsible for setting continuous professional training standards for licensed corporation.

The Enforcement Division conducts market surveillance to identify improper or illegal activities for further investigation.

The Enforcement Division is responsible for monitoring stock market transactions. The Supervision of Markets Division mainly monitors and regulates the exchange itself, not the transactions that take place in the market.

The Enforcement Division conducts market surveillance to identify improper or illegal activities for further investigation.

Investment Products Division:
(b) regulates and approves investment products that are offered to the public and subject to the SFO.

The SFC has a Corporate Finance Division, which is the major division regulating corporate finance activities. However, Type 6 licensees will also interact with the Intermediaries Division, and possibly with the Enforcement Division. It may be noted that the SFC also operates the Supervision of Markets Division and Investment Products Division.

Investment Products Division:
(b) regulates and approves investment products that are offered to the public and subject to the SFO.

The SFC is responsible for the regulation of all securities and futures activities, including the regulatory activities carried out by banks. It is also responsible for regulating the exchange controller.

The SFC has established regulatory committees to which it has delegated some of its functions.
In addition, there are tribunals and panels which are part of the regulatory mechanism. The major ones are: the Takeovers and Mergers Panel (“Panel”), the Takeovers Appeal Committee, the Market Misconduct Tribunal (“MMT”), and the Securities and Futures Appeals Tribunal (“SFAT”).

The SFC has established various regulatory committees to which it has delegated some of its functions, e.g.:
(b) Takeovers Appeal Committee – hears appeals against the disciplinary rulings of the Takeovers and Mergers Panel at the request of an aggrieved party for the sole purpose of determining whether any sanction imposed by the Panel is unfair or excessive.

The SFC has established various regulatory committees to which it has delegated some of its functions, e.g.:
(b) Takeovers Appeal Committee – hears appeals against the disciplinary rulings of the Takeovers and Mergers Panel at the request of an aggrieved party for the sole purpose of determining whether any sanction imposed by the Panel is unfair or excessive.

The following tribunals and panels are independent of the SFC:
(a) Securities and Futures Appeals Tribunal (“SFAT”) – established by the SFO as an independent statutory body. Chaired by a High Court judge, the SFAT comprises current and former judges appointed by the Chief Executive of the HKSAR and two other members drawn from a panel appointed by the Financial Secretary under delegated authority. The function of the SFAT is to hear appeals against the decisions made by the SFC relating to the licensing or registration of intermediaries and certain other matters

The MMT is established under the SFO to deal with market misconduct, including insider dealing, stock market manipulation, etc.

Corporate finance advisers are subjected to <>、<> and <>.

Corporate Finance is Type 6 Regulated Activity under the SFO.

Persons undertaking the regulated activity of advising on corporate finance will need to be
licensed by or registered with the SFC as a corporate finance adviser (Type 6 regulated
activity) unless an exemption applies.

In the Securities and Futures Ordinance (SFO), chapters related to licensing and registration may apply to?
I. Licensed corporations
II. staffs of licensed corporations
III. Banks conducting regulated activities (registered institutions)
IV. Staffs of banks conducting regulated activities (registered institutions)

The function of the SFAT is to hear appeals against the decisions made by the SFC relating to the licensing or registration of intermediaries and certain other matters.

The HKMA is required to maintain currency stability, ensure the safety and stability of the banking system, and promote the efficiency, integrity and development of the financial system.

The HKMA and the SFC must work closely together in relation to any SFC-regulated activities that are carried out by registered
institutions. To this end, a memorandum of understanding (“MOU”) has been signed between the two regulators, setting out their roles and responsibilities so as to minimise overlaps under the regulatory regime.

Under the SFO and the Banking Ordinance, authorised financial institutions (“AFIs”), which are regulated by the HKMA and include banks, have to be registered with the SFC as registered institutions if they wish to carry out an SFC-regulated activity. Clearly, the HKMA and the SFC must work closely together in relation to any SFC-regulated activities that are carried out by registered institutions. To this end, a memorandum of understanding (“MOU”) has been signed between the two regulators, setting out their roles and responsibilities so as to minimise overlaps under the regulatory regime. The Insurance Authority is the major regulator of the insurance industry in Hong Kong.

As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.

As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out
on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.

Under the SFO and the Banking Ordinance, authorised financial institutions (“AFIs”), which are regulated by the HKMA and include banks, have to be registered with the SFC as registered institutions if they wish to carry out an SFC-regulated activity. The HKMA may refer cases of suspected malpractice by registered institutions in respect of the SFC-regulated activities to the SFC, which may directly review those institutions.

As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out on-site inspections.

Under the SFO and the Banking Ordinance, authorised financial institutions (“AFIs”), which are regulated by the HKMA and include banks, have to be registered with the SFC as registered institutions if they wish to carry out an SFC-regulated activity.

Under the SFO and the Banking Ordinance, authorised financial institutions (“AFIs”), which are regulated by the HKMA and include banks, have to be registered with the SFC as registered institutions if they wish to carry out an SFC-regulated activity. As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out
on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.

The HKMA is responsible for regulating the banking industry.

Under the SFO and the Banking Ordinance, authorised financial institutions (“AFIs”), which are regulated by the HKMA and include banks, have to be registered with the SFC as
registered institutions if they wish to carry out an SFC-regulated activity. As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.

Under the SFO and the Banking Ordinance, authorised financial institutions (“AFIs”), which are regulated by the HKMA and include banks, have to be registered with the SFC as registered institutions if they wish to carry out an SFC-regulated activity. As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out
on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.

The provisions of the SFO have different applications to the following different classes of person:
(b) “registered institution”, which refers to authorised financial institutions (“AFIs”) directly supervised by the Hong Kong Monetary Authority (“HKMA”) and registered with the SFC.

For banks that also undertake regulated Type 1 to Type 7 regulated activities, they will be regulated by both the HKMA and SFC.

AFIs who engage in the regulated activity of advising on corporate finance are required under the SFO to be registered with the SFC to become “registered institutions”.

On 6 March 2000, the SEHK, HKFE and the three
associated clearing houses – Hong Kong Securities Clearing Company Limited, The SEHK Options Clearing House Limited and HKFE Clearing Corporation Limited – became wholly owned subsidiaries of HKEX.

Except in relation to the management of business risk, and the enforcement of their own listing, trading, clearing and settlement rules, HKEX, the exchanges and the clearing houses are not responsible for front-line prudential and conduct regulation of market participants, which is carried out by the SFC.

The SEHK and HKFE are recognised under s. 19, SFO as exchange companies that may operate a stock market and a futures market in Hong Kong respectively.

Hong Kong Exchange is the exchange designated by Hong Kong and the controller of clearing company. The subsidiary of Hong Kong Exchange includes The Stock Exchange of Hong Kong Limited, which is responsible for the trading and clearing of securities and futures contract.

HKEX is a listed company on the SEHK. On 6 March 2000, the SEHK, HKFE and the three associated clearing houses – Hong Kong Securities Clearing Company Limited, The SEHK
Options Clearing House Limited and HKFE Clearing Corporation Limited – became wholly owned subsidiaries of HKEX. HKEX is an exchange controller recognised by the SFC under s. 59, SFO.

HKEX is an exchange controller recognised by the SFC under s. 59, SFO.

HKEX is not responsible for front-line prudential regulation of market participants. Such task is the responsibility of the SFC.

HKEX is an exchange controller recognised by the SFC under s. 59, SFO.

SEHK issued the listing rules.

The Main Board and GEM board have their own Listing Rules.

The SEHK is responsible for the listing of securities both on the Main Board and on the Growth Enterprise Market (“GEM”) and it is also responsible for receiving notifications and disseminating information about changes in the shareholdings of directors, chief executives and substantial shareholders of listed companies that are disclosable under the SFO.

SEHK is responsible for receiving notifications and disseminating information regarding changes in the shareholdings of directors, chief executives and substantial shareholders of listed companies that are disclose able under the SFO.

The Registrar of Companies administers the following ordinances:
(a) the NCO;
(b) the CWUMPO;
(c) the Limited Partnerships Ordinance;
(d) the Trustee Ordinance;
(e) the Registered Trustees Incorporation Ordinance;
(f) the Money Lenders Ordinance; and
(g) miscellaneous incorporation ordinances.

The Registrar of Companies administers and enforces certain aspects of the:
(a) NCO;
(b) Companies (Winding Up and Miscellaneous Provisions) Ordinance
There are no direct links between the SFC and the Companies Registry in regulatory areas, although the two agencies maintain an active liaison on issues of common interest.
The Companies Registry maintains and makes available for public inspection financial and other returns, charges registered by companies and so on.
The Registrar of Companies does not directly regulate companies, limited partnerships, trustees or money lenders; such functions are assumed by different bodies.

The Companies Registry maintains and makes available for public inspection the financial and other returns made by companies, charges registered by companies and so on. It will follow up defaults in making the prescribed returns of entities covered by these ordinances and may strike
companies off the register of companies for failure to make returns or for not carrying on business.

The Companies Registry maintains and makes available for public inspection the financial and other returns made by companies, charges registered by companies and so on. It will follow up defaults in making the prescribed returns of entities covered by these ordinances and may strike
companies off the register of companies for failure to make returns or for not carrying on business.

The Registrar of Companies is responsible for the registration of prospectuses under s. 38D, CWUMPO for companies incorporated in Hong Kong and under s. 342C, CWUMPO for companies incorporated outside Hong Kong.

The Registrar of Companies administers the following ordinances:
(a) the NCO;
(b) the CWUMPO;
(c) the Limited Partnerships Ordinance;
(d) the Trustee Ordinance;
(e) the Registered Trustees Incorporation Ordinance;
(f) the Money Lenders Ordinance; and
(g) miscellaneous incorporation ordinances.

The Registrar of Companies is responsible for the registration of prospectuses under s. 38D, CWUMPO for companies incorporated in Hong Kong and under s. 342C, CWUMPO for companies incorporated outside Hong Kong.

Securities and Futures Ordinance (SFO) ays down the overall parameters which governs corporate finance activities in Hong Kong.

Securities and Futures Ordinance (SFO) provides for the licensing and registration of corporate finance advisers.

The laws passed by the Legislative Council of the Hong Kong Special Administrative Region (“LegCo”) are called ordinances. They are enacted by the Chief Executive of the
Hong Kong Special Administrative Region (“HKSAR”) with the advice of LegCo. Some laws are made by a process of delegation from LegCo to other bodies, such delegation usually being done under an ordinance. For example, the Securities and Futures Commission (“SFC”) has extensive powers to make rules under the Securities and Futures Ordinance (“SFO”). This process is, in the case of the SFC, generally required to be completed by a process of tabling in LegCo, which gives LegCo an opportunity to review the subsidiary legislation before it becomes law.

Legislation has the force of law and can be enforced through the courts, this gives some flexibility to enable the legal framework to adjust in a timely manner as markets, practices and products evolve.

《上市規則》等不是法律，並無法律效力。換言之，聯交所不能透過香港法院強制執行其規則。

Only corporations may become intermediaries. A corporation that obtains a licence will be regarded as a “licensed corporation” unless it is an AFI, in which case it will be regarded as a “registered institution”. Together they are referred to as “intermediaries”. The distinction between the licensing of corporations and the registration of AFIs is reviewed in further detail in section 1 of Topic 4.

The Companies Registry is responsible
I. Keep and make the company’s returns for public inspection
II. Strike off companies for failure to file returns or not carry on business
III. Recover returns from companies that fail to file on time

The Companies Registry does not directly regulate companies.

Codes and guidelines do not have the force of law.

The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(d) Codes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.

The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(d) Codes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.
€ The SFC has the power to reprimand (privately or publicly), to fine and to suspend or revoke a licence or registration in relation to all or any part of the regulated activities specified on the licence or certificate of registration.

The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.

The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines: (d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.

The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines: (d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.

The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(c) Persons prejudiced by the perpetration of market misconduct may take civil action against the wrongdoer through the courts to obtain redress. The SFO has provisions for the findings of the Market Misconduct Tribunal to be admissible in evidence in private civil actions.
(d) Codes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.

The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(a) Breaches of the SFO and subsidiary legislation are legal offences and will be investigated by the SFC and enforcement action taken; the SFC may refer serious cases to law enforcement agencies such as the Commercial Crimes Bureau (“CCB”) of the Hong Kong Police Force or the Independent Commission Against Corruption (“ICAC”) for investigation and action.
(b) The SFC may also apply to the courts for an injunction to restrain a person from dealing with his assets, or from carrying on all or a part of his business, if it can make a case to show that it is in the public interest to issue such an order.

A failure on the part of an intermediary or its representative to comply with a code of conduct is not a breach of law and does not by itself constitute an offence under the law.
However, it should be noted that breaches of codes of conduct may be taken into account in two important respects:
(b) a court hearing legal proceedings under the SFO shall consider the provisions of the codes if the court considers it relevant to the determination of any question arising in
the proceedings. This gives the codes a degree of legal recognition.

The SFO empowers the SFC to issue codes and guidelines relating to various matters including, for example, the business conduct of intermediaries and the furtherance of the SFC’s regulatory objectives.

The Listing Rules are not laws, and so do not have the force of law. This means that the SEHK cannot enforce a breach of its rules through the courts of Hong Kong. The Listing Rules instead operate on a contractual basis between the SEHK and an issuer and its related parties. Nevertheless, the Listing Rules do enjoy a measure of statutory backing by virtue of the SMLR. The SMLR is subsidiary legislation that establishes the dual filing regime and requires an applicant for listing to comply with the Listing Rules while at the same time providing the SFC with some oversight powers.

These are 2 of the objectives of the SFC in relation to the securities and futures industry, as stated in s. 4 of the SFO.

The demands for employment is not a function satisfied by financial market alone, thus is not a primary reason for the existence of the financial markets in Hong Kong.

The objectives of the SFO are to provide a regulatory framework which:
(a) promotes a fair, orderly and transparent market;
(b) is flexible enough to cope with new products and other innovations, and further advances in technological infrastructure;
(c) is administered by a regulator with sufficient powers and discretion whose operations are transparent and who is accountable to the stakeholders through a system of adequate
checks and balances.

Encouraging the development of new products, operating profitable exchanges in Hong Kong and reducing trading hours are all actions. They are action verbs but not objective description. Objectives can only be objective description, therefore, these phrases can never be objectives and primary objective of Hong Kong financial regulators. Objectives are status that financial regulators hope for, enhancing confidence is an objective description that financial regulators hope for.

The regulatory objectives of the SFC is to provide protection to the investing public rather than to the majority shareholder.

The SFC’s main objectives in exercising its enforcement powers:
I. Protection of investors
II. Maintenance of Market Integrity and Confidence
III. Holding offenders accountable for their actions

Disclosure requiremetns are in place to enhance transperancy

The objectives of the SFO are to provide a regulatory framework which:
(a) promotes a fair, orderly and transparent market;
(b) is flexible enough to cope with new products and other innovations, and further advances in technological infrastructure;
(c) is administered by a regulator with sufficient powers and discretion whose operations are transparent and who is accountable to the stakeholders through a system of adequate
checks and balances.

The broad points stated by the Securities Review Committee under Ian Hay Davison were
the need for:
(e) checks and balances on the system, with the exchanges being supervised by a
commission independent of the Government, with the Government only to intervene if
and when the Commission failed to regulate properly

The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(c) provide protection to the investing public;
(f) assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the industry.

The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(d) minimise crime and misconduct in the market.

The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(b) promote public’s understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the market.

The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(b) promote public’s understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the market

The Securities Commission option is wrong, the correct name is Securities and Futures Commission.

<> issued by the Securities and Futures Commission(SFC) provides detailed requirements for the management of takeovers and mergers.

The functions and powers of the SFC are wide and are set out in s. 5, SFO. The principal functions are to:
(b) supervise, monitor and regulate the activities of:
(i) recognised exchange, clearing houses, exchange controllers and investor compensation companies or persons carrying on regulated activities; and
(ii) registered institutions that are regulated or to be regulated by the SFC under any relevant provisions.

The functions and powers of the SFC are wide and are set out in s. 5, SFO. The principal functions are to:
(c) promote, encourage and enforce the proper conduct, competence and integrity of persons carrying on regulated activities;
(g) promote, encourage and enforce internal control and risk management systems by persons carrying on regulated activities, including registered institutions in the case of any regulated activities they conduct.

The SFC supervises and monitors the activities of HKEX, the exchange companies and the clearing houses, approves their rules and amendments to the rules, approves the fees they charge, and administers and enforces the applicable legislation. It also carries out regular reviews of these activities.

The role of the Hong Kong Government with regards to Hong Kong’s development as a financial centre is to coordinate and encourage various bodies to keep an eye particularly on the elements which affect systemic risk.

The SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as described in section 2 above.

Under the Basic Law of Hong Kong Special Administrative Region of the People’s Republic of China (“Basic Law”) (see Note below), the Hong Kong Government is to provide an appropriate economic and legal environment for Hong Kong as an international financial centre, and to regulate and supervise the free operation of its financial markets. Under the SFO, the SFC is the regulator of market intermediaries and their conduct and the supervisor of the recognised exchanges and recognised clearing houses in all aspects of their operation, in each case with specified powers of enforcement.

Authorizing self-regulatory bodies and professional bodies to set up committees is not the main function of the SFC.

The regulation system of securities and futures in Hong Kong is flexible and compatible with the development of the financial market. Although the regulation system of securities and futures in Hong Kong has lots of businesses with China, it’s mainly globally connected. There is high market transparency in Hong Kong. However, there is no relatively low risks. The frontline supervisors of the securities industry in Hong Kong include SFC and Hong Kong Monetary Authority.

The HKEX is the operator of the securities and futures exchanges and the related clearing houses. It has a primary responsibility for developing and maintaining the efficiency, integrity and transparency of the market, in relation to both its financial soundness and the provision of a platform for the listing of suitable companies.

Enforcement of the Listing Rules is the job of the SEHK.

The SFC has a Corporate Finance Division, which is the major division regulating corporate finance activities.

MBLR Appendix 14 contains the Corporate Governance Code and Corporate Governance Report.

The Listing Rules also contain important appendices that set out the SEHK’s views on the principles and implementation of good corporate governance, the “Corporate Governance Code and Corporate Governance Report” (MBLR Appendix 14; GLR Appendix 15).

The Listing Appeals Committee will consider appeals against the decisions of the Listing Committee (or GEM Listing Committee) in some certain matters.

The Corporate Governance Code is issued by the Stock Exchange of Hong Kong and represents the SEHK comments on good corporate governance.

The Corporate Governance Code sets out the SEHK’s views on the principles of good corporate governance in six sections covering:
I. Directors
II. Remuneration of directors and senior management and board evaluation
III. Accountability and audit
IV. Delegation by the board
V. Communication with shareholders
VI. Company secretary

The Corporate Governance Code sets out the SEHK’s views on the principles of good corporate governance in six sections, covering:
(a) directors;
(b) remuneration of directors and senior management and board evaluation;
(c) accountability and audit;
(d) delegation by the board;
(e) communication with shareholders; and
(f) company secretary.

The Corporate Governance Code sets out the SEHK’s views on the principles of good corporate governance in six sections, covering:
(a) directors;
(b) remuneration of directors and senior management and board evaluation;
(c) accountability and audit;
(d) delegation by the board;
(e) communication with shareholders; and
(f) company secretary.

Unlike the guidance-only basis of the above principles and recommended best practices, it is mandatory for issuers to include a Corporate Governance Report in their interim and annual reports (and summary reports, if any). Such reports should contain prescribed information on
their corporate governance practices including a statement giving considered reasons for any deviation from the code provisions of the Corporate Governance Code. In the case of recommended best practices, issuers are encouraged, but not required, to state whether they have been complied with.

The Corporate Governance Code sets out the SEHK’s views on the principles of good corporate governance in six sections, covering:
(a) directors;
(b) remuneration of directors and senior management and board evaluation;
(c) accountability and audit;
(d) delegation by the board;
(e) communication with shareholders; and
(f) company secretary.
Each section includes a statement on principles, detailed code provisions and recommended best practices. Issuers are expected to comply with, but may choose to deviate from, the code provisions. Every issuer must carefully review each code provision set out and, where an issuer
deviates from any of the code provisions, it must give considered reasons in its interim and annual reports. The recommended best practices are for guidance only, and issuers may also devise their own code on such terms as they may consider appropriate.

Issuers are expected to comply with, but may choose to deviate from, the code provisions. Every issuer must carefully review each code provision set out and, where the
issuer deviates from any of the code provisions, the issuer must give considered reasons in interim and annual reports. The recommended best practices are for guidance only, and
issuers may also devise their own code on such terms as they may consider appropriate.

AFIs who engage in the regulated activity of advising on corporate finance are required under the SFO to be registered with the SFC to become “registered institutions”. While the front-line regulator of a registered institution remains the HKMA, a registered institution will in general be subject to the SFC’s codes, including the CFA Code.

Good corporate governance should separate the functions of Director and CEO.

Authority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.

Authority for payment is provided in the company’s articles. The model articles of association in the Companies (Model Articles) Notice provide that the remuneration of directors is determined by the company in general meeting. This usually covers directors’ fees. If a director holds some other position, such as managing director or executive director, he can have a service contract.

These are 2 of many of the best practices recommended by the Code in terms of Corporate Governance.

Each section includes a statement on principles, detailed code provisions and recommended best practices. Issuers are expected to comply with, but may choose to deviate from, the code provisions. Every issuer must carefully review each code provision set out and, where an issuer
deviates from any of the code provisions, it must give considered reasons in its interim and annual reports. The recommended best practices are for guidance only, and issuers may also devise their own code on such terms as they may consider appropriate.

Every issuer must carefully review each code provision set out and, where an issuer deviates from any of the code provisions, it must give considered reasons in its interim and annual reports.

Unlike the guidance-only basis of the above principles and recommended best practices, it is mandatory for issuers to include a Corporate Governance Report in their interim and annual reports (and summary reports, if any). Such reports should contain prescribed information on
their corporate governance practices including a statement giving considered reasons for any deviation from the code provisions of the Corporate Governance Code. In the case of recommended best practices, issuers are encouraged, but not required, to state whether they have been complied with.

The Registrar of Companies administers and enforces certain aspects of the:
(d) Trustee Ordinance.
(f) Money Lenders Ordinance.

In addition to the licensing requirements applicable to the corporation and its representatives undertaking a regulated activity, a licensed corporation must also ensure that it satisfies the following requirements concerning responsible officers:
(a) every executive director (see Note 1 below) that is an individual must obtain the approval of the SFC as a responsible officer in relation to the regulated activity;
(b) every licensed corporation must have, for each regulated activity for which it is licensed, at least two responsible officers approved by the SFC as such; and at least one of them shall be an executive director of the licensed corporation; and
(c) at least one responsible officer must be available at all times to supervise the business of the regulated activity.

The SFO defines six types of market misconduct: insider dealing, disclosure of false or misleading information inducing transactions, stock market manipulation, false trading, price rigging, and disclosure of information about prohibited transactions.

SFO regulates offers of investments and sets out the requirements which an issuer and its adviser must meet when making such offers. It is an offence to issue advertisements, invitations or documents relating to investments in certain situations unless the issue is authorised by the SFC.

Section 384, SFO provides that giving false or misleading information to the
SFC as to a material particular (whether knowingly or recklessly) is an offence.

It is an offence to issue advertisements, invitations or documents relating to investments in certain situations unless the issue is authorised by the SFC (ss. 103 and 105, SFO).
Giving false or misleading information to the SFC as to a material particular (whether knowingly or recklessly) is an
offence.

A person is guilty of an offence if, with the intention of committing fraud, he:
(a) makes false or misleading entries;
(b) destroys any records; or
(c) does not maintain records.

The SFO defines six types of market misconduct: insider dealing, disclosure of false or misleading information inducing transactions, stock market manipulation, false trading, price rigging, and disclosure of information about prohibited transactions.

“cold shoulder order”: prohibiting a person from investing or trading in Hong Kong markets

The SFO defines six types of market misconduct: insider dealing, disclosure of false or misleading information inducing transactions, stock market manipulation, false trading, price rigging, and disclosure of information about prohibited transactions. The first three of these are likely to be of most relevance to the business of a corporate finance adviser and will be
reviewed below.

Insider dealing may induce civil action and criminal prosecution.

Boiler room activities are not market misconducts but improper trading practices. Thus the MMT does not deal with this.

The MMT is established under the SFO to deal with market misconduct, including insider dealing, stock market manipulation, etc.

Under the SFO, market misconduct may be pursued via proceedings before the MMT or via criminal proceedings conducted before a court of law. Once proceedings have been commenced in either of these routes, they may not be instituted in the other route in respect of the same conduct. This practice of hearing in only one route is called Dual System.

The Secretary for Justice is responsible for determining the means of reporting market misconduct.

The powers of the MMT include:

I. Disqualifying a person from holding office as a director, liquidator or receiver or from
taking part in the management of a listed or specified corporation for up to 5 years.

II. Prohibiting a person from investing or trading in Hong Kong markets for up to 5
years (“cold shoulder order”).

Penalties that the Market Misconduct Tribunal can impose on those found to have committed market misconduct include:
I. Disqualification from office as director or liquidator or receiver or participation in the management of the corporation for a period of up to 5 years.
II. Cold shoulder order prohibiting investment in Hong Kong market for up to 5 years
III. Issuance of a disciplinary referral recommending a professional body to take disciplinary action against the person
IV. Requiring the person to pay to the government profits gained or losses avoided, plus compound interest
V. Requesting the person to pay to the government and the SFC reasonable costs and expenses incurred