Hong Kong’s Securities and Futures Commission (SFC) and Hong Kong
Exchanges and Clearing Limited (HKEx) have both welcomed the enactment of the
Securities and Futures (Amendment) Ordinance 2012 (Amendment Ordinance), which,
in particular, establishes a statutory disclosure regime for listed companies.
Under the Amendment Ordinance, the SFC is empowered to implement a statutory
disclosure regime whereby listed corporations will be required to disclose price
sensitive information (PSI) in a timely manner, backed by civil sanctions for
non-disclosure. 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.
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
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
The SFC will also establish the Investor Education Centre (IEC), a wholly-owned
subsidiary and targeted to be launched by the fourth quarter of this year, to
take up broader investor education responsibilities covering the entire financial
Provisions relating to the SFC directly instituting proceedings before the
MMT and the establishment of the IEC came into operation on May 4, 2012, while
the PSI disclosure regime will take effect on January 1, 2013, to give listed
companies sufficient time to prepare themselves to comply with the new requirements
and to set up the necessary internal control systems.
HKEx believes that the new legislation is significant and a positive development
for Hong Kong as an international financial centre. "We believe the implementation
of a statutory obligation to disclose PSI ensures the regulatory regime in Hong
Kong remains on par with those in other jurisdictions," said HKEx Head
of Listing Mark Dickens.
In connection with the implementation of the statutory PSI disclosure regime,
HKEx confirmed that changes to its Listing Rules will be necessary to minimize
duplication and overlap with the new law.
The main change will be to remove the existing continuing disclosure obligations,
which will become part of the statutory regime. In addition, a range of amendments
will be made consequential on the removal of those core provisions. HKEx expects
to launch a public consultation on the changes to the Listing Rules later this