It transpires that
Webb-site.com editor David Webb was not the only director of HKEx to
make a personal submission to the Government on the Listing Consultation. We
have obtained a copy of John Strickland's submission, and in the interests
of transparency, we publish it here. |
PERL: Strickland's Submission
28th March 2004
Mr John Strickland, a director who is standing for election at this
week's AGM of Hong Kong Exchanges and Clearing Ltd (HKEx, 0388) AGM this week (see
voting recommendations) made
a personal submission to the Government on Proposals to Enhance the Regulation
of Listing. We have obtained a copy and are publishing it in the interests
of transparency. Click here to
read his submission in its entirety.
Mr Strickland's call for statutory backing of the listing rules
went substantially beyond what HKEx had suggested. HKEx had proposed statutory
rules only for "certain core disclosure obligations" on financial
reporting, significant corporate transactions, price-sensitive information and
connected transactions, but Mr Strickland wrote:
"Statutory backing should be extended to rules relating to...
corporate governance, restrictions on purchases and subscription...etc"
He also said:
"other conduct rules such as directors' dealings in securities
and other directors' duties should be statutorily backed, so that proper
investigations can be made and violations can be appropriately punished"
Moving on to the list of proposed sanctions, Mr Strickland
proposed:
"the list should include the requirement for minority
shareholders to be "made whole" by the parties that benefited from the abuse".
This raises an interesting point which we should have made in
our own submission. We note that the Market Misconduct Tribunal (MMT) can only order
that the profit made from, or loss avoided by, misconduct be paid to the
Government, not to minority shareholders. Ironically then, the Government
actually has a financial interest in greater market misconduct, the prosecution
of which could boost government revenues. While we don't believe that is their
intent, it is wrong in principle, and it is clear where the victims lie - the minority
shareholders should receive the compensation, not the Government. At present,
the investors have to take the findings of the MMT and bring their own legal
action, which in the absence of a class-action system, is prohibitively
expensive.
In relation to the Listing Committee's composition, Mr
Strickland wrote:
"A majority of members of the Listing Committee should be
personal (as opposed to institutional) investors. These are the parties who
suffer when there are violations of the Listing Rules. The present members are
largely market intermediaries and listed company representatives having
different agendas and motivations from investors."
Tearing down the Chinese wall between the Board and the Listing
Division on listing policy, Mr Strickland
wrote:
"It is proper (given past history) that the Board of HKEx does
not intervene in individual cases in connection with the Listing Rules. The HKEx
Board should however be responsible (with the SFC) for changes to the Listing
Rules, for policies in connection with the regulatory function and for ensuring
that the Listing Division is appropriately staffed and managed. Any other
arrangements will inevitably be contrived and impossible to defend so long as
the Listing Division is part of or a subsidiary of HKEx."
The current arrangement is not what Mr Strickland proposes, and
we agree that it is contrived and impossible to defend. The Board of HKEx has no
involvement in Listing Matters, apart from the CEO who sits on the Listing
Committee. All the full-time staff of the Listing Division theoretically report
to the Listing Committee, but that committee has no say over budget and staffing
matters, which are an internal management affair.
Mr Strickland also writes:
"The Listing Committee today is far too involved in individual
cases of IPOs and application of the Listing Rules. The workload is impossibly
large for unpaid practitioners with other jobs. As a consequence it is near
impossible for them to give proper attention to matters brought before them. The
proper use of the Listing Committee is a) to advise the Board of HKEx on
policies, practices and procedures in connection with regulation of listed
companies and b) to hear appeals from decisions made by the Listing Division.
The Listing Division should deal with individual cases, overseen by the SFC and
the Board of HKEx.
© Webb-site.com, 2004
Sign up for our free newsletter
Recommend Webb-site.com to a friend
Important notice: All material on this site, except
where otherwise accredited, is copyright to Webb-site.com.
Media and researchers are welcome to quote from articles on this site, provided that such
quotation is attributed to Webb-site.com. The
information in this site should not be relied upon by any person in making any investment
decision. No responsibility or liability is accepted by Webb-site.com or any person
related to it for any loss arising from or in reliance upon the whole or any part of the
contents of this site. Persons who are in any doubt about an investment or potential
investment should take professional investment advice. From time to time parties associated with Webb-site.com may
own long or short positions in securities issued by or related to companies or governments
on which we comment.
Back to top
|