The race is on, and we need your help. If you own shares in HKEx, and want a better-run market, then you should elect an HKEx board which for the first time includes investor representatives. Vote for David Webb and Oscar Wong and against the incumbent broker-directors at the AGM. Vote now! We also urge investors to vote against the new issue mandate and support Project Vampire.

HKEx voting recommendations
28 March 2003

Company: Hong Kong Exchanges and Clearing Limited (HKEx)
Stock code: 0388
Date of meeting: 15-Apr-03
Time of meeting: 16:30
Advice date:  28-Mar-03
Notice of Meeting: Click here
Shareholder circular: Click here
Voting method: will require a poll, all proxies will be counted

Note to journalists:
We have up to 4 proxy seats available inside this AGM. Please contact us if you want one.

Item Description Vote
1 Adopt the accounts FOR
2 Declare a final dividend FOR
3.1 Re-elect Mr Fan Chor Ho, Paul AGAINST
3.2 Re-elect Dr Kwok Chi Piu, Bill AGAINST
3.3 Re-elect Mr Lee Jor Hung, Dannis AGAINST
3.4 Re-elect Mr Lee Kwan Ho, Vincent Marshall AGAINST
3.5 Re-elect Mr Seto Gin Chung, John AGAINST
3.6 Elect Mr Wong Sai Hung, Oscar FOR
3.7 Re-elect Mr Yue Wai Keung AGAINST
3.8 Elect Mr Webb, David Michael FOR
4 Re-appoint PriceWaterhouseCoopers as Auditors FOR
5.1 Mandate to issue additional shares AGAINST
5.2 Mandate to repurchase shares on-market FOR
5.3 Extend the mandate granted pursuant to item 5.1 AGAINST
5.4 Approve the payment of remuneration to the non-executive directors FOR
5.5 Amend the Memorandum and Articles of Association FOR

If you don't know how to send in your votes, see our Voting Guide.

Reasons for recommendations

Items 3.1-3.8

This is the first time that HKEx has held elections for directors since it was listed on its own Stock Exchange in 2000. At the time of its listing (when no new shares were issued), all the shares in HKEx were owned by the former members of its two exchanges, the Stock Exchange and the Futures Exchange. Those members elected 6 representatives to the board, all of whom are affiliated with local stockbrokers. They are now standing for re-election.

The Government, under law, appointed 8 directors prior to listing. This will be reduced to 6 directors after the AGM, but we do not yet know who the Government will appoint or re-appoint. Several of the incumbent appointed directors work for an investment bank, a broker, a listed company, or a corporate law firm. None of them works for an asset manager.

The Chief Executive of HKEx is an ex-officio director, taking the total to 15 before the AGM, and 13 afterwards. He is the only executive director.

As there are 8 candidates for 6 seats, this will be a contested election. It will be decided based on the net votes for each candidate, being votes in favour minus votes against. If more than 6 candidates have net positive votes, then the top 6 will win. If there is a tie, the winner will be chosen by random draw.

Vote for David Webb and Oscar Wong (3.6 and 3.8)

David Webb is editor of Oscar Wong Sai-hung is Chief Executive of BOC-Prudential Asset Management Ltd, a local fund management firm which is a joint venture between Bank of China and the UK's Prudential plc and . We don't know him personally, but HKEx needs investor representatives on the board, so please vote for him. Biographies of all candidates are in the shareholder circular. If both Webb and Wong are elected, there will still only be 2 investor-affiliated directors on the HKEx board, out of 13 directors.

Positive votes are not enough - vote against 3.1, 3.2, 3.3, 3.4, 3.5 and 3.7

Because of the net votes system, it is not sufficient to vote in favour of Oscar Wong and David Webb. If you want to elect them, you must also vote against the six incumbent broker-directors. You can be confident that their supporters will vote against the 2 new candidates. It would be a great shame if we were in the top 6 in terms of positive votes but not elected due to negative votes. Each share you own has double voting power - a vote in favour of Webb and Wong and against the others  makes a 2-vote difference to the net votes.

Some shareholders may be concerned that if they vote against the incumbents, then only two directors (Webb and Wong) may be elected with net positive votes. Don't worry about that, because if there are any vacancies, then the board can fill them by appointing new directors whose term will last until the next AGM. That in fact would open the door to appointment of more investor-affiliated directors, offsetting the brokers and investment banks. It would be a good thing.

And please, do not try to pick 4 out of the 6 incumbents to go with the two investor candidates, because if you pick randomly, that will just result in giving all 6 of them two thirds of the votes you give to Webb and Wong, and it will make it harder for the two investors to be elected. So please vote against all the other candidates.

We don't know if we can win. We do need every vote we can get, because it is likely that the percentage turnout of those brokers who still hold their shares in HKEx will be higher than the institutional shareholders who often ignore AGM votes. But if institutions fail to get out and vote for us, and we are not elected, then they should not complain to us later that the market seems to be run like a club for brokers and tycoons.

Items 5.1 and 5.3 urges all investors to vote against the general mandate for all listed companies, for the reasons explained in our article Project Vampire.

©, 2003

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