SECURITIES AND FUTURES COMMISSION ORDINANCE

SECURITIES AND FUTURES COMMISSION ORDINANCE

LAWS OF HONG KONG


SECURITIES AND FUTURES
COMMISSION ORDINANCE


CHAPTER 24





CHAPTER 24

SECURITIES AND FUTURES COMMISSION ORDINANCE

ARRANGEMENT OF SEMONS

Section..................................... Page

PART I

PRELMNARY

1. Short title ............................8
2. Interpretation .........................8

PART II

SECURITIES AND FUTURES COMMISSION

3. Securities and Futures Commission .....12
4. Functions of Commission ...............14
5. Constitution of Commission ............16
6. Commission may establish committees ...18
7. Staff of Commission ...................20
8. General powers of Commission ..........20
9. Delegation and sub-delegation of Commission's functions 20
10.Advisory Committee 22
11.Directions to Commission 22
12.Annual report of Commission 22
13.Commission to furnish information 24
14.Financial year and estimates of income and expenditure 24
is.Accounts 24
16.Auditors and audit 24
17.Investment of funds 26

PART 1II

SEcuRrrIES AND FuTuREs Appum PANFL

18.Constitution of Appeals Panel 26
19.Appeals (registration, forfeiture and notices) 28
20.Hearing of appeals by tribunal 30
21.Procedure for appeals 30
22.Case stated...................................34
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Section Page

PART IV
ADDITIONAL REGISTRATION REQumEmEim
23.Applications under section 51 of Securities Ordinance or section 30 of
Commodities Trading Ordinance: supplementary provisions 36
24.Applicant under Securities Ordinance or Commodities Trading Ordinance to
furnish information to Commission ....40
25.Certificates of registration to continue in force 40
26.Section 23(2) and (3) to apply to inquiries under section 56 of Securities
Ordinance or section 36 of Commodities Trading Ordinance 42
27.Registered persons to notify Commission where records etc. kept 42
28.Financial resources rules 46
29.Modification of financial resources rules in particular cases 48

PART V

R.EGuLATioN OF REGISTERED PERSONS'BUSINESS, ETc.

30.Supervision 50
31.Information relating to transactions 52
32.Certification to High Court relating to non-compliance under section 30 or 31 54
33.Investigations 56
34.Returns 62
35.Production of computerized information 64
36.Magistrate's warrant 64
37.Destruction etc. of documents 66
38.Powers of intervention 68
39.Restriction of business 68
40.Restriction on dealing with assets 70
41.Maintenance of assets 70
42.Provisions relating to notices under section 39, 40, 41 or 43 72
43.Withdrawal, substitution or variation of notices under section 39, 40 or 41 74
44.Appeals against notices under this Part 74
45.Winding-up orders 74
46.Receiving orders.......... 76
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Section Page

PART VI

SPECIAL PROVISIONs RELATING To EXCRANGE COMPANIES AND
CLEARING HOUSES

47.Transfer and resumption of functions 76
48.Information: Exchange Companies and clearing houses 78
49.Notice of closure or re-opening 78
50.Additional powers-restriction notices relating to Exchange Companies and
clearing houses .....................78
51.Additional powers-suspension orders relating to Exchange Companies and
clearing houses ...................84

PART VII

FUNDING

52.Levies 86
53.Appropriation 88
54.Fees and other charges 88

PART VIII

MISCELLANEOUS

55.Injunctions to restrain contraventions 90
56.Immunity, etc . 92
57.Liability of directors, etc . 92
58.Evidence 92
59.Preservation of secrecy, etc . 94
60.Service of notices 100
61.Penalties for offences 102
62.Prosecution of certain offences by Commission 102
63.Dissolution of Provisional Securities and Futures Commission Limited and
transfer of property ..................104
64.Transitional 106

Schedule Functions of Commission to which section 9 does not apply 108
1989




CHAPTER 24

SECURITIES AND FUTURES COMNIISSION

To establish the Securities and Futures Commission and to amend the law
relating to dealing in securities and trading in futures contracts; and to
provide for connected or incidental matters.
[The Ordinance other than sections 27(1)
to (8), 30, 31, 32 and 65 as read
with item 1 (b) of paragraph 4 of1 May 1989 L.N. 126 of 1989
Schedule 2* insofar as they relate to
the repeal of sections 122 and 123
of the Securities Ordinance 1
The remaining provisions 1 August 19891L.N. 230 of 1989

Originally 10 of 1989-L.N. 259 of 1989

PART 1

PRELMINARY

1. Short title
This Ordinance may be cited as the Securities and Futures Commission
Ordinance.

2. Interpretation
In this Ordinance, unless the context otherwise requires-
'clearing house' ( ) means a clearing house within the meaning of section
2(1) of the Commodities Trading Ordinance (Cap. 250) or,,and
under any other Recurides;
'the Commission' ( ) means the Securities and Futures Commission
established by section 3;
'Commodity Exchange' has the meaning assigned to it by section
2(1) of the Commodities Trading Ordinance (Cap. 250);
'company' ( ) means any company within the meaning of the Companies
Ordinance (Cap. 32) and includes an oversea company within the meaning
of that Ordinance or any other body corporate incorporated in Hong
Kong having a share capital;

See, for s. 65 and Schedule 2, Ord. 10 of 1989.
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'data equipment' ( ) has the meaning assigned to it by section 27;
'data material' ( ) means any document or other material used in
connection with or produced by data equipment;
,,establishment day' ( ) means the day on which section 3 comes into
operation;
'Exchange Company' ( ) means-
(a) the Stock Exchange Company; or
(b) the Futures Exchange Company,
and 'Exchange Companies' means both of those companies;
'executive director' and 'non-executive director' mean
a director of the Commission who is appointed under section 5 as an
executive director and a non-executive director thereof, respectively;
'exempt dealer' has the meaning assigned to it by section 2(1)
of the Securities Ordinance (Cap. 333);
'4financial resources rules' ( ) means rules made under section 28;
'financial year' means the period specified in section 14(1);
'firm' (AM) has the meaning assigned to it by section 2(1) of the Commodities
Trading Ordinance (Cap. 250);
'function' (099) includes power and duty;
'Tutures contracC ( ) has the meaning assigned to it by section 2(1) of
the Commodities Trading Ordinance (Cap. 250);
'Futures Exchange Company' means the Exchange Company
within the meaning of section 2(1) of the Commodities Trading Ordinance
(Cap. 250);
'group of companies'has the meaning assigned to it by section 2(1)
of the Companies Ordinance (Cap. 32);
'officer' (ARAM), in relation to a company, has the meaning assigned to it by
section 2(1) of the Companies Ordinance (Cap. 32);
'Panel' means the Securities and Futures Appeals Panel
established by section 18;
'property investment arrangements' ( ) means investment
arrangements as defined in relation to property other than securities by
section 2 of the Protection of Investors Ordinance (Cap. 335);
'record or other document includes---
(a)a book, voucher, receipt or data material, or information which is
recorded in a non-legible form but is capable of being reproduced
in a legible form; and
(b)any document, disc, tape, sound track or other device in which
sounds or other data (not being visual images) are embodied so
as to be capable (with or without the aid of other equipment) of
being reproduced and any film (including a microfilm), tape or
other device in which visual images are embodied so as to be
capable (as aforesaid) of being reproduced;
1989







'registered person' ( ) means a person who is registered under the
Securities Ordinance (Cap. 333), the Commodities Trading Ordinance
(Cap. 250) (or both those Ordinances) as a dealer, dealing partnership,
dealer's representative, investment adviser, commodity trading adviser,
investment advisers' partnership, investment representative or a
commodity trading adviser's representative;
'the relevant Ordinances'means this Ordinance, the Securities
Ordinance (Cap. 333), the Commodity Exchanges (Prohibition) Ordinance
(Cap. 82), the Commodities Trading Ordinance (Cap. 250), the Protection
of Investors Ordinance (Cap. 335), the Stock Exchanges Unification
Ordinance (Cap. 361) and the Securities (Disclosure of Interests)
Ordinance (Cap. 396);
'securities' (M has the meaning assigned to it by section 2(1) of the
Securities Ordinance (Cap. 333);
'Stock Exchange Company' means the Exchange Company
within the meaning of section 2(1) of the Stock Exchanges Unification
Ordinance (Cap. 361);
'trading in commodity futures contracts'has the meaning
assigned to it by section 2(1) of the Commodities Trading Ordinance (Cap.
250);
'tribunal' means a tribunal appointed under section 20;
'Unified Exchange' has the meaning assigned to it by section 2(1)
of the Stock Exchanges Unification Ordinance (Cap. 361).

PART II

SECURMES AND FuTuREs COMWSSION

3. Securities and Futures Commission

(1) There is hereby established a body to be known as the Securities and
Futures Commission.
(2) The Commission shall be a body corporate with power to sue and be
sued.
(3) The receipts of the Commission shall not be subject to taxation under
the Inland Revenue Ordinance (Cap. 112).
(4) (a) The Commission shall provide itself with a seal.
(b)The seal of the Commission shall be authenticated by the
signature of the chairman or deputy chairman of the Commission
or, if both the chariman and deputy chairman of the Commission
are absent from Hong Kong or unable to act, the signature of
some other director of the Commission authorized by it to act in
that behalf.




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4. Functions of Commission

(1) The Commission shall have the following functions-
(a)to advise the Financial Secretary on all matters relating to
securities, futures contracts and property investment arrange-
ments;
(b)without prejudice to any duties imposed or powers conferred on
any other person in regard to the enforcement of the law relating
to securities, futures contracts and property investment
arrangements, to be responsible for ensuring that the provisions
of the relevant Ordinances, and the provisions of any other
Ordinance so far as they relate to securities, futures contracts and
property investment arrangements, are complied with;
(e)to report to the Financial Secretary the occurrence of any dealing
in relation to securities which it reasonably believes or suspects to
be an insider dealing within the meaning of section 141B of the
Securities Ordinance (Cap. 333);
(d)to be responsible for supervising and monitoring the activities of
the Exchange Companies and clearing houses;
(e)to take all reasonable steps to safeguard the interests of persons
dealing in securities or trading in futures contracts or entering
into property investment arrangements;
to promote and encourage proper conduct amongst members
of the Exchange Companies and clearing houses, and other
registered persons;
(g)to suppress illegal, dishonourable and improper practices in
dealing in securities, trading in futures contracts, entering into
property investment arrangements, and the provision of
investment advice or other services relating to securities, futures
contracts and property investment arrangements;
(h)to promote and maintain the integrity of registered persons and
encourage the promulgation by registered persons of balanced
and informed advice to their clients and to the public generally;
(i)to consider and suggest reforms of the law relating to securities,
futures contracts and property investment arrangements;
(j)to encourage the development of securities and futures markets in
Hong Kong and the increased use of such markets by investors in
Hong Kong and elsewhere;
(k)to promote and develop self-regulation by market bodies in the
securities and futures industries;
(1)to perform any other functions conferred by or under any other
Ordinance.

1989




(2) As regards any function, the Commission may, for the guidance of
registered persons and others, prepare and cause to be published in the Gazette
guidelines indicating the manner in which, in the absence of any particular
consideration or circumstance, it proposes to perform the function.
(3) The Commission may from time to time engage such consultants or
advisers as it may consider necessary to assist the Commission in the
performance of its functions.
(4) Nothing in subsection (1)(k) shall be regarded as limiting or otherwise
affecting any other function of the Commission.

5. Constitution of Commission
(1) Subject to subsection (2), the Commission shall consist of a chairman
appointed by the Governor and such uneven number, not being less than 7, of
other directors so appointed as the Governor may determine; and when the
number of such other directors ceases to be an uneven number the Governor
shall make such appointment or appointments as may be necessary to comply
with this subsection.
(2) Half of the directors of the Commission, including the chairman, shall
be appointed to be executive directors and the remainder shall be appointed to
be non-executive directors.
(3) The Governor may appoint an executive director to be deputy
chairman of the Commission.
(4) (a)If no appointment has been made under subsection (3) or if the
office of deputy chairman of the Commission is vacant, the
Financial Secretary may designate an executive director to act as
chairman of the Commission during any period during which the
chairman of the Commission is unable to act as chairman due to
illness or other incapacity or is absent from Hong Kong.
(b)A designation under this subsection shall cease when revoked by
the Financial Secretary or an appointment is made under
subsection (3), whichever first occurs.
(5) The terms and conditions of office of a director of the Commission
shall be such as the Governor may determine.
(6) A director of the Commission may at any time resign his office by
letter sent to the Governor.
(7) A director of the Commission shall be paid by the Commission such
remuneration, allowances or expenses as the Governor may determine.
(8) The Governor may by notice in writing remove from office any
director of the Commission whose removal appears to him to be desirable for
the effective performance by the Commission of its functions.
(9) Meetings of the Commission shall be held as often as may be
necessary for the performance of its functions, and may be convened by the
chairman or the deputy chairman or any 2 other directors.

1989





(10) If the office of chairman of the Commission is vacant or the chairman
of the Commission is unable to act as chairman due to illness or other
incapacity or is absent from Hong Kong the deputy chairman or an executive
director designated under subsection (4) shall act as chairman in his place.
(11) At a meeting of the Commission-
(a)the chairman shall be chairman of the meeting; or
(b)if the chairman is not present, the deputy chairman shall be
chairman of the meeting; or
(c)if neither the chairman nor the deputy chairman is present, the
directors present shall choose one of their number to be chairman
of the meeting.
(12) The quorum for a meeting of the Commission shall be 4 directors of
whom 2 shall be executive directors and 2 shall be non-executive directors.
(13) Each director of the Commission present at a meeting thereof shall
have a vote.
(14) (a)Every question for decision at a meeting of the Commission shall
be determined by a majority of votes of the directors present and,
in the event that voting is equally divided, subject to paragraph
(b) the chairman of the meeting shall have a casting vote.
(b)The chairman of a meeting shall not exercise a casting vote until
after he has consulted the Financial Secretary as regards that
exercise.
(15) The Commission may act notwithstanding a vacancy among its
directors.
(16) The Commission shall organize and regulate its administration,
procedure and business.

6. Commission may establish committees
(1) The Commission may establish standing or special committees and
may refer or assign to any such committee any matter for consideration, inquiry
or management by the committee.
(2) The Commission may appoint any person to be a member of any
committee established under this section, whether that person is a director of
the Commission or not.
(3) Any reference or assignment under subsection (1) and every
appointment under subsection (2) may be withdrawn or revoked by the
Commission at any time, and no such reference or assignment shall prevent the
performance by the Commission of any of its functions.
(4) A committee established under this section may elect any of its
members to be chairman and may regulate its own procedure and business; and
in the exercise of its powers under this subsection such committee shall be
subject to and act in accordance with any direction given to the committee by
the Commission for the purposes of this subsection.


1989





(5) Meetings of a committee established under this section shall be held
at such times and places as the chairman of that committee may, subject to
subsection (4), determine.

7. Staffof Commission

(1) The Commission may from time to time employ persons who shall be
paid such remuneration and allowances and shall hold their employment on
such other terms and conditions as the Commission shall determine.
(2) The Commission may make arrangements for or in respect of the
provision and maintenance of such schemes (whether contributory or not) for
the payment to its employees and their dependants of such retirement benefits,
gratuities or other allowances as it may determine.

8. General powers of Commission

For the purposes of this Ordinance, the Commission may-
(a)acquire, hold and dispose of property of any description;
(b)make contracts or other agreements;
(c)receive and expend moneys;
(d)with the approval of the Financial Secretary, borrow money on
such security or other conditions as it considers expedient;
(e)subject to section 59, cause to be printed or publish any material.

9. Delegation and sub-delegation
of Commission's functions

(1) Subject to subsection (2), the Commission may delegate any of its
functions, other than its power under this section to delegate or a function
specified in the Schedule, to-
(a)any of the directors of the Commission;
(b)any committee established under section 6; or
(c)any employee of the Commission.
(2) (a)A delegation under this section shall not prevent the concurrent
performance by the Commission of the function delegated.
(b)The Commission may revoke a delegation under this section.
(3) Where the Commission makes a delegation under this section, it may
at the same time authorize the person or committee to whom the delegation is
made to sub-delegate the function delegated and such authorization may
contain restrictions or conditions as regards the exercise of the power to
sub-delegate under the authorization.
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(4) Where any person or committee purports to act pursuant to a
delegation or sub-delegation under this section, he or it shall be presumed, until
the contrary is shown, to be acting in accordance with the terms of the
delegation or sub-delegation.
(5) The Legislative Council may by resolution amend the Schedule.

10. Advisory Committee

(1) There shall be an Advisory Committee to advise the Commission
which shall consist of the chairman and not more than 2 executive directors of
the Commission, who shall be appointed by the Commission, and not less than
8 or more than 12 other members appointed by the Governor after consultation
with the Commission.
(2) The Advisory Committee shall meet at least once every 3 months.
(3) A meeting of the Advisory Committee may be convened by-
(a) the chairman of the Commission; or
(b) any other 3 members of the Advisory Committee.
(4) At a meeting of the Advisory Committee-
(a)the chairman of the Commission shall preside; or
(b)if the chairman of the Commission is not present, the members
present shall choose one of their number to preside.
(5) The Commission may request the Advisory Committee to advise it on
any matter of policy regarding the performance of any of its functions.
(6) Where a member of the Advisory Committee appointed by the
Commission ceases to be an executive director of the Commission, he shall
thereupon cease to be a member of the Advisory Committee.
(7) The Governor may by notice in writing remove a person from
membership of the Advisory Committee.

11. Directions to Commission

(1) The Governor may give to the Commission such directions in writing
as regards the performance of any of its functions as he considers appropriate.
(2) The Commission shall in performing its functions comply with any
direction under this section.

12. Annual report of Commission

The Commission shall, as soon as practicable after the end of each
financial year, prepare a report on its activities during that financial year and
send a copy of the report to the Financial Secretary who shall cause a copy
thereof to be laid on the table of the Legislative Council.


1989





13. Commission to furnish information

The Commission shall, when required by the Financial Secretary, furnish
such information with respect to the policy it is pursuing or proposes to pursue
in the performance of any of its functions as he may specify.

14. Financial year and estimates
of income and expenditure

(1) The financial year of the Commission shall be the period of 12 months
beginning on 1 April, and its first financial year shall commence on the
establishment day and end on the following 31 March.
(2) The Commission shall not later than 31 December in each financial
year submit to the Governor for his approval estimates of its income and
expenditure for the next financial year.
(3) The estimates as approved under subsection (2) shall be laid on the
table of the Legislative Council.

15. Accounts

The Commission shall cause proper accounts and records to be kept of all
transactions and shall, as soon as practicable after the end of each financial
year, cause to be prepared for that financial year a statement of the accounts of
the Commission, which statement shall-
(a)include an income and expenditure account and balance sheet;
and
(b)be signed by the chairman and 1 non-executive director of the
Commission.

16. Auditors and audit

(1) (a)The Commission shall, as soon as practicable after the end of
each financial year, submit the statement of the accounts
prepared for that year under section 15 for audit to auditors
appointed by the Commission with the approval of the Financial
Secretary, and the auditors shall prepare a report on the accounts
and send the report to the Commission who shall, as soon as
possible, send a copy of the report and a copy of the statement of
accounts to the Financial Secretary.
(b) The auditors' report shall include-
(i) a statement whether, in the auditors' opinion, the income
and expenditure account for the financial year to which the
report relates gives a true and fair view of the Commission's
surplus or deficit;
1989




(ii)a statement whether, in such opinion, the balance sheet for
such financial year gives a true and fair view of the
Commission's financial affairs at the end of that financial
year.
(2) The Financial Secretary shall cause a copy of the auditors' report and
a copy of the statement of accounts to be laid on the table of the Legislative
Council.
(3) The Director of Audit or any other public officer authorized by him
for the purposes of this subsection may at any reasonable time examine any
account, record or other document kept by the Commission and, if he thinks
fit, make a copy of the whole or any entry in any such document.
(4) An auditor appointed under subsection (1) shall have a right of access
at all reasonable times to the books, accounts, vouchers and other records of
the Commission and shall be entitled to require from the officers of the
Commission such information and explanations as he considers necessary for
the performance of his duties as auditor.

17. Investment of funds

Funds of the Commission which are not immediately required may be
invested by the Commission in such manner as the Financial Secretary shall
approve.

PART III

SECURITM AND FUTURES APPEALS PANEL

18. Constitution of Appeals Panel

(1) For the purposes of hearing appeals under this Part, there shall be a
panel to be known as the Securities and Futures Appeals Panel.
(2) The Panel shall consist of the following members appointed by the
Governor-
(a)a chairman and a deputy chairman (not being directors or
employees of the Commission) each of whom shall be a barrister
qualified to practise as such or a solicitor qualified to act as such
under the Legal Practitioners Ordinance (Cap. 159);
(b)not less than 4 members who shall be non-executive directors of
the Commission; and
(e)5 members who are not directors or employees of the
Commission.(Amended L.N. 259 of 1989)
1989




(3) A member of the Panel shall hold office for such period as the
Governor may determine and may resign his office at any time by letter sent to
the Governor.
(4) If the office of chairman of the Panel is vacant or the chiarman of the
Panel is unable to act as chairman of the Panel due to illness or other incapacity
or is absent from Hong Kong, the deputy chairman of the Panel shall act as
chairman in his place.

19. Appeals (registration, forfeiture and notices)

(1) Where-
(a)an application of a person for registration under Part VI of the
Securities Ordinance (Cap. 333) is refused; or
(b)an application of a person for registration under Part VI of that
Ordinance is granted subject to conditions with which he is
dissatisfied; or
(c)the deposit of a registered dealer is forfeited under section
52(2)(c) of that Ordinance; or
(d)conditions are attached or amended under section 53A of that
Ordinance and the registered person concerned is dissatisfied with
the conditions or, as may be appropriate, the amendment; or
(e)the registration of any registered person is revoked or suspended
under section 55 or 56 of that Ordinance,
subject to section 21, the person or dealer may appeal to the Panel against the
refusal, conditions, forfeiture, revocation or suspension, as the case may be.
(2) Where-
(a)a certificate of registration is issued by the Commission under
section 30(2) of the Commodities Trading Ordinance (Cap. 250)
subject to conditions; or
(b)the Commission refuses to register an applicant under section 31
or 32 of that Ordinance; or
(c)a deposit is transferred or forfeited by the Commission under
section 33 of that Ordinance; or
(d)conditions are attached or amended under section 33A of that
Ordinance and the registered person concerned is dissatisfied with
the conditions or, as may be appropriate, the amendment; or
(c)the registration of a registered person is revoked or suspended by
the Commission under section 35 or 36 of that Ordinance,
subject to subsection (4) and section 21, a person in relation to whom such
conditions are imposed, the applicant whose application is so refused, any
person aggrieved by the transfer or forfeiture or the registered person whose
registration is so revoked or suspended, as the case may be, may appeal in
respect thereof to the Panel.
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(3) A person upon whom a notice referred to in section 44 is served by the
Commission under Part V may appeal to the Panel.
(4) An appeal under this section against the attachment or amendment of
a condition referred to in subsection (1)(d) or (2)(d) shall not affect the coming
into force of the condition to which the appeal relates.

20. Hearing of appeals by tribunal

(1) Where a person appeals to the Panel under section 19, the chairman of
the Panel shall, as soon as may be, appoint a tribunal consisting of 3 members
of the Panel, who shall be the chairman of the Panel or the deputy chairman,
together with a member appointed under section 18(2)(b) and a member
appointed under section 18(2)(c), to determine the appeal.
(2) The chairman of the Panel or the deputy chairman of the Panel, when
a member of a tribunal, shall preside at the hearing of an appeal by the
tribunal.
(3) Subject to section 21, the Panel shall regulate the procedure for the
hearing of appeals under this Part.

21. Procedure for appeals

(1) Subject to section 20 and this section, the Governor in Council may
make rules regulating the procedure and proceedings of a tribunal and
providing for the payment of remuneration and allowances to the members of a
tribunal.
(2) Until rules are made under subsection (1) the rules made under section
45 of the Securities Ordinance (Cap. 333) and in force immediately before the
commencement of this Part shall apply, with the necessary modifications and
subject to this section, to appeals to the Panel under this Part and, for that
purpose, shall be deemed to have been made under that subsection.
(3) (a)An appeal shall be made to the Panel within 30 days beginning
on the day on which written notification of the decision to which
the appeal relates is served on the appellant or, in the case of an
appeal relating to a notice referred to in section 44, the day on
which the notice is served on the appellant.
(b)An appeal under this section shall be heard and determined as
soon as reasonably practicable.
(4) Subject to section 44(2), a decision in respect of which an appeal may
be made to the Panel other than a decision to impose conditions referred to in
section 19(1)(b) or (d) or (2)(a) or (d) shall not come into operation until the
time for making the appeal has expired or, where an appeal is made, the appeal
is determined or withdrawn.
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(5) For the purpose of the hearing of an appeal under this Part-
(a)the appellant and the Commission shall be entitled to be heard
either in person or through counsel or solicitor and if the
appellant is a company, through any of its directors or employees
or if a partnership through any of the partners or, with the leave
of the tribunal hearing the appeal, through any other person;
(b) the tribunal hearing the appeal may-
(i) receive such evidence as it considers relevant, whether it
would be admissible in a court or not;
(ii) require evidence to be given on oath or affirmation and
orally or in writing;
(iii)require any record or other document specified by it and
relating to the subject-matter of the appeal to be produced
by the appellant or the Commission;
(c)the tribunal hearing the appeal may by notice in writing signed by
the member presiding and served on the person to whom it is
addressed, require that person to attend and give evidence before
it at the hearing of the appeal, and to produce such record or
other document in that person's custody or under his control
relating to the subject-matter of the appeal as may be specified in
the notice;
(d)the member presiding at the hearing of the appeal may administer
an oath or affirmation to any person.
(6) Without affecting the generality of section 56(2), a tribunal and its
members, and witnesses, counsel and any solicitor, and any other person who is
a party to or who otherwise has an interest in the proceedings shall have the
same privileges and immunities in respect of the hearing of an appeal under this
Part as they would have in proceedings before the High Court.
(7) A tribunal hearing an appeal under this Part may confirm, vary or
reverse the decision under appeal and every decision of a tribunal shall contain
a statement of the reasons for the decision.
(8) Subject to section 22, the determination of an appeal by a tribunal
hearing an appeal under this Part or any order as to costs made by a tribunal
shall be final and shall not be appealable.
(9) (a)A tribunal hearing an appeal under this Part may award costs to
any party to the appeal, and costs so awarded shall be
recoverable as a civil debt.
(b)A tribunal may order any party to an appeal to pay, in
accordance with rules made under this section by the Governor in
Council, the costs and expenses incurred by the tribunal in
hearing and determining the appeal and the amount of such costs
and expenses shall be determined by the tribunal in accordance
with such rules, and any sum so ordered to be paid shall be
1989




recoverable by the person to whom they are payable under such
rules as a civil debt.
(10) Any person who, without reasonable excuse, refuses or fails-
(a)to attend and give evidence when required to do so by a tribunal
hearing an appeal under this Part; or
(b)to answer truthfully and fully questions put to him by a member
of such tribunal; or
(c)to produce any record or other document which he is required by
such tribunal to produce,
commits an offence.

22. Case stated
(1) The tribunal hearing an appeal under this Part may by way of a case
stated refer to the Court of Appeal, for its opinion thereon, any question of law
relating to the appeal.
(2) A case may be stated under this section by a tribunal either of its own
motion or on the application in accordance with subsection (4) of any party to
the relevant appeal.
(3) (a)A case stated under this section by a tribunal of its own motion
shall be stated before the tribunal determines the relevant appeal
and be signed by the person presiding at the hearing of such
appeal.
(b)Where a case is stated under this section by a tribunal of its own
motion, the tribunal shall not determine the relevant appeal until
after the opinion of the Court of Appeal on the case has been
given.
(4) The following provisions shall apply to any application under
subsection (2)-
(a)the application shall be in writing and, subject to paragraph (b),
shall be sent to the chairman of the Panel after the determination
of the relevant appeal and be accompanied by the fee specified
in an order made for the purposes of this subsection by the
Governor in Council;
(b)the application shall be received by the chairman of the Panel
before the expiration of the period of 14 days beginning on the
day on which such appeal is determined;
(c)the party making the application shall at the same time send a
copy thereof to any other party to such appeal;
(d)on receipt of the application the chairman of the Panel shall
reconvene the tribunal by which such appeal was determined; and
(e)the tribunal shall, as soon as may be, consider the application
and may allow or refuse it, and its decision shall be final and shall
not be appealable.
1989




(5) (a)A case stated under this section shall include a statement of facts
and, where appropriate, the decision of the tribunal appointed
under section 20 on the relevant appeal and shall be signed by the
person presiding at the hearing of such appeal.
(b)The person by whom it is signed shall, as soon as may be,
transmit a case stated under this section to the Court of Appeal.
(6) The Court of Appeal may require the tribunal by which a case is
stated under this section to amend the case in such manner as the court shall
specify.
(7) Where the Court of Appeal determines a case stated under this section
it shall cause a copy of the case, together with a copy of its opinion thereon, to
be sent to the person by whom the case was signed and that person shall, where
appropriate, reconvene the relevant tribunal which, when reconvened, shall
determine the relevant appeal or, as may be appropriate, revise its previous
determination having regard (in either case) to the opinion of the court.

PART IV

ADDITIONAL REGISTRATION REQUIREMENTS

23. Applications under section 51 of Securities Ordinance
or section 30 of Commodities Trading Ordinance:
supplementary provisions

(1) The Commission shall refuse-
(a)to issue a certificate of registration under section 51 of the
Securities Ordinance (Cap. 333); or
(b)to register a person under section 30 of the Commodities Trading
Ordinance (Cap. 250),
if the applicant for registration does not satisfy the Commission that he is a fit
and proper person to be so registered.
(2) In considering whether an applicant for registration referred to in
subsection (1) is a fit and proper person to be so registered the Commission
shall, in addition to any other matter that the Commission may think relevant,
have regard to the matters set out in subsection (3) in respect of-
(a)the applicant if he is an individual;
(b)where the applicant is a company, each of its directors and
officers; or
(c)where the applicant is a partnership, each of the partners.
(3) The matters referred to in subsection (2) are in the case of an applicant
and any other person to whom that subsection applies-
(a)his financial status;

1989





(b)his educational or other qualifications or experience having
regard to the nature of the functions which, if the application is
allowed, he will perform;
(e) his ability to perform such functions efficiently, honestly and
fairly; and
(d)his reputation, character, financial integrity and reliability.
(4) For the purposes of this section, the Commission may have regard to
any information in its possession whether furnished by the applicant or not.
(5) For the purposes of subsection (2), the Commission may take into
account any decision relating to authorization made in relation to the applicant
by the Commissioner for Banking or the Insurance Authority or by any other
authority (whether in Hong Kong or elsewhere) which in the opinion of the
Commission performs any function similar to a function conferred on the
Commission by this section, section 51 of the Securities Ordinance (Cap. 333)
or section 30 of the Commodities Trading Ordinance (Cap. 250).
(6) For the purposes of subsections (2) and (3), the Commission may-
(a) take into account any matter relating to-
(i) any person who is or is to be employed by, or associated
with, the applicant for the purposes of the proposed business
to which the application relates;
(ii) any person who will be acting as a representative in relation
to such business;
(iii) where the applicant is a company, any substantial share-
holder, director or officer of the company, any other
company in the same group of companies or to any director
or officer of any such other company; and
(iv) where the applicant is a partnership or a firm, any of the
partners; and
(b)have regard to any other business which the applicant carries on
or proposes to carry on.
(7) This section shall not be construed as in any way affecting the power
of refusal conferred on the Commission by section 53(1) of the Securities
Ordinance (Cap. 333) or section 32(1) of the Commodities Trading Ordinance
(Cap. 250).
(8) In subsection (6) 'substantial shareholder' in relation to a
company, means a person who has an interest in shares in the company-
(a)the nominal value of which is equal to more than 10% of the
issued share capital of the company; or
(b)which entitle the person to exercise or control the exercise of
more than 10% of the voting power at any general meeting of the
company.


1989





24.Applicant under Securities Ordinance or
Commodities Trading Ordinance to
furnish information to Commission

An applicant under section 51 of the Securities Ordinance (Cap. 333) or
section 30 of the Commodities Trading Ordinance (Cap. 250) shall furnish to
the Commission at the time of the application such information as may
reasonably be required by the Commission-
(a)regarding the services which, if the application is allowed, the
applicant will hold himself out as being able to provide;
(b)regarding the business which the applicant proposes to carry on
and to which the application relates, or relating to any person
whom the applicant intends or proposes to employ in such
business or any person with whom the applicant intends to be
associated in the course of carrying on such business; and
(c)to enable the Commission to take into account the matters
referred to in section 23(6)(a) and (b).

25. Certificates of registration to continue in force

(1) A person who immediately before the establishment day was
registered, or who on or after that day becomes registered, under section 51 of
the Securities Ordinance (Cap. 333) or section 30 of the Commodities Trading
Ordinance (Cap. 250) shall continue to be so registered; but this section shall
not be construed as atlecting the power of the Commission to suspend or
revoke the person's registration under section 55 or 56 of the Securities
Ordinance (Cap. 333) or section 35 or 36 of the Commodities Trading
Ordinance (Cap. 250).
(2) (a)Where an application for renewal of registration under Part VI
of the Securities Ordinance (Cap. 333) or section 34 of the
Commodities Trading Ordinance (Cap. 250) is made before the
establishment day and is not determined before that day,
notwithstanding anything contained in this Ordinance the
application shall be taken over and determined by the Com-
mission, and in case the application is allowed the renewal shall
be deemed to take eflect immediately before the establishment
day.
(b)For the purposes of paragraph (a), and only for those purposes,
section 34 of the Commodities Trading Ordinance (Cap. 250) and
the provisions of the Securities Ordinance (Cap. 333) which are
relevant shall be regarded as remaining in force, and that section
and those provisions shall for those purposes be construed as if
any reference therein to the Commissioner were a reference to the
Commission.




1989





26.Section 23(2) and (3) to apply to inquiries under section
56 of Securities Ordinance or section 36 of
Commodities Trading Ordinance

Section 23(2) and (3) shall with the necessary modifications apply when the
Commission conducts an inquiry under section 56 of the Securities Ordinance
(Cap. 333) or section 36 of the Commodities Trading Ordinance (Cap. 250),
and for that purpose the references in section 23(2) and (3) to the applicant
shall be construed as references to the person to whom the inquiry relates.

27.Registered persons to notify Commission
where records etc. kept

(1) (a)Every person who on the commencement of this section is a
person to whom this section applies or who before such
commencement applied to be registered under the relevant
Ordinances and who becomes a person to whom this section
applies shall-
(i) if immediately before such commencement he was a
registered person described in subsection (10), within the
period of 30 days beginning on such commencement;
(ii)if he becomes so registered on or after such commencement,
within the period of 30 days beginning on the date of his
registration,
notify the Commission in writing of the location of the premises
at which any record or other document relating to the business in
respect of which he is registered is, or is to be, kept by him and in
case every such record or other document is not, or is not to be,
kept at a single premises he shall so notify the Commission of the
location of each of the premises at which any such document or
record is, or is to be, so kept.
(b)Every person who applies to be a registered person and who, if
his application is allowed, will be a person to whom this section
applies shall in his application specify the location of the premises
at which any record or other document relating to the business in
respect of which he applies to be registered is to be kept by him
and in case every such record or other document is not to be kept
at a single premises, he shall so specify the location of each of the
premises at which any such document or other record is to be so
kept.

1989




(2) A person to whom this section applies shall give to the Commission
not less than 30 days' notice in writing, or such shorter period such-notice
the Commission may in aparticular Gase Allow, en an application madain-that
behalf, of any intended cha'nge in the location of premises at which any record
or other document referred to in subsection (1) is to be kept by him.
(3) Every person referred to in subsection (1) or (2) shall, as regards any
premises referred to in his notification or application, state whether or not those
premises are used or are to be used partly or wholly for residential purposes.
(4) A person to whom this section applies shall not keep any record or
other document relating to the business in respect of which he is registered at-
(a)any premises the location of which has not been notified to the
Commission under this section; or
(b)any premises which are not regarded by the Commission as
suitable:
Provided that this subsection shall not operate as regards a person to
whom subsection (1)(a) applies until the period mentioned in subparagraph (i)
or, as may be appropriate, subparagraph (ii) of that subsection has expired.
(5) References to a record or other document in subsections (1), (2) and
(4) include references to any record or other document which a registered
person is required to keep under the relevant Ordinances, and shall also include
all data equipment used in connection therewith.
(6) The Commission may require any registered person or applicant for
registration who notifies a location of premises under this section to notify it in
respect of other premises for the purpose of complying with this section if, in
the opinion of the Commission, the first-mentioned premises are unsuitable.
(7) (a)Where premises are, or are to be, used partly or wholly for
residential purposes, the Commission shall not regard the
premises as being suitable unless it is satisfied by the registered
person or applicant concerned that the use by him of the premises
to keep a record or other document referred to in subsection (1)
will not affect the exercise in relation to the record or other
document of any power under Part V.
(b)Where the Commission decides that premises referred to in
paragraph (a) are suitable, it shall inform the registered person or
applicant concerned of its decision by letter and the letter shall
also state that the premises may be entered pursuant to section 30
or 36.
(c)Where the Commission decides that premises are unsuitable, it
shall inform the registered person or applicant concerned of its
decision by letter.
(8) The Commission shall maintain a register and shall record therein the
location of any premises notified to it in accordance with subsection (1) or (2).
1989




(9) In this section, 'data equipment' ( ) means any equipment
which-
(a) automatically processes information;
(b) automatically records or stores information;
(c) can be used to cause information to be automatically recorded,
stored or otherwise processed on other equipment (wherever
situated);
(d) can be used to retrieve information, whether the information is
recorded or stored in the equipment itself or in other equipment
(wherever situated).
(10) (a) This section applies to any person who is a registered person and
who is also-
(i) a dealer but who is not a dealing director; or
(ii) a dealing partnership, investment adviser, investment
advisers' partnership or commodity trading adviser.
(b) In this subsection-
'commodity trading adviser'has the meaning
assigned to it by section 2(1) of the Commodities Trading
Ordinance (Cap. 250);
'dealer' ( ) means any person who is a dealer within the
meaning of section 2(1) of the Commodities Trading
Ordinance (Cap. 250) or section 2(1) of the Securities
Ordinance (Cap. 333) but who, in either case, is not a
director or employee accredited to, or a partner in, a
corporation or firm which is itself a dealer;
'dealing director' 'dealing partnership-
, 'investment adviser' ( ) and 'investment
advisers' partnership' () have the meanings
assigned to them, respectively, by section 2(1) of the
Securities Ordinance (Cap. 333).

28. Financial resources rules

(1) The Commission may, after consultation with the Financial Secretary,
make rules requiring registered persons to have and maintain, in respect of the
businesses as regards which they are registered, such financial resources as are
required by the rules.
(2) Financial resources rules may-
(a) impose requirements which are absolute or which are to vary
from time to time by reference to factors which either are
specified in, or are to be determined in accordance with, the rules;
1989




(b)impose requirements which take account of any business carried
on by the person concerned in conjunction with, or in addition
to, the business carried on by him and referred to in subsection
(1);
(c)make provision as to the assets, liabilities and other matters to be
taken into account in determining a person's financial resources
for the purposes of the rules and the extent to which, and the
manner in which, they are to be taken into account for that
purpose.
(3) Financial resources rules may provide that the rules or any provision
thereof shall not apply, or shall apply with such modifications or only in such
circumstances as shall be specified in the rules, to persons who have and
maintain financial resources (in Hong Kong or elsewhere) in accordance with
an authorization of an authority (in Hong Kong or elsewhere) which in the
opinion of the Commission performs any function which is similar to a function
conferred on the Commission by this section.
(4) (a)On the commencement of the rules first made under this section,
section 65B of the Securities Ordinance (Cap. 333) shall cease to
have effect.
(b)On and from the commencement referred to in paragraph (a),
sections 65C and 65D of the Securities Ordinance (Cap. 333)
shall each be construed and have effect as if for each of the
references in those sections to section 65B there were substituted
a reference to financial resources rules.
(5) Section 34 of the Interpretation and General Clauses Ordinance
(Cap. 1) applies to financial resources rules.

29. Modification of financial resources
rules in particular cases

(1) The Commission may, on the application of any person to whom
financial resources rules apply, give a direction in writing altering the
requirements of the rules so as to adapt them, subject to such conditions as may
be specified in the direction, to the circumstances of that person or of any
particular kind of business carried on, or to be carried on, by him.
(2) Where a direction is give under subsection (I)--
(a)thereupon the financial resources rules shall have effect in relation
to the person to whom the direction relates in conformity with
the direction and such direction shall take effect on the
publication of the relevant notice pursuant to paragraph (b); and
(b)the Commission shall cause a notice stating that the direction has
been given to be published in the Gazette.
1989





(3) The Commission shall not give a direction under subsection (1) unless
it appears to it that-
(a)compliance with the requirements in question would be unduly
burdensome for the applicant having regard to the benefit which
compliance would confer on the investing public; and
(b)the direction, if given in the particular case, would not result in
any undue risk to the investing public.
(4) (a)A direction under subsection (1) shall continue in force until
withdrawn by the Commission, and where the Commission
proposes to withdraw any such direction it shall give at least 7
days' notice in writing of its intention to the person concerned
and such withdrawal shall take effect on the publication of the
relevant notice pursuant to paragraph (b).
(b)Where the Commission withdraws a direction under paragraph
(a), it shall cause a notice of the withdrawal to be published in the
Gazette.

PART V

REGULATION OF REGISTERED PERSON'S BUSINESS,ETC.

30. Supervision

(1) For the purpose of ascertaining whether a person who is, or at any
time has been, a registered person is complying or has complied with any
provision of or any requirement under the relevant Ordinances or the terms and
conditions of any certificate of registration issued to him, a person ('an
authorized person' ( ) authorized in writing for the purposes of this
section by the Commission may at all reasonable times-
(a)enter the premises of the registered person notified by him to the
Commission under section 27; and
(b)inspect and make copies of any record or other document, or part
thereof, or make or take any abstract of or extract from any
record or other document relating in either case to the business to
which such certificate of registration applies.
(2) For the purpose of enabling an authorized person to exercise his
powers under subsection (1)(b), he may require the registered person or any
other person whom he reasonably believes is in possession of or has under his
control any record or other document mentioned in that subsection to produce
it to him.
1989





(3) For the purpose of an inspection under subsection (1)(b), the
registered person or other person mentioned in subsection (2) shall afford an
authorized person access to such records or other documents as may reasonably
be required for the inspection, and shall produce to the authorized person such
records or other documents as he may reasonably require.
(4) Where-
(a)a copy of any record or other document is supplied by a
registered person in compliance with a requirement made under
this section; or
(b)a copy of any record or other document is made in the exercise of
a power conferred by this section and a photocopying machine or
other facility or a registered person is used to make the copy,
the Commission shall reimburse the photocopying or other expenses which, in
the opinion of the Commission, have been reasonably incurred by the registered
person in making the copy.
(5) Nothing in this section shall be construed as requiring an institution
authorized to carry on banking business or the business of taking deposits
under the Banking Ordinance (Cap. 155) to produce any record or other
document relating to the affairs of a customer to an authorized person unless
the Commission is satisfied that such production is necessary for the purposes
of this section and certifies in writing that that is the case; and where the
Commission so certifies in respect of any such institution, such institution shall
comply with any requirement under subsection (2) or (3) that applies in its case.
(6) Any person who, without reasonable excuse, contravenes subsection
(3) commits an offence.
(7) Any person who, without reasonable excuse, in purported compliance
with a requirement made under this section, produces a record or other
document which he knows to be false or misleading in a material particular
commits an offence.
(8) An authorized person shall be furnished by the Commission with a
copy of his authorization, and he shall, when entering any premises under this
section, produce the copy of the authorization for inspection by any person
who is present and who is affected by the exercise of the power.

31. Information relating to transactions

(1) The Commission or any person authorized in writing by the
Commission for the purposes of this section may require-
(a)a person registered as the holder of any securities or futures
contracts; or
(b)a person reasonably believed by the Commission or the person so
authorized to be the holder of any securities or futures contracts
or to hold any interest in property investment arrangements; or

1989





(c)a person reasonably believed by the Commission or the person so
authorized to hold any securities or futures contracts or to have
an interest in property investment arrangements, as beneficial
owner; or
(d)a person reasonably believed by the Commission or the person so
authorized to hold, to have acquired or disposed of, purchased or
sold, any securities, futures contracts or interest in property
investment arrangements, or any interest therein, whether
directly or through a nominee, trustee, or agent, and whether as
beneficial owner nominee, trustee, agent or otherwise; or
(e) a registered person or an exempt dealer,
in relation to any acquisition, disposal, purchase, sale or holding of securities,
futures contracts or interest in property investment arrangements to disclose to
it or him the name (including any aliases). address and occupation of the person
(or other particulars that are capable of establishing the identity of the person)
from, to or through whom, or on whose behalf, the securities or futures
contracts or interest in property investment arrangements were acquired,
disposed of, purchased, sold or were or are held, together with the quantity of
securities or futures contracts or interests in property investment arrangements
so acquired, disposed of, purchased, sold or held, and the instructions given to
or by such last-mentioned person in respect thereof.
(2) For the purpose of enabling this section to have effect, every
investment adviser or commodity trading adviser and registered person who is a
dealer within the meaning of section 27(10) shall keep, in such manner and form
as may be specified in rules made for the purposes of this section by the
Commission (which rules the Commission is hereby authorized to make), any
record or other document as may be so specified.
(3) Where a requirement is made under subsection (1), a person who-
(a)without reasonable excuse fails to disclose to the Commission
information required to be disclosed under subsection (1) and
which is in his possession or under his control;
(b)furnishes to the Commission in purported compliance with the
requirement information which he knows to be false or mis-
leading in a material particular; or
(c)fails to comply with any provision of rules made under this
section which applies to him,
commits an offence.

32. Certification to High Court relating to
non-compliance under section 30 or 31

(1) If a person mentioned in section 30 or 31, without reasonable excuse,
fails to produce any record or other document or disclose information upon
1989




being required to do so under that section, the Commission may certify the
failure to the High Court and the High Court may thereupon inquire into the
case and-
(a)order such person to comply with the requirement within such
period as may be fixed by the High Court; or
(b)if the High Court is satisfied that such person has failed without
reasonable excuse to comply with such requirement, punish him
in the same manner as if he had been guilty of contempt of court.
(2) A person shall not be punished under subsection (1) and section 30 or
31 in respect of the same failure.

33. Investigations

(1) Where the Commission has reason to believe that-
(a)an offence under any of the relevant Ordinances may have been
committed; or
(b)a person may have committed a defalcation or other breach of
trust, fraud or misfeasance-
(i) in dealing in securities or trading in futures contracts;
(ii) in the management of investment in securities or in futures
contracts;
(iii) in making property investment arrangements; or
(iv) in giving advice as regards the acquisition, disposal,
purchase or sale, or otherwise investing in, any security or
futures contract or as regards any property investment
arrangements; or
(c)insider dealing for the purposes of Part X11A of the Securities
Ordinance (Cap. 333) may have taken place; or
(d)the manner in which a person has engaged or is engaging in any
of the following activities referred to in paragraph (b) namely, the
dealing or trading mentioned in subparagraph (i) thereof, the
management mentioned in subparagraph (ii) thereof, the making
of property investment arrangements or the giving of advice
described in subparagraph (iv) thereof is not in the interest of the
investing public or the public interest,
the Commission may in writing direct one or more of its employees or, with the
consent of the Financial Secretary, appoint one or more other persons to be an
investigator ('the investigator' (W-AjR)) to investigate any matter referred to
in paragraphs (a) to (d) and report to the Commission thereon.
(2) Where any matter is investigated under subsection (1) in relation to
any person, that person is, for the purposes of this section, referred to as 'the
person under investigation'
1989





(3) Any costs or expenses incurred by a person (other than an employee
of the Commission) acting as the investigator under this section shall be paid
out of moneys provided by the Legislative Council.
(4) The person under investigation or any person who is reasonably
believed or suspected by the investigator to have in his possession or under his
control any record or other document which contains, or which is likely to
contain, information relevant to an investigation under this section, or who is
so believed or suspected of otherwise having such information in his possession
or under his control, shall-
(a)produce to the investigator, within such time and at such place
as he may reasonably require, any record or other document
specified by the investigator which is, or may be, relevant to the
investigation, and which is in his possession or under his control;
(b)if so required by the investigator, give to him such explanation or
further particulars in respect of a record or other document
produced in compliance with a requirement under paragraph (a)
as the investigator shall specify;
(c)attend before the investigator at such time and place as he may
require in writing, and answer truthfully and to the best of his
ability such questions relating to the matters under investigation
as the investigator may put to him; and
(d)give to the investigator all assistance in connection with the
investigation which he is reasonably able to give.
(5) A barrister or solicitor acting for the person under investigation may-
(a)attend an examination of that person; and
(b) to the extent that the investigator shall reasonably permit-
(i) examine that person; and
(ii) address the investigator,
in relation to matters in respect of which the investigator has
questioned that person.
(6) A person shall be obliged to answer questions put to him under this
section by the investigator, but if the answers might tend to incriminate him,
and he so claims before answering the question, neither the question nor the
answer shall be admissible in evidence against him in criminal proceedings other
than proceedings for an offence under subsection (12) or section 36 of the
Crimes Ordinance (Cap. 200), or for perjury, in respect of the answer; the
investigator shall, before asking any question under this section, inform the
person concerned of the limitation imposed by this subsection in respect of the
admissibility in evidence of the question and any answer given.
(7) The investigator shall be furnished by the Commission with a copy of
the direction or appointment under subsection (1) and shall, before exercising
any power under this section, produce the copy to the person concerned for his
inspection.
1989




(8) Where any explanation, particulars, answer or statement is or are
made or given under subsection (4) to the investigator, he may further require,
in writing, the person making or giving the same-
(a)to verify the explanation, particulars, answer or statement by
statutory declaration (which may be taken and received by the
investigator); or
(b)in case such explanation, particulars, answer or statement is or
are not made or given in accordance with a requirement under
subsection (4) to verify by a statutory declaration (which may be
so taken and received) that he was unable to comply or, as the
case may be, fully to comply, with that requirement because the
matter which he failed to furnish was not within his knowledge or
was neither in his possession nor under his control,
and where a requirement under this subsection is made, the person to whom it
is made shall comply with the requirement within such reasonable period as is
specified in the requirement.
(9) The investigator may, and if so directed by the Commission shall,
make interim reports to the Commission, and on the conclusion of his
investigation shall make a final report to the Commission.
(10) Notwithstanding section 59, the Commission may, with the consent of
the Attorney General, cause a report under this section to be published.
(11) Nothing in this section shall be construed as requiring an institution
authorized to carry on banking business or the business of taking deposits
under the Banking Ordinance (Cap. 155) to disclose any information or
produce any record or other document relating to the affairs of a customer to
the investigator unless-
(a)the customer is a person whom the investigator has reason
to believe may be able to give information relevant to the
investigation; and
(b)the Commission is satisfied that the disclosure or production is
necessary for the purposes of the investigation and certifies in
writing that that is the case,
and, where the conditions in paragraphs (a) and (b) are met in respect of any
such institution, such institution shall comply with any provision of subsection
(4) or (8) that applies in its case.
(12) Any person who-
(a)without reasonable excuse fails to produce any record or other
document which he is required to produce under subsection
(4)(a);
(b)without reasonable excuse fails to comply with any requirement
under subsection (4)(b);
(c)without reasonable excuse fails to comply with a requirement
under subsection (4)(c) to attend before the investigator;



1989





(d)without reasonable excuse fails to answer any question put to
him by the investigator under subsection (4)(c), or in answering
such a question says anything which he knows to be false or
misleading in a material particular or who in so answering
recklessly makes a false statement;
(e)without reasonable excuse fails to comply with subsection (4)(d);
without reasonable excuse fails to comply with a requirement
under subsection (8), or fails to do so within the period specified
therein,
commits an offence.
(13) If any person, without reasonable excuse, fails to do anything which
he is required to do under subsection (4), the investigator may certify the failure
to the High Court and the High Court may thereupon inquire into the case
and-
(a)order such person to comply with the requirement within such
period as may be fixed by the High Court; or
(b)if the High Court is satisfied that such person has failed without
reasonable excuse to comply with such requirement, punish him
in the same manner as if he had been guilty of contempt of court.
(14) A person shall not be punished under subsections (12) and (13) in
respect of the same failure.
(15) (a)Where the person under investigation or any other person is
convicted by a court or magistrate on a prosecution instituted as
a result of an investigation under this section, the court or
magistrate may order him to pay to the Commission the whole or
part of the costs or expenses of the investigation.
(b)Where an amount is paid to the Commission pursuant to an
order under this subsection in respect of the costs or expenses of
an investigation and the costs or expenses of that investigation
are paid out of moneys provided by the Legislative Council, the
Commission shall pay to the Financial Secretary an amount
equal to the amount of those moneys or, if the amount paid
pursuant to the order is less than the amount of those moneys, an
amount equal to that so paid.

34. Returns
(1) The Commission may make rules requiring any registered person to
whom the rules apply to make annual returns to the Commission.
(2) Rules made under this section may-
(a)apply to registered persons generally or to registered persons of a
particular class or description specified in the rules, and different
rules may be made in respect of different classes or descriptions of
registered persons;
1989





(b)specify the form of the return and the particulars it is to contain
and the persons by whom such returns are to be made; and
(c)specify the time by which a return required by the rules is to be
received by the Commission.

35.Production of computerized information

Where any information or matter relevant to an inspection or investigation
under section 30 or 33 is recorded otherwise than in a legible form, the powers
conferred by those sections and section 36 to require the production of any
record or other document for the purposes of any provision of those sections
shall include the power to require the production of a reproduction of the
recording of any such information or matter or of the relevant part of it in a
legible form.

36.Magistrate's warrant

(1) If a magistrate is satisfied on information on oath laid by the
chairman or other director of the Commission, or by an employee of the
Commission authorized by the Commission for the purposes of this section,
that there are reasonable grounds for suspecting that there is, or is likely to be,
on premises specified in the information any record or other document which is
relevant to an inspection under section 30 or an investigation under section 33,
the magistrate may issue a warrant authorizing any such person ('specified
person' OR OA CA) ) and any police officer, and such other persons as may be
necessary to assist in the execution of the warrant-
(a)to enter the premises so specified, if necessary by force, at any
time within the period of 7 days beginning on the date of the
warrant; and
(b)to search for, seize and remove any record or other document
which any such specified person or police officer has reasonable
cause to believe may be required for the purposes of the
inspection or investigation.
(2) A specified person or a police officer or other persons authorized by a
warrant under this section may-
(a)require any person on the premises specified in the warrant whom
he reasonably believes to be employed in connection with a
business which is, or which has been, conducted on such premises
to produce for examination any record or other document which
such specified person or police officer has reasonable cause to
believe may be required for the purposes of the inspection or
investigation and which is in his possession or under his control;




1989





(b)prohibit any person mentioned in paragraph (a) from-
(i)removing from the premises so specified any record or
other document produced pursuant to a requirement under
paragraph (a);
(ii) erasing, adding to or otherwise altering any entry or other
particular contained in, or otherwise interfering in any
manner whatsoever with, or causing or permitting any other
person to interfere with, any such record or other document;
(c)take, in relation to any such record or other document, any other
step which may appear necessary for preserving it and preventing
interference with it.
(3) Any record or other document removed under this section may be
retained for any period not exceeding the period of 6 months beginning on the
day of its removal or, where the record or other document is required in
connection with any ciriminal proceedings, for such longer period as may be
necessary for the purposes of those proceedings.
(4) Where a person removes a record or other document under this
section he shall, as soon as reasonably practicable, give a receipt for it, and he
may permit any person who would be entitled to inspect it but for such removal
to inspect the record or other document at any reasonable time and to make
copies of and take extracts from it.
(5) Section 102 of the Criminal Procedure Ordinance (Cap. 221) shall
apply to property which has come into the possession of the Commission under
this section as it applies to property which has come into the possession of the
police.
(6) A person who-
(a)without reasonable excuse fails to comply with any requirement
or prohibition under subsection (2); or
(b)obstructs any person exercising a power conferred by sub-
section (2),
commits an offence.

37. Destruction etc. of documents

A person who destroys, falsifies, conceals or otherwise disposes of, or
causes or permits the destruction, falsification, concealment or disposal
of, any record or other document which is relevant to an inspection under
section 30 or an investigation under section 33 commits an offence
unless he proves that he had no intention of concealing from the authorized
person or investigator facts capable of being disclosed by the record
or other document.




1989




38. Powers of intervention
(1) Any power conferred on the Commission by section 39, 40 or 41 may
be exercised in relation to any registered person if he is a registered person to
whom this section applies and if, and only if, it appears to the Commission
that-
(a)the exercise of the power is desirable in the interest of the
investing public;
(b)the registered person is not a fit and proper person (having
regard, amongst other matters, to the matters specified in section
23(3)) to carry on any one or more of the businesses in respect of
which he is registered under the Securities Ordinance (Cap. 333)
or the Commodities Trading Ordinance (Cap. 250), as the case
may be, to the extent to which he is carrying it on or proposes to
carry it on; or
(c)the registered person has contravened or failed to comply with
any provision of or requirement under the relevant Ordinances
or, in purported compliance with any such provision, has
furnished the Commission with information which, in a material
particular, is false, inaccurate or misleading.
(2) The powers conferred on the Commission by section 39, 40 or 41 may
be exercised in relation to a person whose registration is suspended or revoked
under section 55 or 56 of the Securities Ordinance (Cap. 333) or section 35 or 36
of the Commodities Trading Ordinance (Cap. 250) where an appeal is made
under section 19 or the time for making such an appeal has not expired, and
references in section 39, 40 or 41 to a registered person shall be construed
accordingly.
(3) The Commission shall not exercise any power conferred on it by
section 39, 40 or 41 with respect to a registered person who is a member of an
Exchange Company or a clearing house unless the Commission has given
written notification of its intention to that Exchange Company or, as the case
may be, that clearing house.
(4) This section applies to any registered person who is a dealer, a partner
of a dealing partnership, an investment adviser, a commodity trading adviser
or a partner in an investment advisers' partnership; and for the purposes of
this subsection 'dealer' 'dealing partnership'
'investment adviser' QQ-CM F.1) , 'commodity trading adviser'
and 'investment advisers' partnership' have the meanings
assigned to them respectively by section 27(10).

39. Restriction of business

(1)Subject to section 38, the Commission may by notice in writing-
(a) prohibit a registered person to whom section 38 applies from-




1989





(i) entering into transactions of a class or description specified
in the notice or entering into them otherwise than in
circumstances so specified or to an extent so specified;
(ii) soliciting business from persons of a class or description so
specified or from persons other than persons of such a class
or description;
(iii) carrying on business as a registered person in a manner so
specified;
(b)require such a registered person to carry on business in, and only
in, a manner so specified.
(2) A prohibition or requirement under this section may relate to either or
both of the following-
(a)transactions entered into in connection with or for the purposes
of the business in respect of which a registered person to whom
section 38 applies is registered;
(b)other business which is carried on by such a registered person in
connection with or for the purposes of such business.

40. Restriction on dealing with assets

Subject to section 38, the Commission may, as regards any assets whether
in Hong Kong or elsewhere and whether they are assets of a registered person
or not, by notice in writing-
(a)prohibit a registered person to whom section 38 applies from
disposing of such assets or prohibit him from dealing with them
in a manner specified in the notice;
(b)require such a registered person to deal with such assets in, and
only in, a manner specified in the notice.

41. Maintenance of assets

(1) Subject to section 38, the Commission may by notice in writing
require a registered person to whom section 38 applies to maintain in Hong
Kong and in such other place outside Hong Kong as may be specified in the
notice, in such manner as will enable such person at any time freely to transfer
or otherwise dispose of them, assets of such value and of such class or
description as appear to the Commission to be desirable with a view to ensuring
that the person will be able to meet his liabilities in respect of the business
carried on by him as a registered person.
(2) The Commission may direct that for the purposes of any requirement
under this section assets of any specified class or description shall or shall not be
taken into account.
1989





42. Provisions relating to notices under
section 39, 40, 41 or 43

(1) A notice under section 39, 40 or 41 shall remain in force until it is
withdrawn by the Commission under section 43 by a further notice.
(2) The power under section 39,40 or 41 to impose, or under section 43 to
withdraw, substitute or vary, a prohibition or requirement shall be exercisable
by written notice served by the Commission on the person concerned, and any
such notice shall take effect at such time as is specified in the notice or the time
when it is served, whichever is the later.
(3) A notice-
(a)imposing a prohibition or a requirement under section 39, 40 or
41; or
(b)under section 43(1) substituting or varying such a prohibition or
requirement; or
(e) under section 43(2),
shall be accompanied by a statement in writing of the reasons why the
prohibition or requirement was imposed, substituted or varied, as the case may
be, or the relevant application was refused.
(4) Where the reasons stated in a notice to which subsection (3) applies
relate specifically to matters which-
(a)refer to a person who is identified in the notice but who is not a
person on or in respect of whom the relevant prohibition or
requirement was imposed; and
(b)are, in the opinion of the Commission, prejudicial to that person
in any respect,
the Commission shall, if possible, serve a copy of the notice on that person.
(5) The Commission may cause to be published in the Gazette a
prohibition or requirement irnposed under section 39, 40 or 41 or a withdrawal,
substitution or variation under section 43 of any such prohibition or
requirement and where any such prohibition or requirement is so published, the
Commission shall also cause to be so published any subsequent withdrawal,
substitution or variation of the prohibition or requirement.
(6) Any notice published under subsection (5) may, if the Commission
thinks fit, include a statement of the reasons for which the relevant prohibition
or requirement was imposed, withdrawn, substituted or varied.
(7) (a)Nothing in sections 38 to 44 or any notice served under section
39, 40 or 41 shall render any contract unenforceable by any party
thereto if he proves that in entering into the contract he acted in
good faith and, as regards any notice so received, was unaware of
the notice.
(b)Where by virtue of anything contained in a section or notice
referred to in paragraph (a) a person rescinds a contract, he shall
restore to any other party to the contract any money or other




1989





benefit received or obtained by him under the contract from that
party.

43. Withdrawal, substitution or variation
of notices under section 39, 40 or 41

(1) Where a notice under section 39, 40 or 41 is in force, the Commission
may of its own volition, or on the application of the person on whom the notice
was served or any other person affected by the notice, by notice in writing-
(a)withdraw the notice; or
(b)substitute another prohibition or requirement for, or vary, any
prohibition or requirement contained in the notice.
(2) If, on an application made by a person under subsection (1), the
Commission refuses to withdraw, substitute or vary a prohibition or
requirement imposed under section 39, 40 or 41, the Commission shall serve on
that person a notice in writing of the refusal.

44. Appeals against notices under this Part

(1) Where the Commission issues a notice under section 39, 40, 41, 42 or
43, any person on whom such notice is served may, within the period specified
in section 21(3), appeal to the Panel under section 19.
(2) An appeal referred to in subsection (1) shall not atrect the coming into
force of any notice to which the appeal relates.
(3) A notice referred to in subsection (1) shall state that an appeal may be
made to the Panel against the notice by any person on whom the notice is
served, and specify the period within which such an appeal may be made.

45. Winding-up orders

(1) If, in the case of a company which may be wound up by the High
Court under the Companies Ordinance (Cap. 32), it appears to the Commission
that it is expedient in the public interest that the company should be wound up,
the Commission may, subject to subsection (2), present a petition for it to be
wound up under that Ordinance on the ground that it is just and equitable that
it should be so wound up.
(2) The Commission shall not present a petition under subsection (1) for
the winding up of any person that is a member of an Exchange Company or a
clearing house unless the Commission has given written notification of its
intention to that Exchange Company or, as the case may be, that clearing
house.




1989





46. Receiving orders
(1) If it appears to the Commission that it is expedient in the public
interest to do so and subject to subsection (2) the Commission may present a
petition for a receiving order in accordance with the Bankruptcy Ordinance
(Cap. 6) against a registered person if the registered person has committed an
act of bankruptcy within the meaning of that Ordinance, and that Ordinance
shall apply in relation to such petition as it applies in relation to a petition
presented by a creditor.
(2) The Commission shall not present a petition under subsection (1) in
respect of any person who is a member of an Exchange Company or a clearing
house unless the Commission has given written notification of its intention to
that Exchange Company or, as may be appropriate, that clearing house.

PART VI
SPECIAL PROVISIONS RELATING To EXCHANCE COMPANIES
AND CLEARING HOUSES

47. Transfer and resumption of functions
(1) If it appears to the Commission that an Exchange Company is willing
and able to perform all or any of the functions to which this section applies, it
may request the Governor in Council to make an order ('transfer order' (
transferring all or any of those functions to that Exchange Company
('designated Exchange Company'or transfer the functions in so
far as they or it applies to the members or applicants for membership of that
company.
(2) This section applies to any function of the Commission under sections
28 and 29, Parts VI and VIA of the Securities Ordinance (Cap. 333) and Part IV
of the Commodities Trading Ordinance (Cap. 250).
(3) Any function to which this section applies may be transferred by a
transfer order either wholly or in part, and any such transfer may be subject
to a reservation that the function is to be exercisable by the Commission
concurrently with the designated Exchange Company.
(4) The Commission shall not make a request under subsection (1) that a
transfer order be made in respect of the making of financial resources rules
unless the proposed designated Exchange Company has first supplied the
Commission with a draft of the financial resources rules which it proposes to
make, and the Commission is satisfied that those rules, if made, will afford the
investing public an adequate level of protection.
(5) The Commission may at the request or with the consent of a
designated Exchange Company resume all or any of the functions transferred
by a transfer order, but such resumption shall take effect only by order of the
Governor in Council.




1989




(6) If at any time it appears that any designated Exchange Company is
unable to or unwilling to perform all or any of the functions transferred to it by
a transfer order, the Governor in Council may, if the Commission so requests,
order that the Commission resume all or any of such functions.
(7) A transfer order may provide for the designated Exchange Company
to retain all or any fees charged in relation to the performance of any
transferred function, and an order made under subsection (5) or (6) may
provide for the Commission to retain all or any such fees, from a date to be
specified in the order.

48. Information: Exchange Companies and clearing houses
(1) The Commission, each of the Exchange Companies or any clearing
house shall be entitled to supply information about its affairs or, in the case of
an Exchange Company, the affairs of any of its members to any other of them,
and any such supply of information shall not be treated as a publication for the
purposes of the law of defamation and, subject to section 59, no person so
supplying any such information shall incur any liability as a consequence
thereof.
(2) The Commission may by written notice require any Exchange
Company or clearing house to supply it with such information, including
information in its possession or under its control which relates to the affairs of
any of its members, as it may reasonably require for the performance of its
functions under the relevant Ordinances, and any such supply of information
shall not be treated as a publication for the purposes of the law of defamation;
and, without affecting the generality of section 56(2) and notwithstanding
section 59, no person so supplying any such information shall incur any liability
as a consequence thereof.

49. Notice of closure or re-opening
An Exchange Company shall give to the Commission such written notice
as is reasonable in the circumstances of its intention to close its exchange for the
transaction of business otherwise than in accordance with the rules of that
company and, where it has so closed it, of its intention to re-open it.

50. Additional powers-restriction notices relating to
Exchange Companies and clearing houses
(1) Subject to subsections (2), (4) and (11), where the Commission is
satisfied that it is in the interest of the investing public or in the public interest,
or it is appropriate to do so for the protection of investors or for the proper
regulation of an Exchange Company or clearing house, the Commission may
by notice in writing ('restriction notice' do any of the
following-



1989





(a)require the Exchange Company or clearing house, before the
expiration of a period specified in the notice-
(i) to amend, withdraw or revoke, in such manner as shall be
specified in the notice, any provision of its memorandum of
association, articles of association, rules or regulations or
other instrument so specified;
(ii) to take such action relating to the management, conduct or
operation of its business as may be so specified;
(b)prohibit the Exchange Company or clearing house doing or
causing to be done, during a period so specified, such act or other
thing relating to the management, conduct or operation of its
business as shall be so specified.
(2) The Commission shall not serve a restriction notice unless-
(a)it has previously consulted the Financial Secretary in relation
thereto;
(b)it has previously requested in writing the Exchange Company or
clearing house concerned to put, or cause to be put, into effect a
provision (which includes a request to refrain from doing any act
or other thing) specified in the request and similar in effect to the
requirement or prohibition specified in the restriction notice or,
in case there is more than one such requirement or prohibition so
specified, provisions the combined effect of all of which is similar
to the combined effect of the requirements or prohibitions so
specified; and
(c) in the case of a request under paragraph (b) which-
(i) contains a provision requesting the Exchange Company or
clearing house concerned to amend, withdraw or revoke any
provision of its memorandum or articles of association
under subsection (1)(a)(i), the provision has not been
complied with before the expiration of the period specified in
relation thereto in the request being not less than 45 days; or
(ii) contains a provision requesting the Exchange Company or
clearing house concerned to do or refrain from doing any act
or other thing, the Commission is satisfied that the provision
has not been complied with(3) (a)Where a restriction notice requires an Exchange Company or
clearing house to amend, withdraw or revoke any provision of its
memorandum of association or articles of association, the
Exchange Company or clearing house may appeal to the
Governor in Council against the notice.
(b)An appeal under paragraph (a) shall not affect the coming into
force of the restriction notice to which the appeal relates.

1989





(4) A period specified in a restriction notice in relation to a prohibition
under subsection (1)(b) shall be a period not exceeding 6 months beginning on
the date of the notice.
(5) The Commission may, after consultation with the Financial Secretary,
by notice in writing extend, for a period or successive periods of not more than
3 months each, the period during which a restriction notice is to remain in
force.
(6) Where a restriction notice is issued or extended under this section, the
Commission may cause to be published in the Gazette a copy of the notice or,
as may be appropriate, particulars of the extension.
(7) A restriction notice may, on the application of the Commission to the
High Court, be enforced by an order of the High Court as if it were a judgment
or order of that court.
(8) Where an Exchange Company or clearing house is in breach of a
requirement in a restriction notice under subsection (1)(a)(i) relating to a
provision of its memorandum of association, articles of association, rules or
regulations or other instrument-
(a)in the case of a requirement to amend such provision, the
provision shall be deemed to have effect as if the requirement had
been complied with;
(b)in the case of a requirement to withdraw or revoke such
provision, the provision shall cease to have effect.
(9) Where-
(a)a restriction notice includes a requirement described in subsection
(1)(a)(i) and the requirement relates to the memorandum of
association or the articles of association of a company; and
(b)by virtue of subsection (8) the provision to which the requirement
relates has effect as if the requirement had been complied with or,
as the case may be, has ceased to have effect,
the Commission shall, as soon as may be, deliver to the Registrar of Companies
a copy of the notice, and if there is an appeal under subsection (3) against the
notice and the appeal is not withdrawn, the Commission shall, as soon as may
be, inform such registrar in writing of the outcome of the appeal.
(10) No Exchange Company or clearing house, or any member, officer or
servant of an Exchange Company or clearing house shall be liable in damages
for any act or omission done or omitted in compliance or in purported
compliance with a restriction notice unless the act or omission is shown by the
person claiming the damages to have been done or omitted in bad faith.
(11) Nothing in this section shall be construed as enabling the Commission
to do under this section anything which may be done by the Commission by
direction or order under section 26 or 27 of the Securities Ordinance (Cap. 333)
or section 21 of the Commodities Trading Ordinance (Cap. 250).
1989





51. Additional powers-suspension orders relating
to Exchange Companies and clearing houses

(1) Where the Commission is satisfied that it is in the interest of the
investing public or in the public interest, or it is appropriate to do so for the
protection of investors or for the proper regulation of an Exchange Company
or clearing house, the Commission may, after consultation with the Financial
Secretary, make an order ('suspension order') relating to all or
any of the following functions of the Exchange Company or clearing house-
(a)the functions of the board of directors or governing body of the
Exchange Company or clearing house;
(b)the functions of a director of a board or a member of a body
referred to in paragraph (a);
(c)the functions of a committee (including a sub-comn-fittee)
established by a board or body referred to in paragraph (a);
(d)the functions of the chief executive officer (whether called that or
not) of the Exchange Company or clearing house.
(2) For so long as a suspension order is in force the following provisions
shall apply-
(a)none of the functions to which the order relates shall be
performed by the Exchange Company or clearing house to which
it relates or any board, governing body, committee or officer
thereof;
(b)any function to which paragraph (a) applies may be performed
by such person as shall be specified in the order in relation to that
function;
(c)a person referred to in paragraph (a) shall not, by act or
omission, either directly or indirectly, afect the manner in which
functions therein referred to are performed.
(3) Subject to subsection (5), a suspension order shall continue in force
for such period, being a period not exceeding 6 months, as shall be specified in
the order.
(4) (a)A suspension order or an extension thereof under subsection (5)
shall take effect when a copy of the order or notice of the
extension is served under subsection (6)(a) on the Exchange
Company or clearing house to which the order relates.
(b) (i) Where a suspension order is made or such an order is
extended under subsection (5), the Commission shall, if it is
practical so to do, as soon as may be, give a copy of the
order or, as may be appropriate, notice of its extension to
the chief executive officer of the Exchange Company or
clearing house to which the order relates and to such
directors or members of the committee thereof (if any) as the
Commission may consider appropriate in the circumstances.



1989





(ii) Nothing in this paragraph shall affect paragraph (a).
(5) The Commission may, after consultation with the Financial Secretary,
extend for a period or successive periods of not more than 3 months each the
period during which a suspension order is to remain in force.
(6) Where a suspension order is made or extended under this section, the
Commission shall-
(a)forthwith serve a copy of the order or notice in writing of the
extension on the Exchange Company or clearing house to which
the order relates; and
(b)cause the suspension order or, as may be appropriate, notice of
such extension to be published in the Gazette.
(7) Where costs or expenses are reasonably incurred by the Commission
or a director or employee thereof in connection with a suspension order, an
amount equal to the amount of the costs or expenses shall be paid to the
Commission on demand by the Exchange Company or clearing house
concerned and shall be recoverable as a civil debt.
(8) Any person who knowingly contravenes subsection (2)(c) commits an
offence.

PART VII

FUNDING

52. LEVIES

(1) In the case of every purchase and sale of securities recorded on the
Unified Exchange or notified to it under its rules, the purchaser and the seller
shall each of them be liable to pay to the Commission a levy at such rate as may
be specified by order of the Governor in Council as a percentage of the
consideration for such purchase and sale; and different rates may be specified
under this subsection in respect of different classes of securities.
(2) In the case of every leviable transaction in each market of the Futures
Exchange Company, the purchaser and the seller shall each of them be liable to
pay to the Commission a levy of such amount as may be specified by order of
the Governor in Council; and different amounts may be specified under this
subsection in respect of different leviable transactions.
(3) (a)The Stock Exchange Company shall collect and account to the
Commission for the levy referred to in subsection (1).
(b)The Stock Exchange Company shall retain the proportion of the
levy collected under paragraph (a) that is equal to the percentage
specified under paragraph (c) as the amount of the levy to be
retained by it, and shall pay to the Commission the balance of
suchlevy.

1989






(c)The Governor in Council may by order specify the percentage of
the levy collected under paragraph (a) which is to be the amount
thereof to be retained by the Stock Exchange Company pursuant
to paragraph (b).
(4) The Futures Exchange Company shall collect, account for and pay to
the Commission the levy referred to in subsection (2).
(5) The Governor in Council may by order amend the rate or amount of
levy payable under subsection (1) or (2).
(6) If at any time in any financial year the reserves of the Commission,
after deducting depreciation and all provisions, are more than an amount
equivalent to twice the estimated operating expenses of the Commission for that
financial year, submitted and approved in accordance with section 14(2), and
the Commission then has no outstanding borrowings, the Commission shall
consult the Financial Secretary with a view to recommending to the Governor
in Council that the rate or amount of a levy payable under this section or fees
or charges payable under section 54 be reduced.
(7) The amount of any levy payable under this section shall be
recoverable as a civil debt due to the Commission.
(8) The Governor in Council may make rules providing for-
(a)the payment of the levies payable under this section;
(b)the imposition of charges for late payment of such levies; and
(c)the keeping, examination and audit of the accounts of the
Exchange Companies relating to the collection and remission of
such levies.
(9) In this section 'leviable transaction' has the same
meaning as in section 79A(4) of the Commodities Trading Ordinance (Cap.
250).

53. Appropriation

In each financial year there shall be paid to the Commission out of general
revenue such moneys as shall be appropriated for that purpose by the
Legislative Council.

54. Fees and other charges
(1) The Governor in Council may, after consultation with the
Commission, make rules providing for the payment to the Commission of fees
or other charges in relation to-
(a)anything done by a committee of the Commission in the
performance of a function relating to takeovers and mergers;
(b)any application to the Commission for any authorization,
approval, exemption, waiver or modification under the relevant
Ordinances;




1989






(c)any other function performed under the relevant Ordinances
by the Commission or by a committee established by the
Commission;
(d)any other matter with regard to which provision is made by or
under the relevant Ordinances.
(2) (a)Fees or other charges prescribed under this section may be fixed
at levels sufficient to effect the recovery of expenditure incurred,
or likely to be incurred, by the Commission in performing its
functions under the relevant Ordinances but in fixing the level of
any such fees or charges account shall not be taken of any
moneys appropriated to the Commission under section 53.
(b)Fees or other charges prescribed under this section shall not be
limited by reason only of the amount of administrative or other
costs incurred, or likely to be incurred, by the Commission in
providing any service or otherwise performing any function
under the relevant Ordinances as regards any particular person
or in providing any service which is of a particular class or
description.
(3) Rules made under this section may provide that the amount of any
fees or other charges may be fixed by reference to a scale prescribed in the rules,
and for the payment of different fees or other charges by or in relation to
persons or cases of different classes or descriptions.

PART VIII

MISCELLANEOUS

55. Injunctions to restrain contraventions

(1) If on the application of the Commission the High Court is satisfied
that there is a reasonable likelihood that any person will contravene any
provision of any rules or direction made or given under section 28 or 29 or any
notice under Part V, the court may grant an injunction restraining the
contravention or, as the case may be, make an order that any person who
appears to the court to have been knowingly involved in the contravention take
such steps as the High Court may direct.
(2) No application shall be made by the Commission under subsection (1)
for an order affecting any person who is a member of an Exchange Company
unless the Commission has given written notification of its intention to that
Exchange Company.

1989




56. Immunity, etc.

(1) No liability shall be incurred by any person in respect of anything
done, or omitted to be done, by him in good faith in the performance or
purported performance of any function under the relevant Ordinances.
(2) Subject to section 50(10), a person who complies with a requirement
made under this Ordinance shall not incur any liability to any person by reason
only of that compliance.
(3) A person who is a legal practitioner (whether or not he is qualified in
Hong Kong to practise as a barrister or act as a solicitor) shall not be required
under this Ordinance to disclose any information (other than the name and
address of a client) or produce any record or other document which he would
be entitled to refuse to disclose or produce on grounds of legal professional
privilege in proceedings in the High Court.
(4) A person who is not a legal practitioner shall not be required under
this Ordinance to disclose any information or produce any document (whether
an original or a copy) if the requirement to do so would not apply in the case of
a legal practitioner by virtue of subsection (3).

57. Liability of directors, etc.

(1) Where an offence under this Ordinance committed by a corporation is
proved to have been committed with the consent or connivance of, or to be
attributable to any neglect on the part of, any director, manager, secretary, or
other similar officer of the corporation, or any person who was purporting to
act in any such capacity, he, as well as the corporation, shall be guilty of the
offence and shall be liable to be proceeded against and punished accordingly.
(2) Subject to subsection (3), for the purposes of this section, a person is
deemed to be a director of a corporation if he occupies the position of a director
by whatever name called or is a person in accordance with whose directions or
instructions the directors of the corporation or any of thern act.
(3) A person shall not, by reason only that the directors of a corporation
act on advice given by him in a professional capacity, be taken to be a person in
accordance with whose directions or instructions those directors act.
(4) Where an offence committed by a partner in a partnership is proved to
have been committed with the consent or connivance of, or to be attributable to
any neglect on the part of, any other partner of the partnership, that other
partner shall be guilty of the offence and liable to be proceeded against and
punished accordingly.

58. Evidence

Any record or other document purporting to be a record or other
document, or a copy of a record or other document, executed, signed or issued

1989




by or on behalf of the Commission and purporting to be signed or initialled by
the chairman or other director or any person employed in the administration of
the relevant Ordinances shall in any proceedings be admissible as prima facie
evidence of the facts stated therein, and it shall not be necessary to prove the
signature or initials of the person purporting to sign or initial the record or
other document.

59. Preservation of secrecy, etc.

(1) Except in the performance of a function under any of the relevant
Ordinances, or in carrying out a provision of any of those Ordinances, a person
who is appointed under any of those Ordinances or who performs or assists any
other person in the performance of a function under any of those Ordinances-
(a)shall, at all times subsequent to his appointment or after he has
performed or so assisted in the performance of any such function
(and whether or not his appointment continues or he may again
perform or so assist in the performance of any such function),
preserve and aid in preserving secrecy with regard to any matter
coming to his knowledge in the performance of, or assisting in
the performance of, any function under any of the relevant
Ordinances;
(b)shall not at any such time communicate any such matter to any
other person; and
(c)shall not at any such time suffer or permit any other person to
have access to any record or other document which is in his
possession or under his control by virtue of his being or having
been so appointed or his performing or having performed, or
assisting or having assisted any other person in the performance
of a function under any of the relevant Ordinances.
(2) Notwithstanding subsection (1) the Commission may disclose
information-
(a)in the form of a summary complied from similar or related
information provided by persons under any provision of the
relevant Ordinances if the summary is so complied as to prevent
particulars relating to the business or identity, or the trading
particulars, of any such person being ascertained from it;
(b)with a view to the institution of, or otherwise for the purposes of,
any criminal proceedings or any investigation, whether under the
relevant Ordinances or otherwise, in Hong Kong;
(c)in connection with any civil proceedings to which the
Commission is a party;
(d)to the Insider Dealing Tribunal established by section 141G of
the Securities Ordinance (Cap. 333);


1989




(e)to the Financial Secretary, the Secretary for Monetary Affairs,
the Commissioner of Banking, the Insurance Authority, the
Registrar of Companies or any public officer authorized by the
Financial Secretary for the purpose of this paragraph if, and only
if, in the opinion of the Commission, it is desirable or expedient
that the information should be so disclosed in the interest of the
investing public or the public interest;
to-
(i) the Stock Exchange Company;
(ii) the Futures Exchange Company;
(iii) the Securities Compensation Fund Committee established
under section 99 of the Securities Ordinance (Cap. 333);
(iv) the Commodities Compensation Fund Committee estab-
lished under section 78 of the Commodities Trading
Ordinance (Cap. 250); or
(v) a clearing house,
if, and only if, in the opinion of the Commission, it is desirable or
expedient that the information should be so disclosed in the
interest of the investing public or in the public interest;
(g) to an authority in a place outside Hong Kong which, in the
opinion of the Commission, performs any function in that place
similar to a function of the Commission, if, and only if, the
Commission is satisfied that such authority is subject to adequate
secrecy provisions and that it is desirable or expedient in the
interest of the investing public or the public interest that the
information should be so disclosed;
(h) to such organization in a place outside Hong Kong which
controls or otherwise regulates dealing in securities, trading
in futures contracts or entering into property investment
arrangements, as may have been specified for the purposes of this
paragraph by the Commission in a notice published in the
Gazette (and which has not since been withdrawn) if, and only if,
the Commission is satisfied that such organization is subject to
adequate secrecy provisions and that it is desirable or expedient
in the interest of the investing public or the public interest that
the information should be so disclosed;
(i) to such professional or semi-professional bodies in Hong Kong
as may be specified for the purpose of this paragraph by the
Commission in such a notice if, and only if, in the opinion of the
Commission, it is desirable or expedient that the information
should be so disclosed;
(j) obtained by an inspector appointed under section 127(1) of
the Securities Ordinance (Cap. 333) (whether or not such

1989





information is included in notes under section 128 of that
Ordinance of an examination under Part XI thereof or a report
made under section 130 of that Ordinance) to-
(i) the Financial Secretary;
(ii) the Attorney General;
(iii) the police;
(iv) the Independent Commission Against Corruption;
(v) the Insider Dealing Tribunal;
(k)obtained by an investigator under section 33 to any person
mentioned in paragraph (j)(i) to (v); or
(l)for the purpose of, or otherwise in connection with, an audit
required by section 16.
(3) Where information is disclosed in any of the circumstances described
in subsection (2), neither---
(a) the person to whom that information is disclosed; nor
(b)any person obtaining or receiving the information, whether
directly or indirectly, from the person referred to in paragraph
(a),
shall disclose the information, or any part thereof, to any other person without
the consent of the Commission.
(4) Subject to subsection (5), the chairman or any other director of the
Commission or any person employed in the administration of any provision of
the relevant Ordinances shall not directly or indirectly effect or cause to be
effected, on his own account or for the benefit of any other person, any
transaction regarding securities, a futures contract or property investment
arrangements---
(a)which he knows to be the subject of an investigation or
proceedings by the Commission under any of the relevant
Ordinances or to be the subject of other proceedings under this
Ordinance or is being otherwise considered by the Commission;
(b)which he knows to be connected with a matter which is either
the subject of an investigation or proceedings mentioned in
paragraph (a) or is being otherwise considered by the
Commission; or
(c)in respect of which a prospectus or any take-over document is to
his knowledge, being considered by the Registrar of Companies
for registration under the Companies Ordinance (Cap. 32).
(5) Subsection (4) does not apply to, or in respect of, any right of the
holder of securities by virtue of being that holder-
(a)to exchange the securities or convert them to another form of
securities;
(b)to participate in a scheme of arrangement approved by the High
Court under the Companies Ordinance (Cap. 32);
1989




(c)to subscribe for other securities or dispose of a right to subscribe
for other securities;
(d)to charge or pledge the securities to secure the repayment of
money;
(e)to realize the securities for the purpose of repaying money
referred to in paragraph (d); or
to realize the securities in the course of performing a duty
imposed by law.
(6) Where the chairman or any other director of the Commission or any
person employed in the administration of any of the relevant Ordinances is, in
the course of his duties, required to consider any matter relating to-
(a)any securities or futures contract or property investment
arrangements in which he has an interest or any securities or
futures contract or property investment arrangements of the
same class or kind;
(b)any securities or futures contract or property investment
arrangements in which a company in which he has an interest has
an interest;
(c) a person-
(i) with whom he is or has been employed or associated;
(ii)of whom he is or has been a client or, in the case of a bank
or deposit-taking company (within the meaning of section
2(1) of the Banking Ordinance (Cap. 155)), a customer; or
(iii) who is or was a client or, in the case of a bank or
deposit-taking company (within the meaning of section 2(1)
of the Banking Ordinance (Cap. 155)), a customer of a
person with whom he is or was employed or associated,
he shall forthwith inform the Commission that the matter so relates.
(7) Any person who-
(a)contravenes subsection (1) or (3); or
(b)without reasonable excuse, contravenes subsection (4) or fails to
comply with any requirement of subsection (6),
commits an offence.

60. Service of notices

(1) A notice or direction required to be served under any of the relevant
Ordinances shall be properly served if-
(a)in the case of an individual, it is delivered to him or, where it
cannot conveniently be so delivered, it is-
(i)left at the address at which he ordinarily resides or carries on
business or, if such an address is unknown, at his last known
address; or

1989





(ii) sent by post to him at any such address;
(b) in the case of-
(i) a company, it is delivered to an officer of the company or,
where it cannot so be conveniently delivered, it is left at, or
sent by post to, the company's registered office;
(ii)an oversea company within the meaning of the Companies
Ordinance (Cap. 32), it is left with, or sent by post to, the
person resident in Hong Kong who is authorized to accept
service of process and notices on its behalf for the purposes
of Part Xl of that Ordinance;
(c)in the case of a partnership, it is delivered to any partner or where
it cannot be conveniently delivered, it is left at, or sent by post to,
the address at which the partnership carries on business;
(d)in the case of a body corporate other than a company or an
unincorporated body of persons other than a partnership, it is
delivered to an officer of the body, or where it cannot be
conveniently delivered, it is left at, or sent by post to, the address
at which the body carries on business.
(2) For the purposes of subsection (1), every other body corporate other
than a company and every unincorporated body of persons not being a
partnership shall be deemed to carry on business at its principal office or place
of business.

61. Penalties for offences

Any person who commits an offence under section 21(10), 30(6) or (7),
31(3), 33(12), 36(6), 37, 51(8) or 59(7) is liable-
(a)on conviction upon indictment to a fine of $1,000,000 and, in the
case of an individual, to imprisonment for 2 years;
(b)on summary conviction to a fine of $100,000 and, in the case of
an individual, to imprisonment for 6 months.

62. Prosecution of certain offences by Conunission

(1) Any offence under any of the relevant Ordinances may be prosecuted
by the Commission in its own name but, where under this subsection the
Commission prosecutes an offence, the offence shall be tried before a magistrate
as an offence which is triable summarily.
(2) For the purposes of the prosecution of an offence mentioned in
subsection (1) and only for those purposes, an employee of the Commission
who apart from this subsection is not qualified to act as a barrister or solicitor
may appear and plead before a magistrate any case of which he has charge and
shall, in relation to the prosecution, have all the other rights of a person


1989





qualified to practise as a barrister or solicitor under the Legal Practitioners
Ordinance (Cap. 159).
(3) Nothing in this section shall derogate from the powers of the Attorney
General in respect of the prosecution of criminal offences.

63. Dissolution of Provisional Securities and Futures
Commission Limited and transfer of property

(1) The Provisional Securities and Futures Commission Limited ('the
Company'shall, on the establishment day, be dissolved by virtue
of this section.
(2) All property, whether movable (including choses-in-action) or
immovable, which immediately before the establishment day was vested in or
belonged to or was held in trust or subject to conditions for the Company and
all rights, powers and privileges relating to or connected with any such
property, shall on the establishment day, without any conveyance or
assignment, be transferred to and vested in or become the property of or
property held in trust or subject to conditions for the Commission.
(3) All property transferred by this section which immediately before the
establishment day was standing in the books of any bank or was registered in
the books of any bank, corporation or company in the name of the Company
shall, upon the request of the Commission made at any time on or after the
establishment day, be transferred in those books by the bank, corporation or
company into the name of the Commission.
(4) Every chose-in-action transferred by this section may, on or after the
establishment day, be sued upon, recovered, or enforced by the Commission in
its own name and it shall not be necessary for the Commission to give notice to
the person bound by any such chose-in-action of the transfer effected by this
section.
(5) Every debt or other liability (including unliquidated liabilities aris-
ing from torts or breaches of a contract) which immediately before the
establishment day is owing and unpaid or has been incurred and is un-
discharged by the Company shall, on the establishment day, become and be the
debt or liability of the Commission and shall be paid or discharged by and may
be recovered from and shall be enforceable against the Commission
accordingly.
(6) Every contract which was entered into and is in force immediately
before the establishment day between the Company and any person shall
continue in force on and after the establishment day, but it shall be construed
and have effect as if the Commission were substituted therein for the Company
and shall be enforceable by or against the Commission accordingly.



1989




(7) Where, immediately before the establishment day, any legal
proceedings are pending to which the Company is a party, the name of the
Commission shall be substituted for that of the Company and the proceedings
shall not abate by reason of such substitution.
(8) The Stamp Duty Ordinance (Cap. 117) shall not apply to the vesting
in the Commission of property or rights transferred by this section.

64. Transitional

(1) The Securities Commission Disciplinary Committee as constituted
immediately prior to the establishment day shall continue in existence for the
purposes of completing any inquiry commenced under section 39 of the
Securities Ordinance (Cap. 333), or hearing any appeal commenced under
section 58 of that Ordinance, prior to that date but not at that date completed
or disposed of, and for the purposes of this subsection-
(a)any such inquiry or appeal may be continued and completed or
disposed of, and
(b)any order or decision of the Disciplinary Committee so
constituted may be made or given and shall have the same force
and effect,
as if this Ordinance had not been enacted.
(2) Any proceedings before a Disciplinary Committee or an Appeals
Committee appointed under section 66 of the Commodities Trading Ordinance
(Cap. 250) commenced prior to the establishment day under that Ordinance but
not completed or disposed of at that day may be continued and completed or
disposed of (by the making of an order or otherwise) by such Committee as if
this Ordinance had not been enacted.
(3) Any business being the business of a committee established under
section 16 of the Securities Ordinance (Cap. 333) or section 9 of the
Commodities Trading Ordinance (Cap. 250) and subsisting immediately before
the establishment day which had not been completed and disposed of at that
day shall be transferred to and be the business of a corresponding committee
established under section 6 of this Ordinance.
(4) Any claim for compensation from a compensation fund made under-
(a)the transitional arrangements in Schedule 2 to the Stock
Exchanges Unification Ordinance (Cap. 361) which has not
been disposed of at the establishment day may be continued
and disposed of under those transitional arrangements after the
establishment day;
(b)Part X of the Securities Ordinance (Cap. 333) which has not been
disposed of at the establishment day may be continued and
disposed of under that Part after the establishment day;


1989




(c)Part V111 of the Commodities Trading Ordinance (Cap. 250)
which has not been disposed of at the establishment day may be
continued and disposed of under that Part after the establishment
day.
(5) Any appeal commenced under the Securities Ordinance (Cap. 333) or
the Coinmodities Trading Ordinance (Cap. 250) (other than an appeal referred
to in subsection (1) or (2)) and not disposed of at the establishment day may be
continued and disposed of under that Ordinance as if this Ordinance had not
been enacted.
(6) Any authorization granted or issued under the Securities Ordinance
(Cap. 333), the Protection of Investors Ordinance (Cap. 335), the Commodities
Trading Ordinance (Cap. 250) or the Stock Exchanges Unification Ordinance
(Cap. 361) which is in force immediately before the establishment day shall
continue in force after that day as if the authorization had been granted or
issued under this Ordinance.
(7) Any licence or exemption granted, certificate issued, recognition or
permission given, declaration made, suspension or condition imposed or
attached or other thing done by the former Securities Commission, the former
Commissioner for Securities, the former Commodities Trading Commission or
the former Commissioner for Commodities Trading in the performance of a
function similar to a function of the Commission shall, if that thing was in
force, subsisting or effective immediately before the establishment day, be
regarded as having been granted, issued, given, made, imposed, attached or
done by the Commission in performing the function and for the purposes of
this subsection the function shall be regarded as having been performable: by
the Commission at the time the thing was granted, issued, given, made,
imposed, attached or done.
(8) Any application under Part VI of the Securities Ordinance (Cap. 333)
to the former Commissioner for Securities or any notification given to the
former Commissioner for Securities or any application under Part IV of the
Commodities Trading Ordinance (Cap. 250), or any notification given to the
former Commissioner for Commodities Trading which was pending or effective
immediately before the establishment day shall, unless it is withdrawn after that
day, be determined by or, as may be appropriate, be regarded as having been
given to, the Commission as if it had originally been made or given to the
Commission by virtue of this Ordinance.
(9) In subsections (7) and (8) 'former' means existing immediately before
the establishment day.

SCHEDULE [S-9]
FUNCTIONS OF COMMISSION TO WHICH SECTION 9 DOES NOT APPLY
1. Any power of the Commission to make subsidiary legislation.




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2. A function of the Commission under section 4(2), 8(a), 10(1), 12, 14(2), 15, 32(1), 33(10), 39,
40, 41, 43(1), 45(1), 46(1), 47, 50(1) or (5), 51(1) or (5) or 59(2)(g) or (h), the power of the
Commission under section 16(1) to appoint auditors and the Commission's power of appointment
under section 33(1).
3. A function of the Commission under section 14(3), 26(1), 27, 65B(6), 74(3), 100(2), (3), (4) or
(7), 110 or 130(5) of the Securities Ordinance (Cap. 333), the Commission's power of appointment
under section 127(1) of that Ordinance in so far as it is exercisable as regards a person who is not an
employee of the Commission, the making by the Commission of an order described in section
134(1) of that Ordinance and the Commission's power to apply to the High Court under section 144
of that Ordinance for an order described in subsection (1) of that section.
4. A function of the Commission under section 14(1),15,16,18(1),19(1),21(1) or (2), 60A(3),78
or 113(4) of the Commodities Trading Ordinance (Cap. 250) and the Commission's power to
prescribe by virtue of section 13(3)(1) of that Ordinance.
5. A function of the Commission under section 3(1),3(4), 10A, 34(2),35(1)j 36(1) or 44(3) of the
Stock Exchanges Unification Ordinance (Cap. 361).
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