SECURITIES (MISCELLANEOUS) REGULATIONS

SECURITIES (MISCELLANEOUS) REGULATIONS

SECURITIES (MISCELLANEOUS) REGULATIONS

ARRANGEMENT OF REGULATIONS

Regulation................................
Page
1. Citation .............................A 2
2. Interpretation .......................A 2
3. Amounts to be deposited ..............A 2
4. Application of deposits by trustees in bankruptcy A 3
5. Application of deposits by liquidators A 3
6. Application of deposits forfeited under section 52(2)(c) of the Ordinance A 3
7. Fees .................................A 5
8. Change of information ................A 5
9. Representatives to notify changes of address A 5
10.......................................Certificate of registration to be exhibited A 6
11.......................................Applications for authorization of mutual fund corporations and unit trusts A 6
12.......................................Fees for authorization of mutual fund corporations and unit trusts A 6
13.......................................Annual fees for authorized mutual fund corporations and unit trusts A 7
14.......................................Cessation of authorization A 7
15.......................................Publication in the Gazette A 7

First Schedule. Claims Notice ...........A 8

Second Schedule..........................Fees ..................................................................................
..........................................A
9





SECURITIES (MISCELLANEOUS) REGULATIONS
(Cap. 333, section 146)
[25
October

L.N. 303/85 -L.N. 148/88

Citation

1. These regulations may be cited as the Securities (Miscellaneous)
Regulations.

Interpretation

2. In these regulations, unless the context otherwise requires-

,,authorization' means authorization under section 15(1)(c) of the Ordinance, and
'authorized' shall be construed accordingly; (L.N. 148/88)

'dealer' includes a person whose registration as a dealer has been revoked;

'default', in relation to the failure of a dealer to perform a legal obligation, means a
default arising from

(a)any breach of trust committed by the dealer or any co-trustee of the
dealer, and if the dealer is a corporation, by any director or other officer of
the corporation;

(b)any defalcation' fraud or misfeasance committed by the dealer or any
servant of the dealer and

(i) if the dealer is a member of a dealing partnership, by any partner of
the partnership; or

(ii) if the dealer is a corporation, by any director or officer of the
corporation;

'deposit' means a deposit or that part of a deposit required to be paid, or directed
to be forfeited, by the Commissioner under section 52(2) of the Ordinance;

'fund' means

(a)in the case of a mutual fund corporation, a separate pool of assets in
respect of which the corporation is the issuer of redeemable shares;

(b)in the case of a unit trust, a separate pool of assets in respect of which
the beneficiaries under the trust may participate; (L.N. 148188)

'legal obligation' includes an obligation arising under a contract or quasicontract
or under a trust (including a constructive trust).

Amounts to he deposited

3. The following amounts are prescribed for the purposes of section 52(1) of
the Ordinance





(a)in the case of an applicant who is an individual, whether he intends to
carry on business alone or in partnership with one or more other dealers, a
sum of $50,000 payable in cash; and

(b)in the case of an applicant which is a corporation a sum consisting of
$50,000 payable in cash for each dealing director of the corporation.

Application of deposits by trustees in bankruptcy

4. (1) Subject to paragraph (2), where the Commissioner pays a deposit to the
trustee in bankruptcy of a bankrupt dealer pursuant to section 52(2)(a) of the
Ordinance, the trustee shall apply the deposit as if the clients of the dealer in his
capacity as a dealer in securities were the only creditors of the dealer.

(2) If there are no clients of the dealer who are his creditors or if their claims
against the dealer have been fully satisfied, the trustee in bankruptcy may apply the
deposit or, as the case may be, the balance of the deposit for the benefit of any
other creditors of the dealer.

Application of deposits by liquidators

5. (1) Subject to paragraph (2), where the Commissioner pays a deposit to the
liquidator of a dealer pursuant to section 52(2)(b) of the Ordinance and the dealer,
being a corporation, is ordered to be wound up by the Court, the liquidator shall
apply the deposit as if the clients of the dealer in its capacity as a dealer in
securities were the only creditors of the dealer.

(2) If there are no clients of the dealer who are its creditors or if their claims
against the dealer have been fully satisfied, the liquidator may apply the deposit or,
as the case may be, the balance of the deposit for the benefit of any other creditors
of the dealer.

Application of deposits forfeited under section 52(2)(c)
of the Ordinance

6. (1) Where a deposit made by a dealer is forfeited under section 52(2)(c), it
shall be applied for the purpose of compensating persons who establish claims as
provided in this regulation.

(2) Where a person sustains pecuniary loss because of the failure of a dealer,
by reason of a default committed in the course of or in connection with the dealer's
business of dealing in securities, to perform a legal obligation owed to that person
in relation to any money, securities or other property

(a)which was entrusted to or received by that dealer, or any director, partner
or employee of that dealer, for or on behalf of that person; and

(b)to which that person is entitled or in which that person has a beneficial
interest (whether existing or contingent),

he shall be entitled to claim compensation in accordance with this regulation.

(3) The amount which a claimant shall be entitled to claim as compensation is
the amount of the actual pecuniary loss suffered by him (including the





reasonable costs of and disbursements incidental to the making and proof of his
claim) less the amount or value of all money or other benefits received or receivable
by him from any source other than the Commissioner in reduction of the loss.

(4) The Commissioner shall cause to be published in a daily newspaper in the
English language and a daily newspaper in the Chinese language published and
circulating generally in Hong Kong a notice in the form prescribed in the First
Schedule specifying a date, not being earlier than 3 months after publication of the
notice, on or before which claims for compensation from the deposit lodged by the
dealer specified in the notice may be made.

(5) A claim for compensation may be made in writing to the Commissioner

(a)if a notice under paragraph (4) has been published, on or before the date
specified in the notice; or

(b)if no such notice has been published, within 6 months after the claimant
became aware of the default.

(6) The he Commissioner shall, subject to these regulations and after such
inquiry as he thinks fit

(a)at any time after the commission of the default in respect of which the
claim arose allow any proper claim made in accordance with paragraph (5)
and determine the amount payable as compensation (whether or not in
excess of $50,000); and

(b) disallow any other claim.

(7) Where all claims made in accordance with paragraph (5) have been dealt
with under paragraph (6), the Commissioner shall, as soon as practicable thereafter
and subject to paragraph (8), authorize payments from the relevant deposit, in
respect of amounts determined under paragraph (6), to the persons whose claims
have been allowed.

(8) In authorizing payment under paragraph (7), the Commissioner shall have
regard to the following

(a)if only one amount is determined under paragraph (6) and that amount
does not exceed the deposit, that amount is payable in full;

(b)if 2 or more amounts are so determined and those amounts together do
not exceed the deposit, those amounts shall be payable in full;

(c)if only one amount is so determined but exceeds the deposit, only so
much of the amount as does not exceed the deposit shall be payable;

(d)if 2 or more amounts are so determined and those amounts together
exceed the deposit, the total amount payable to all claimants whose claims
have been allowed under paragraph (6) shall not exceed the amount of the
deposit and each amount so determined shall be abated by the same
proportion as the total amounts determined bear to the amount of the
deposit.





Fees

7. (1) The fees set out in the Second Schedule are prescribed for the matters
specified therein.

(2) If an applicant withdraws his application for registration or renewal of
registration, or, if registration or renewal of registration is refused by the
Commissioner, half of the fees paid by the applicant shall be returned to him by the
Commissioner.

Change of information

8. The following changes of information are prescribed for the purposes of
section 63(1)(b) of the Ordinance

(a) in every case-

(i) any change of name or business name;

(ii) where there is a change in membership of any stock or commodity
futures exchange in Hong Kong or elsewhere, the details of such
changes;

(iii) where the registered person becomes a plaintiff or a defendant in a
civil litigation, the particulars of the litigation; and

(b) in the case of a registered person who is an individual-

(i) where he is convicted of an offence other than a traffic offence,
particulars of the offence including the penalty imposed;

(ii) where he is adjudicated civilly liable for any fraud, misfeasance or
other misconduct in connection with the formation or management of any
corporation, details of the circumstances including the findings;

(iii) where he is involved in the affairs of any corporation which is
being investigated by an inspector or officer appointed under any
enactment, details of the circumstances;

(iv) where a bankruptcy petition is served on him, details of the
petition;

(c) in the case of a registered person which is a corporation-

(i) where there is a change of the ultimate holding company, details of
the change;

(ii) where there is a change in the nominal or issued share capital,
details of the change;

(iii) where a winding-up petition is served on the corporation, details of
the petition;

(d)in the case of a registered dealing partnership or investment advisers'
partnership, where there is a change in the capital distribution of the
partners, details of the change.

Representatives to notify changes of address

9. (1) Any dealer's representative or investment representative who changes
his business address shall notify the Commissioner of the change.





(2) Any person who, without reasonable excuse, fails to comply with
paragraph (1) within 7 days after the change takes place commits an offence and is
liable to a fine of $2,000.

Certificate of registration to be exhibited

. 10. (1) Every registered person other than a representative shall exhibit his
certificate of registration in a prominent place at his place of business or, if he has
more than one place of business, at his principal place of business.

(2) Any person who, without reasonable excuse, fails to comply with
paragraph (1) commits an offence and is liable to a fine of $1,000.

Applications for authorization of mutual fund corporations
and unit trusts

11. (1) An application for authorization of a mutual fund corporation or unit
trust shall be accompanied by the following fee

(a)where authorization is sought in respect of a mutual fund corporation that
maintains, or is capable of maintaining, more than one fund, a fee of
510,000 plus $10,000 for each fund in respect of which authorization is
sought;

(b)where authorization is sought in respect of a unit trust within which there
is, or could be, more than one fund, a fee of $10,000 for each fund in
respect of which authorization is sought;

(c) in any other case, a fee of $10,000.

(2) An application for extension of an authorization to cover another fund shall
be accompanied by a fee of $10,000.

(L.N. 148/88)

Fees for authorization of mutual fund corporations and
unit trusts

12. (1) An authorization of a mutual fund corporation or unit trust shall not
take effect unless the following fee is paid

(a)where the authorization is of a mutual fund corporation that maintains, or
is capable of maintaining, more than one fund, a fee of $5,000 plus $5,000
for each fund to which the authorization extends;

(b)where the authorization is of a unit trust within which there is, or could be,
more than one fund, a fee of $5,000 in respect of each fund to which the
authorization extends;

(c) in any other case, a fee of $5,000.

(2) An extension of an authorization to cover another fund shall not take effect
unless a fee of $5,000 is paid.

(L.N. 148/88)





Annual fees for authorized mutual fund corporations and
unit trusts

13. (1) The following annual fees shall be paid-

(a)in respect of an authorized mutual fund corporation that maintains, or
is capable of maintaining, more than one fund, a fee of $2,700 plus
$2,700 for each fund proposed to be maintained during the year in
question;

(b)in respect of an authorized unit trust within which there is, or could be,
more than one fund, a fee of $2,700 for each fund proposed to be
maintained during the year in question;

(c) in any other case, a fee of $2,700.

(2) An authorization of a mutual fund corporation or unit trust shall not
take effect unless the annual fee is paid.

(3) Subject to paragraph (4), the annual fee shall also be paid on or before
the anniversary, in each succeeding year; of the date on which an authorization
took effect.

(4) In the case of a mutual fund corporation or unit trust which was
immediately before the commencement of the Securities (Miscellaneous)
(Amendment) Regulations 1988 (L.N. 148/88) an authorized mutual fund
corporation or unit trust, the annual fee shall be paid-

(a) within 1 month after the commencement of those regulations; and

(b)on or before the anniversary, in each succeeding year, of the commen-
cement of those regulations.
(L.N. 148/88)

Cessation of authorization

14. (1) A mutual fund corporation or unit trust that has ceased to be
authorized shall not be authorized again unless the fees prescribed by regula-
tions 11 (1), 12(1) and 13(1) are paid.

(2) An authorized mutual fund corporation or unit trust that has ceased
to be authorized in respect of any fund shall not be authorized again in respect
of that fund unless the fees prescribed by regulations 11(2), 12(2) and 13(1) are
paid.
(L.N. 148/88)

Publication in the Gazette

15. (1) Where a mutual fund corporation or unit trust becomes
authorized or ceases to be authorized, the Commission shall within 1 month
give notice in the Gazette of that fact and, where an authorization applies or
used to apply to more than one fund, of the names of the funds.

(2) Where an authorization is extended to another fund or ceases to apply
to a particular fund, the Commission shall within 1 month give notice in the
Gazette of that fact and of the name of the fund.





(3) The Commission shall cause to be published in the Gazette, at least once
each year, the names of all mutual fund corporations and unit trusts that are
authorized and, where an authorization applies to more than one fund, of the names
of the funds.

(L.N. 148/88)

FIRST SCHEDULE

CLAIMS NOTICE

SECURITIES ORDINANCE

(Chapter 333)

NOTICE CALLING FOR CLAIMS AGAINST DEPOSIT LODGED
WITH THE COMMISSIONER FOR SECURITIES

In the matter

[reg. 6]

1 . Notice is hereby given that all persons claiming to have sustained pecuniary loss from a
default committed in the course of or in connection with the business of the above-named
............

........................................................................ : of
dealing

in securities are required to deliver to the Commissioner for Securities particulars of their claims

in writing on or before the of 19

2. Claims not received by the Commissioner on or before the date specified in paragraph 1
above will not be admitted and no payment will be made in respect of those claims.

Dated this .........day of 19

Commissioner for Securities.







SECOND SCHEDULE

PART I

APPLICATION FEES FOR REGISTRATION OR RENEWAL OF REGISTRATION

Item


[reg. 7]

Description of registration

1. Dealer (individual)
2. Dealer (corporation)
3. Dealing partnership
4. Dealer's representative

5.....................Investment adviser (individual) :

6. Investment adviser (corporation)
....................................................................
7. Investment advisers' partnership
.....................................................................

8. Investment representative

PART II

MISCELLANEOUS FEES

Description

. Issue of a duplicate certificate of registration
..................................................

2. Inspection of the registers kept under section 64(1) of the Ordinance, each

Fee

1,300
1,300
1,300

450
1,000
1,000
1,000

450

Fee

50

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