Proposals to enhance protection for the investing public

The Law Society’s Securities Law Committee has reviewed the proposals put forward by the Securities and Futures Commission (SFC) in the consultation paper to enhance protection for the investing public at the pre-sale, sale and post-sale stages of the investment life cycle. These proposals include: the consolidation, into a single SFC Handbook, of the criteria for authorising the offering documentation and advertisements of investment products; the introduction of a new Code on Unlisted Structured Products (the SP Code); the communication of key issues to investors by concise Product Key Facts Statement (Product KFS); the enhancement of disclosure requirements by requiring intermediaries to disclose their monetary and non-monetary benefits to investors and making available material information to investors on an ongoing basis; the compliance by intermediaries of the Code of Conduct in the sale of investment products; a review of the definition of ‘professional investor’; and the introduction of a cooling-off period for certain long-term investments with no liquid secondary market. The Law Society’s submissions on the SFC’s consultation paper are posted on www.hklawsoc.org.hk.

In relation to other proposals to enhance the protection of the investing public, the Finance Services and the Treasury Bureau has published a consultation paper on the proposed establishment of an Investor Education Council and a Financial Dispute Resolution Centre, which the Law Society is currently reviewing.

Review of Corporate Rescue Procedure Legislative Proposals

The Law Society’s Insolvency Law Committee has reviewed the consultation paper published by the Financial Services and Treasury Bureau on the ‘Review of Corporate Rescue Procedure Legislative Proposals’. The Bureau notes that it would be appropriate to reconsider the introduction of a corporate rescue procedure to facilitate companies with viable long-term business prospects but with short-term financial difficulties, to restructure by way of provisional supervision. Provisional supervision would complement the existing restructuring arrangements under the Companies Ordinance (Cap 32) and non-statutory arrangements such as voluntary workouts.

The consultation covers the initiation of provisional supervision, moratorium, employees’ outstanding entitlements, provisional supervisor, insolvent trading, secured creditors and voting at meetings of creditors. The Law Society welcomes the proposal that solicitors may take up appointments as provisional liquidators and has made submissions on the consultation paper, which are posted on www.hklawsoc.org.hk.

Consultation document on the methods for selecting the Chief Executive and for forming LegCo in 2012

The Law Society’s Constitutional Affairs Committee has reviewed the consultation document published by the Government on 18 November 2009 setting out the Government’s proposals on the methods for selecting the Chief Executive (CE) and for forming the Legislative Council (LegCo) in 2012. In the consultation document, views were sought on the questions relating to: (1) the number of Election Committee members; (2) the composition of the Election Committee; (3) the electorate base of the Election Committee; (4) the arrangements for nominating candidates for the office of the CE; (5) the political affiliation of the CE; (6) the number of seats in LegCo; (7) the electorate base of the functional constituencies; and (8) the nationality requirement of LegCo members. Based on the review of the legal and constitutional questions and analysis surrounding the proposals, and an evaluation of the proposals, the Law Society has made submissions on the consultation document, which are posted on www.hklawsoc.org.hk.