Deemed interests
A director is
taken to be interested in the interests of his spouse and
minor children (not being themselves directors of the listed
company), any company which he controls (ie. a company of
which he controls the exercise of one third of more of the
voting power at general meetings or whose directors are
accustomed or obliged to act in accordance with his
directions or instructions) and trusts. As under the
previous disclosure regime, a director must also disclose
his interest under a discretionary trust.
The
provisions relating to cessation of interests are the same
as for substantial shareholders.
Exemptions
The exemptions available to directors are limited to
those in respect of basket derivatives, bare trustees and
collective investment schemes, all as outlined under
'substantial shareholders' above.
In particular, the
exemptions available to substantial shareholders in respect
of de minimis changes, lending shares under the SBL Rules
and bonus and rights issues are not available to directors.
Information to be disclosed
Where a director
makes an 'Initial Notification' he is required, in the case
of an on-exchange transaction, to disclose the highest price
and the average price paid for the interest in the 4 months
preceding the date of the relevant event prompting
notification. In an off-exchange transaction he must
disclose the nature of the consideration and the highest and
average amounts of considerations paid for the interest
within the same 4 month period.
Subsequent
notifications of acquisitions or disposals of interests must
state, in on-exchange transactions, the highest and average
price paid or received (or if no price is paid, that fact)
and in off-exchange transactions the nature of the
consideration and the highest and average price paid or
received (or if no price is paid, that fact).
The
amount and nature of consideration need not be stated in the
case of 'equity derivatives'. This does not apply to the
grant to a director of equity derivatives by a listed
company or any associated company or to the assignment of
such rights in which case the price or consideration paid or
received must be disclosed.
Penalties for failure to
disclose
Failure to make disclosure within the
required time frame or the making of false or misleading
statements constitute a criminal offence liable to the same
fines and periods of imprisonment as for substantial
shareholders.
Registration of Substantial
Shareholders' Interests and Short Positions
As under
the previous legislation, listed companies are required to
maintain a register of interests and short positions
disclosed to them. This register may be the same as the
register required by the previous legislation, adapted to
include the additional information required to be disclosed
by Part XV. Details must be entered on the register within 3
business days following the day of receipt of information by
the listed company and the index must be updated within 10
business days of a name being entered on the register. In
addition, the register must disclose details of any party
holding shares pursuant to a concert party agreement (see
above).
If the register is not kept at the company's
registered office, a listed company must inform the
Registrar of Companies of its whereabouts using the
prescribed form of notice now available on the SFC website.
Investigations of shareholders by a listed company
Under the SFO a listed company has the power to
investigate the identity of holders of interests and short
positions in its shares and also the ownership of equity
derivatives where the underlying shares of such derivatives
are shares in that listed company. As under the previous
legislation, a listed company may be required to exercise
its powers of investigation on the request of members.
The listed company is then under a duty to inform
the Stock Exchange, the SFC and, in the case of authorised
financial institutions only, the Hong Kong Monetary
Authority of any information received. This notification
must be given before the end of the business day after the
day on which the duty arises. The listed company must
prepare a report of the information received pursuant to any
such investigation and make that report available at its
registered office within 10 business days of the end of the
investigation and must deliver a copy of the report to the
SFC and the Stock Exchange. Information received following
an investigation must also be recorded in its register of
interests and short positions.
Offences
It
is an offence for anyone to fail, without reasonable excuse,
to comply with an investigation made by a listed company or
to make a false or misleading statement in response to such
investigation.
Further, a listed company and every
officer who is in default commits an offence if they fail to
prepare a report and deliver it to the SFC and the Stock
Exchange within the specified periods.
Please note
that this summary is for general information purposes only.
Specific legal advice should be sought when appropriate.
