No.1 April 2003
*****
Disclosure of Interests under the Securities and Futures Ordinance *****
Information required to be given
The SFO removes the previous requirement for substantial
shareholders to disclose particulars of registered shareholders
and changes in those particulars. Instead, it introduces more
structured notification forms to facilitate disclosure. Among
the details to be disclosed by a substantial shareholder are the
following:
* 1. In the case of corporate substantial shareholders, the
name and address of any person in accordance with whose
directions it, or its directors are accustomed or obliged
to act, except where it is listed in Hong Kong or on a
specified stock exchange or is the wholly owned subsidiary
of any such listed company.
2. In the case of subsequent disclosures of long positions
in shares disclosure is required of the highest price and
average price per share paid or received in an on-exchange
transaction. In off-exchange transactions the highest and
average consideration per share and nature of the
consideration must be disclosed. If no price or
consideration has been paid or received, this should be
stated. Transactions in equity derivatives do not require
details of price or consideration.
3. In the case of equity derivatives, details as to
whether they are listed or unlisted, cash or physically
settled, and details of the underlying shares.
Timing of Notice
Notices should be filed with the Stock Exchange and the relevant
listed company at the same time or one immediately following the
other. The previous requirement for notice to be given to the
Stock Exchange first has been removed.
Forms to be used
There are 6 separate forms to be used for notification of
interests under the SFO. These are:
* Form 1 Individual Substantial Shareholder Notice
Form 2 Corporate Substantial Shareholder Notice
Form 3A Director's/Chief Executive's Notice of Interests
in Shares of a Listed Company
Form 3B Director's/Chief Executive's Notice of Interests
in Shares of Associated Corporation
Form 3C Director's/Chief Executive's Notice of Interests
in Debentures of Listed Company
Form 3D Director's/Chief Executive's Notice of Interests
in Debentures of Associated Company
The forms and notes thereto can be downloaded in Chinese and
English from the Hong Kong Exchange and Clearing Limited web-
site or the SFC website.
The forms can be printed out and completed manually.
Alternatively they are available in Microsoft Excel format and
can be completed offline using the Excel programme.
Directors who are also Substantial Shareholders must use Form 3A
(annexed hereto) instead of Form 1 to disclose interests in
shares of a listed company of which they are directors.
If an event gives rise to separate disclosure obligations in
each capacity (as director and substantial shareholder), both
obligations can be fulfilled by filing Form 3A. For example, if
a person has a 5.9% interest in the shares of a listed company
and acquires a further 0.2%, he must file a notice as a director
(who must disclose all transactions) and as a substantial
shareholder because his interest has crossed a percentage level.
Penalties for failure to disclose
Failure to make disclosure within the time limits required by
the SFO or the making of a statement which is false or
misleading in any material particular constitutes a criminal
offence carrying a maximum fine of $100,000 or maximum prison
sentence of 2 years for each offence. Members and officers of a
company can also be personally liable for the offences of a
company. The Financial Secretary may further impose restrictions
on the transfer of the shares of any person convicted of an
offence.
Please note that this summary is for general information
purposes only. Specific legal advice should be sought when
appropriate.
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