Electronic Submission of Disclosure of Interests Notices

The SFC proposes to mandate electronic submission of disclosure of interests notices to improve the timeliness of information dissemination to the public.

Under Part XV of the Securities and Futures Ordinance, substantial shareholders, directors and chief executives of listed companies have to submit to the stock exchange and the relevant listed companies notices of disclosure of interests (DI notices) (Note 1). They may submit the DI notices either by electronic means or in hard copy form by fax, post, or hand delivery.

Currently, over 80% of the notices submitted are in hard copy form. These need to be retyped by exchange staff for posting on HKEx’s website, resulting in delays in the release of potentially price sensitive information to the public. There have also been delays caused by posting of the notices from overseas, and by errors, omissions and illegible data in hard copy notices.

The initiative to mandate electronic submission is one of the SFC’s responses to meet the objective of the Report on the Economic Summit on China’s 11th Five Year Plan and the Development of Hong Kong to improve market efficiency. (Note 2)

In addition to the existing electronic form, the exchange will develop a user-friendly web-based system to facilitate electronic submission of DI notices. The exchange will then forward the notices to the relevant listed companies via email so the filers need not do that separately themselves.

In view of the exchange’s current practice of not disseminating potentially price sensitive information during market trading hours, the SFC proposes to retain the existing practice of updating the DI notices on HKEx’s website only after the market closes. The SFC will review the need for real time publication of DI notices when the exchange reviews its practice in relation to publication of price sensitive information.

The SFC is also inviting views from the public on whether there is a need to ease a listed company’s obligations to maintain its registers of interests. The SFC is considering whether specific requirements on how the registers are kept are necessary as long as the registers are kept up to date and in proper order.

Details of the above proposals are set out in a Consultation Paper on the Proposal to Mandate Electronic Submission of Disclosure of Interests Notices, which is available on the SFC website. The public are invited to submit written comments by 11 January 2008. Comments may be submitted as follows:

Email: e-DI@sfc.hk

On-line submission: http://www.sfc.hk

Fax: (852) 2521-7917

Mail:
SFC (Electronic Submission of DI Notices)
8/F, Chater House
8 Connaught Road
Central, Hong Kong

Attn: Supervision of Markets Division

A consultation conclusions paper will be published after the end of the consultation period.

Ends

1. The principal objective of the disclosure of interests regime is to improve market transparency by providing investors with more complete and better quality information regarding directors, chief executives, and substantial shareholders (persons holding 5% or more) in relation to their interests and short positions in shares of the listed company on a timely basis. Circumstances where a disclosure obligation arises include where a substantial shareholder changes his interest across a percentage point, or where a director or chief executive makes any changes to his interest regardless of the holding.

2. The Government sponsored report, released in January this year, recommended electronic filing and dissemination of information in several areas including DI notices.