SECURITIES (INSIDER DEALING) ORDINANCE
SECURITIES (INSIDER DEALING) ORDINANCE
(CHAPTER 395)
ARRANGEMENT OF SECTIONS
Section
PART I PRELIMINARY
1. short title
2. Interpretation
3. Application
4. "Connected with a corporation"
5. Possession of relevant information obtained in privileged capacity
6. "Dealing in securities"
7. "Take-over offer"
8. "Relevant information"
PART II INSIDER DEALING
9. When insider dealing takes place
10. Certain persons not to be held insider dealers
11. Trustees and personal representatives
12. Exercise of right to subscribe for or acquire securities
13. Duty of officers of corporation
14. Insider dealing not void or voidable
PART III INSIDER DEALING TRIBUNAL
15. Constitution of Tribunal Inquiries by Tribunal
16. Inquiries into insider dealing
17. Powers of Tribunal
18. Further powers of Tribunal to obtain information
19. Incriminating answers
20. Offences
21. Privileged information Report and orders of Tribunal
22. Report of Tribunal following inquiry
23. Orders etc. of Tribunal
24. Order against officer of corporation
25. Limitation on aggregate amount of penalties
26. Witnesses' expenses
27. Expenses of investigation and inquiry
28. Form and proof of order of Tribunal
29. Order of Tribunal may be registered in Court
30. Offence
PART IV APPEALS
31. Appeal to Court of Appeal
32. Powers of the Court of Appeal on appeal
33. Stay of execution on appeal
PART V MISCELLANEOUS
34. Offences by corporation, etc.
35. Limitation on commencement of proceedings
36. Chief Justice may make rules
37-44. (Omitted)
Whole document:
Schedule.
An Ordinance to amend the law relating to insider dealing in securities;
and for connected purposes.
[1 September 1991] L. N. 269 of 1991
PART I PRELIMINARY
1. Short title
This Ordinance may be cited as the Securities (Insider Dealing) Ordinance.
2. Interpretation
(1) In this Ordinance, unless the context otherwise requires-
"associate", in relation to a person entitled to exercise or control the
exercise of voting power in relation to a corporation, means-
(a) that person's spouse, reputed spouse, person co-habiting with that
person as a spouse, that person's brother, sister, parent, step-parent,
child (natural or adopted) or step-child;
(b) any corporation of which that person is a director;
(c) any person who is an employee or partner of that person;
(d) if that person is a corporation-
(i) any director of that corporation;
(ii) any related corporation of that corporation; and
(iii) any director or employee of any such related corporation; and
(e) if that person has with any other person an agreement or arrangement
with respect to the acquisition, holding or disposal of shares or other
interests in that corporation or under which they undertake to act
together in exercising their voting power in relation to it, that other
person;
"book or other document" includes-
(a) books of a banker;
(b) cheques, orders for the payment of money, bills of exchange, and
promissory notes in the possession or under the control of a banker;
(c) securities in the possession or under the control of a banker, whether
by way of pledge or otherwise;
(d) any document or record used in the ordinary course of business of a
bank;
(e) any record so used which is kept otherwise than in a legible form and
is capable of being reproduced in a legible form; and
(f) any accounts or deeds;
"Commission" means the Securities and Futures Commission established by
the Securities and Futures Commission Ordinance (Cap. 24);
"company" means a company as defined in section 2 (1) of the Companies
Ordinance (Cap. 32);
"controller", in relation to a corporation, means any person-
(a) in accordance with whose directions or instructions the directors of
the corporation or of another corporation of which it is a subsidiary are
accustomed to act; or
(b) who, either alone or with any associate, is entitled to exercise, or
control the exercise of, more than 33% of the voting power at general
meetings of the corporation or of another corporation of which it is a
subsidiary, and references in this Ordinance to "control" shall be
construed accordingly; "corporation" means any company or other body
corporate or an unincorporated body, incorporated or formed either in Hong
Kong or elsewhere;
"director" includes-
(a) any person occupying the position of director, by whatever name
called; and
(b) any person in accordance with whose directions or instructions the
directors of the corporation are accustomed to act;
"document" includes any register, book, record, tape recording, any form
of computer input or output, and any other document or similar material
(whether produced mechanically, electrically, or manually, or by any other
means whatsoever);
"High Court" means the High Court of Justice;
"holding company" means a corporation which is a holding company within
the meaning of section 2 of the Companies Ordinance (Cap. 32);
"inquiry" means an inquiry instituted under section 16;
"insider dealer" means a person who perpetrates any act which is an
insider dealing within the meaning of section 9 and also means a person
who is to be regarded as an insider dealer under section 16 (6);
"insider dealing" means an insider dealing within the meaning of section
9;
"listed securities" means securities that are listed on the Unified
Exchange at the time of any insider dealing in relation to those
securities;
"officer" in relation to a corporation includes a director, manager or
secretary, and in relation to an unincorporated body includes every member
of the governing body thereof; "related corporation", in relation to a
corporation, means-
(a) any corporation that is that corporation's subsidiary or holding
company or a subsidiary of that corporation's holding company;
(b) any corporation a controller of which is also a controller of that
corporation; "relevant share capital" means a corporation's issued share
capital of a class carrying rights to vote at general meetings of the
corporation;
"securities" means any shares, stocks, debentures, loan stocks, funds,
bonds, or notes of, or issued by, any body, whether incorporated or
unincorporated, or of any government or local government authority, and
includes-
(a) rights, options, or interests (whether described as units or
otherwise) in or in respect of any of the foregoing;
(b) certificates of interest or participation in, or temporary or interim
certificates for, receipts for, or warrants to subscribe to or purchase,
any of the foregoing; or
(c) any instruments commonly known as securities;
"subsidiary" means any corporation which is a subsidiary within the
meaning of section 2 of the Companies Ordinance (Cap. 32);
"Tribunal" has the meaning given to it in section 15;
"Unified Exchange" means the stock market established under section 27 of
the Stock Exchanges Unification Ordinance (Cap. 361).
(2) For the purpose of the definition of "controller", where a person is
entitled to exercise or control the exercise of 33% or more of the voting
power at general meetings of a corporation and that corporation is
entitled to exercise or control the exercise of any of the voting power at
general meetings of another corporation ("the effective voting power")
then the effective voting power at general meetings of that other
corporation is taken as exercisable by that person.
(3) A person shall not be deemed to be a person in accordance with whose
directions or instructions the directors of a corporation are accustomed
to act by reason only that the directors of the corporation act on advice
given by him in a professional capacity.
(4) In this Ordinance securities are deemed to be listed on the Unified
Exchange notwithstanding that dealings in such securities have been
suspended.
(5) In this Ordinance a reference to an interest in securities is to be
read as including an interest of any kind whatsoever in the securities;
and accordingly there are to be disregarded any restraints or restrictions
to which the exercise of any right attached to the interest may be
subject.
3. Application
This Ordinance shall not have effect with respect to an insider dealing in
relation to the listed securities of a corporation which has taken place
before the commencement of this Ordinance.
4. "Connected with a corporation"
(1) A person is connected with a corporation for the purposes of section 9
if, being an individual-
(a) he is a director or employee of that corporation or a related
corporation; or
(b) he is a substantial shareholder in the corporation or a related
corporation; or
(c) he occupies a position which may reasonably be expected to give him
access to relevant information concerning the corporation by virtue of-
(i) any professional or business relationship existing between himself (or
his employer or a corporation of which he is a director or a firm of which
he is a partner) and that corporation, a related corporation or an officer
or substantial shareholder in either of such corporations; or
(ii) his being a director, employee or partner of a substantial
shareholder in the corporation or a related corporation; or
(d) he has access to relevant information in relation to the corporation
by virtue of his being connected (within the meaning of paragraph (a), (b)
or (c)) with another corporation, being information which relates to any
transaction (actual or contemplated) involving both those corporations or
involving one of them and the listed securities of the other or to the
fact that such transaction is no longer contemplated; or
(e) he was at any time within the 6 months preceding any dealing in
relation to listed securities within the meaning of section 9 a person
connected with the corporation within the meaning of paragraph (a), (b),
(c) or (d).
(2) A corporation is a person connected with a corporation for the
purposes of section 9 so long as any of its directors or employees is a
person connected with that other corporation within the meaning of
subsection (1).
(3) In subsection (1), "substantial shareholder" in relation to a
corporation means a person who has an interest in the relevant share
capital of that corporation which has a nominal value equal to or more
than 10% of the nominal value of the relevant share capital of that
corporation.
5. Possession of relevant information obtained in privileged capacity
(1) A public officer or a member or employee (whether such member or
employee is temporary or permanent, paid or unpaid) of any body referred
to in subsection (2), who in his capacity as such receives relevant
information concerning a corporation shall be deemed to be a person
connected with that corporation for the purposes of section 9.
(2) The bodies referred to in subsection (1) are-
(a) the Executive Council;
(b) the Legislative Council;
(c) the Futures Exchange Company, Stock Exchange Company or any clearing
house;
(d) any board, commission, committee or other body appointed by or on
behalf of the Governor or the Governor in Council under any Ordinance;
(e) any body corporate established or incorporated by Ordinance; and
(f) any body corporate specified by the Financial Secretary by notice
published in the Gazette.
(3) In this section-
"clearing house" means a clearing house within the meaning of section 2
(1) of the Commodities Trading Ordinance (Cap. 250) or authorized under
any other Ordinance to carry on business as a clearing house in respect of
securities;
"Futures Exchange Company" means the Exchange Company within the meaning
of section 2 (1) of the Commodities Trading Ordinance (Cap. 250);
"Stock Exchange Company" means the Exchange Company within the meaning of
section 2 (1) of the Stock Exchanges Unification Ordinance (Cap. 361).
(4) In the case of a body referred to in subsection (2) which has no
members the reference in subsection (1) to a member shall be construed as
a reference to a member of the governing body thereof.
6. "Dealing in securities"
For the purposes of this Ordinance, a person deals in securities if(whether as principal or agent) he buys, sells, exchanges or subscribes
for, or agrees to buy, sell, exchange or subscribe for, any securities or
acquires or disposes of, or agrees to acquire or dispose of, the right to
buy, sell, exchange or subscribe for, any securities.
7. "Take-over offer"
In this Ordinance, "take-over offer for a corporation" means an offer made
to all the holders (or all the holders other than the person making the
offer and his nominees) of the shares in the corporation to acquire those
shares or a specified proportion of them, or to all the holders (or all
the holders other than the person making the offer and his nominees) of a
particular class of those shares to acquire the shares of that class or a
specified proportion of them.
8. "Relevant information"
In this Ordinance "relevant information" in relation to a corporation
means specific information about that corporation which is not generally
known to those persons who are accustomed or would be likely to deal in
the listed securities of that corporation but which would if it were
generally known to them be likely materially to affect the price of those
securities.
PART II INSIDER DEALING
9. When insider dealing takes place
(1) Insider dealing in relation to the listed securities of a corporation
takes place-
(a) when a person connected with a corporation who is in possession of
information which he knows is relevant information in relation to that
corporation deals in any listed securities of that corporation (or in the
listed securities of a related corporation) or counsels or procures
another person to deal in such listed securities knowing or having
reasonable cause to believe that such person would deal in them;
(b) when a person who is contemplating or has contemplated making (whether
with or without another person) a take-over offer for a corporation and
who knows that the information that the offer is contemplated or is no
longer contemplated is relevant information in relation to that
corporation, deals in the listed securities of that corporation (or in the
listed securities of a related corporation) or counsels or procures
another person to deal in those listed securities, otherwise than for the
purpose of such take-over;
(c) when relevant information in relation to a corporation is disclosed
directly or indirectly, by a person connected with that corporation, to
another person and the first-mentioned person knows that the information
is relevant information in relation to the corporation and knows or has
reasonable cause for believing that the other person will make use of the
information for the purpose of dealing, or counselling or procuring
another to deal, in the listed securities of that corporation (or in the
listed securities of a related corporation);
(d) when a person who is contemplating or has contemplated making (whether
with or without another person) a take-over offer for a corporation and
who knows that the information that the offer is contemplated or is no
longer contemplated is relevant information in relation to that
corporation, discloses that information, directly or indirectly, to
another person and the first-mentioned person knows or has reasonable
cause for believing that the other person will make use of the information
for the purpose in dealing, or in counselling or procuring another to
deal, in the listed securities of that corporation (or in the listed
securities of a related corporation);
(e) when a person who has information which he knows is relevant
information in relation to a corporation which he received (directly or
indirectly) from a person-
(i) whom he knows is connected with that corporation; and
(ii) whom he knows or has reasonable cause to believe held that
information by virtue of being so connected,
deals in the listed securities of that corporation (or in the listed
securities of a related corporation) or counsels or procures another
person to deal in those listed securities;
(f) when a person who has received (directly or indirectly) from a person
whom he knows or has reasonable cause to believe is contemplating or is no
longer contemplating a take-over offer for a corporation, information to
that effect and knows that such information is relevant information in
relation to that corporation, deals in the listed securities of that
corporation (or in the listed securities of a related corporation) or
counsels or procures another person to deal in those listed securities.
(2) An insider dealing in relation to the listed securities of a
corporation also takes place when a person who is knowingly in possession
of relevant information in relation to that corporation in any of the
circumstances described in subsection (1) -
(a) counsels or procures any other person to deal in the listed securities
of that corporation (or in the listed securities of a related corporation)
in the knowledge or with reasonable cause to believe that, that person
would deal in those listed securities outside Hong Kong on any stock
exchange other than the Unified Exchange; or
(b) discloses that relevant information to any other person in the
knowledge or with reasonable cause to believe that, that or some other
person will make use of that information for the purpose of dealing, or of
counselling or procuring any other person to deal, in the listed
securities of that corporation (or in the listed securities of a related
corporation) outside Hong Kong on any stock exchange other than the
Unified Exchange.
10. Certain persons not to be held insider dealers
(1) A person who enters into a transaction which is an insider dealing
shall not be held to be an insider dealer if he establishes that he
entered into the transaction-
(a) for the sole purpose of the acquisition of qualification shares
required by him as a director or intending director of any corporation;
(b) in the bona fide performance of an underwriting agreement with respect
to the securities to which the transaction relates; or
(c) in the bona fide exercise of his functions as a liquidator, receiver
or trustee in bankruptcy.
(2) A corporation which enters into a transaction which is an insider
dealing shall not be held to be an insider dealer if, although relevant
information concerning the corporation whose securities are the subject of
the insider dealing is in the possession of a director or employee of the
first corporation it establishes that-
(a) the decision to enter into the transaction was taken on its behalf by
a person other than that director or employee; and
(b) arrangements were then in existence for securing that the information
was not communicated to that person and that no advice with respect to the
transaction was given to him by a person in possession of the information;
and
(c) the information was not in fact so communicated and advice was not in
fact so given.
(3) A person who enters into a transaction which is an insider dealing
shall not be held to be an insider dealer if he establishes that he
entered into the transaction otherwise than with a view to the making of a
profit or the avoiding of a loss (whether for himself or another) by the
use of relevant information.
(4) A person who, as agent for another, enters into a transaction which is
an insider dealing shall not be held to be an insider dealer if he
establishes that he entered into the transaction as agent for another
person and he did not select or advise on the selection of the securities
to which the transaction relates.
(5) A person who enters into a transaction which is an insider dealing
shall not be held to be an insider dealer if he establishes-
(a) that the other party to the transaction knew, or ought reasonably to
have known, of the relevant information in question before entering into
the transaction; and
(b) that the transaction was neither recorded on the Unified Exchange nor
required to be notified to the Unified Exchange under its rules.
(6) A person who enters into a transaction which is an insider dealing in
respect of the listed securities of a corporation shall not be held to be
an insider dealer, other than as a person who has counselled or procured
another person to deal in listed securities, if he establishes that the
other party to the transaction knew or ought reasonably to have known that
he was a person connected with that corporation.
(7) A person who enters into a transaction which is an insider dealing
shall not be held to be an insider dealer if he establishes that the
transaction is a market contract within the meaning of section 2 of the
Securities (Clearing Houses) Ordinance (Cap. 420). (Added 68 of 1992 s.
20)
11. Trustees and personal representatives
A trustee or personal representative who enters into a transaction which
is an insider dealing shall not be held to be an insider dealer if he
establishes that he acted on advice obtained bona fide from a person who-
(a) appeared to him to be an appropriate person from whom to seek such
advice; and
(b) did not appear to him to be a person who would be held to be an
insider dealer if he had entered into such transaction.
12. Exercise of right to subscribe for or acquire securities
A person who exercises a right to subscribe for or otherwise acquire
securities of a corporation shall not be held to be an insider dealer if
he establishes that the right was granted to him or was derived from
securities that were held by him before he became aware of any relevant
information concerning the corporation.
13. Duty of officers of corporation
It shall be the duty of every officer of a corporation to take all such
measures as may from time to time be reasonable in all the circumstances
for the purpose of ensuring that proper safeguards exist to prevent the
corporation from perpetrating any act which would cause it to be
identified by the Tribunal as an insider dealer. (Amended 69 of 1991 s.2)
14. Insider dealing not void or voidable
No transaction shall be void or voidable by reason only that it is an
insider dealing.
PART III INSIDER DEALING TRIBUNAL
15. Constitution of Tribunal
(1) There shall continue to be a Tribunal to be known as the Insider
Dealing Tribunal ("the Tribunal") which shall, in accordance with section
22 (1), conduct any inquiry instituted under section 16.
(2) The Tribunal shall consist of a chairman and 2 other members all of
whom shall be appointed by the Governor.
(3) The chairman of the Tribunal shall be a judge and the other 2 members
shall not be public officers.
(4) A member of the Tribunal other than the chairman may be paid, as a fee
for his services, such amount as the Financial Secretary thinks fit, and
that amount shall be charged on the general revenue.
(5) The Schedule shall have effect in relation to the appointment of
members and temporary members of the Tribunal, procedural and other
matters concerning an inquiry and the Tribunal and its sittings.
Inquiries by Tribunal
16. Inquiries into insider dealing
(1) If it appears to the Financial Secretary, whether following
representations by the Commission or otherwise, that insider dealing in
relation to the listed securities of a corporation has taken place or may
have taken place, he may in accordance with this section require the
Tribunal to inquire into the matter.
(2) An inquiry shall be instituted by the Financial Secretary by notice in
writing to the chairman of the Tribunal containing such particulars as are
sufficient to define the terms of reference of the inquiry.
(3) The object of an inquiry shall be to determine, within the terms of
reference of the inquiry as defined under subsection (2) -
(a) whether insider dealing in relation to the listed securities of a
corporation has taken place;
(b) the identity of every insider dealer; and
(c) the amount of any profit gained or loss avoided as a result of the
insider dealing.
(4) Where the Tribunal identifies a corporation as an insider dealer under
subsection (3) (b) the Tribunal may also identify any officer of that
corporation to whose breach of the duty imposed on him by section 13 the
insider dealing in question is directly or indirectly attributable.
(5) The Tribunal shall not identify any person as an insider dealer or as
a person to whose breach of the duty imposed on him by section 13 the
insider dealing by a corporation may be directly or indirectly
attributable without first giving such person an opportunity of being
heard.
(6) Where the Tribunal identifies a corporation as an insider dealer under
subsection (3) (b), if the insider dealing took place with the knowledge,
consent or connivance of any officer of the corporation then such officer
as well as the corporation shall be regarded as having been so identified.
17. Powers of Tribunal
The Tribunal may, for the purpose of an inquiry under this Ordinance-
(a) receive and consider any material whether by way of oral evidence,
written statements, documents or otherwise, notwithstanding that such
material would not be admissible in evidence in civil or criminal
proceedings in a court of law;
(b) by notice in writing signed by the chairman require any person to
attend before it at any sitting and to give evidence and produce any
article, book or other document in his possession or under his control
relating to the subject matter of the inquiry;
(c) administer oaths and affirmations;
(d) examine on oath, affirmation or otherwise any person attending before
it and may require such person to answer all questions put by or with the
consent of the Tribunal;
(e) make an order prohibiting any person from disclosing any material
received by the Tribunal;
(f) make an order prohibiting the publication or disclosure of any
material received by the Tribunal at any sitting or part thereof held in
private;
(g) determine the manner in which any material mentioned in paragraph (a)
shall be received;
(h) subject to any rules made by the Chief Justice under section 36,
determine the procedure to be followed at an inquiry;
(i) exercise such other powers as may be necessary or ancillary to the
carrying out of its functions under this Ordinance.
18. Further powers of Tribunal to obtain information
(1) Where it appears to the Tribunal that it would assist the conduct of
an inquiry to do so, the Tribunal may in writing authorize the Commission
to exercise all or any of the powers set out in subsection (2) and to
provide to the Tribunal the information so obtained which is relevant to
the inquiry.
(2) The powers referred to in subsection (1) are-
(a) to inspect any book or other document of any person where the Tribunal
has reasonable grounds to believe or suspect that such book or other
document may contain information relevant to the inquiry;
(b) to make copies of and take extracts from any book or other document
referred to in paragraph (a) and, subject to subsection (3), to take
possession of such book or other document for such period (not exceeding 2
days) as may be necessary for the purpose of doing so;
(c) to require any person to give within a specified time, any explanation
or particulars concerning any book or other document referred to in
paragraph (a); (d) in writing to require any person to give within a
specified time, information as to whether or not there is at any premises
any book or other document which may contain information relevant to the
inquiry, and particulars as to such premises or book or other document;
(e) to require that any information or particulars furnished pursuant to
this section be verified by statutory declaration and to take any such
declaration.
(3) Where the Commission takes possession of any book or other document
under subsection (2) (b) it shall, subject to such reasonable conditions
as to security or otherwise as it may impose, permit a person who would be
entitled to inspect it if it were not in the possession of the Commission
to inspect it, and to make copies and take extracts, at all reasonable
times.
(4) A person shall produce every book or other document in his custody or
under his control, the inspection whereof is sought by the Commission
under this section.
(5) Any person who is required under this section to disclose any
information or give any explanation or particulars shall comply with that
requirement so far as it lies within his power to do so and shall, if
requested, verify the information, particulars or explanation by statutory
declaration.
(6) A person who-
(a) without reasonable excuse contravenes subsection (4) or (5);
(b) without reasonable excuse, in purported compliance with subsection (4)
or (5), makes any statement which he knows to be false or misleading, or
recklessly makes any statement which is false or misleading, in either
case in a material particular;
(c) obstructs the Commission in the exercise of its powers under this
section; or
(d) destroys, falsifies, conceals or otherwise disposes of, or causes or
permits the destruction, falsification, concealment or disposal of, any
book or other document which is relevant to an inquiry, commits an offence
and is liable on conviction to a fine of $100,000 and to imprisonment for
6 months.
(7) It shall be a defence to a charge under subsection (6) (d) if the
person charged proves that he had no intention of concealing from the
Tribunal or the Commission facts capable of being disclosed by the book or
other document.
19. Incriminating answers
A person shall be obliged to answer questions put to him at an inquiry,
but if the answers might tend to incriminate him, and he so claims before
answering the question, neither the question nor the answer shall be
admissible in evidence against him in criminal proceedings other than
proceedings for an offence under section 20 or under section 36 of the
Crimes Ordinance (Cap. 200), or for perjury in respect of the answer but
shall be admissible for all the purposes of this Ordinance; the chairman
of the Tribunal shall explain to every person giving evidence before the
Tribunal the limitation imposed by this section in respect of the
admissibility in evidence of any question and any answer given by him.
20. Offences
(1) Any person who, without reasonable excuse-
(a) refuses or fails-
(i) to attend and give evidence at an inquiry when required to do so by
the Tribunal under this Ordinance;
(ii) to take an oath or make an affirmation at an inquiry on being
required to do so by the Tribunal;
(iii) to answer truthfully and fully questions put to him at an inquiry
by, or with the consent of, a member of the Tribunal;
(iv) to produce any article or book or other document in his possession or
under his control, which he is required by the Tribunal to produce at an
inquiry;
(v) to comply with any lawful order of the Tribunal;
(b) wilfully disrupts the proceedings at an inquiry or otherwise
misbehaves during any sitting of the Tribunal;
(c) having been required to attend before the Tribunal at an inquiry,
leaves the place where the inquiry is being held without the permission of
the Tribunal, commits an offence and is liable to a fine of $100,000 and
to imprisonment for 6 months.
(2) Any person who-
(a) wilfully hinders or deters any person from attending, giving evidence
or producing any article or book or other document;
(b) threatens, insults or causes any loss to be suffered by any person who
has attended before the Tribunal, on account of such attendance;
(c) threatens, insults or causes a loss to be suffered by any member of
the Tribunal at any time on account of the performance of his duties as a
member;
(d) publishes or otherwise discloses any material which the Tribunal had
prohibited him from publishing or disclosing;
(e) publishes or otherwise discloses any material received by the Tribunal
at any sitting or part thereof held in private, in contravention of an
order made under section 17 (f), commits an offence and is liable on
conviction upon indictment to a fine of $200,000 and to imprisonment for 1
year.
(3) It shall be a defence to a charge under subsection (2) (e) for the
person charged to prove that he did not know and had no reason for knowing
that the Tribunal had made an order prohibiting the publication or
disclosure of such material.
21. Privileged information
(1) Nothing in this Ordinance requires-
(a) the disclosure by an authorized institution acting as the banker or
financial adviser of a person whose conduct is the subject of an inquiry,
of information as to the affairs of any of its customers other than that
person;
(b) the disclosure by any person of any information (except if he is a
legal practitioner, the name and address of a client) or the production by
any person of a book or other document which he would in an action in the
High Court be entitled to refuse to disclose or produce on grounds of
legal professional privilege, or authorize the taking of possession of any
such book or other document which is in the person's possession.
(2) Nothing in this Ordinance shall be construed as affecting section 4 of
the Inland Revenue Ordinance (Cap. 112).
(3) In this section "authorized institution" means an authorized
institution within the meaning of the Banking Ordinance (Cap. 155).
Report and orders of Tribunal
22. Report of Tribunal following inquiry
(1) Where an inquiry is instituted under section 16 the Tribunal shall
conduct the inquiry in accordance with this Ordinance, and shall prepare
and issue a written report thereon.
(2) A report prepared and issued by the Tribunal under this section shall
contain the reasons for its determinations under section 16 (3) and (4)
and the reasons for any order made under section 23, 24 (1) or 27.
(3) The Tribunal shall issue its report in the following manner-
(a) by first furnishing a copy to the Financial Secretary; and
(b) thereafter, except where any sitting of the Tribunal or any part
thereof has been held in private, by-
(i) causing the report to be published in such manner that copies thereof
are available to the public;
(ii) furnishing a copy, so far as is reasonably practicable, to any person
whose conduct was directly in question in the inquiry;
(iii) furnishing a copy to the Commission; and
(iv) where a person identified in the report as an insider dealer or as an
officer of a corporation to whose breach of the duty imposed on him by
section 13 the insider dealing is directly or indirectly attributable, is
a member of a professional body, furnishing a copy to that professional
body.
(4) Where any sitting of the Tribunal or any part thereof has been held in
private, the Financial Secretary may, if he is of the opinion that it is
in the public interest to do so, cause the whole or any part of such
report to be made available to the public in such manner as he may direct.
(5) No person shall be liable to any civil or criminal proceeding by
reason of the publication by him of a true and accurate account or a fair
and accurate summary of any report of the Tribunal published under
subsection (3) (b) or subsection (4).
23. Orders etc. of Tribunal
(1) At the conclusion of an inquiry, where a person has been identified in
a written report prepared under section 22 (1) as an insider dealer, the
Tribunal may in respect of such person make any or all of the following
orders-
(a) an order that that person shall not, without the leave of the High
Court, be a director or a liquidator or a receiver or manager of the
property of a listed company or any other specified company or in any way,
whether directly or indirectly, be concerned or take part in the
management of a listed company or any other specified company for such
period (not exceeding 5 years) as may be specified in the order;
(b) an order that that person pay to the Government an amount not
exceeding the amount of any profit gained or loss avoided by that person
as a result of the insider dealing;
(c) an order imposing on that person a penalty of an amount not exceeding
three times the amount of any profit gained or loss avoided by any person
as a result of the insider dealing.
(2) The Tribunal shall not make an order in respect of any person under
subsection (1) without first giving the person, and, in the case of a
person that is a corporation, an officer concerned in the management of
the corporation, an opportunity of being heard.
(3) In subsection (1) (a)
"listed company" means a company in the case of which securities are
listed on the United Exchange.
(4) For the purposes of subsection (1) (a) a company may be specified by
name or by reference to a relationship with any other company.
(5) Every order made in respect of any person under subsection (1) or
under section 24 (1) shall be notified by the Tribunal in writing to that
person and shall take effect from the date on which it is notified to him,
or such later date as is specified in the notice, notwithstanding that an
appeal against the decision may be made under section 31 or that the time
limited for the making of such an appeal has not expired.
24. Order against officer of corporation
(1) Where a corporation has been identified in a written report made under
section 22 (1) as an insider dealer and the insider dealing is directly or
indirectly attributable to a breach by any officer of the corporation of
his duty under section 13, then, although such officer has not been
identified as an insider dealer in a report made under section 22 or an
order made under section 23, he may, if the Tribunal thinks it
appropriate, have any such order as is mentioned in section 23 (1) (a) or
(c) in respect of an insider dealer made against him.
(2) The Tribunal shall not make an order in respect of an officer of a
corporation under subsection (1) without first giving such officer an
opportunity of being heard. (Amended 69 of 1991 s. 3)
25. Limitation on aggregate amount of penalties
Where a penalty is imposed on more than one person under section 23 (1)
(c) or under section 24 (1), or under both sections 23 (1) (c) and 24 (1)
the aggregate amount of the penalties imposed shall not exceed three times
the profit gained or loss avoided by all persons as a result of the
insider dealing.
26. Witnesses' expenses
(1) Every witness giving evidence or attending to give evidence at an
inquiry shall be entitled in the discretion of the Tribunal to such sum
for his expenses and loss of time as the Tribunal may determine.
(2) All such witnesses' expenses shall be paid out of moneys appropriated
for that purpose by the Legislative Council.
27. Expenses of investigation and inquiry
At the conclusion of an inquiry, the Tribunal may order any person who has
been identified as an insider dealer to pay to the Government such sums as
it thinks fit in respect of the expenses of and incidental to the inquiry
and any investigation of his conduct or affairs made for the purposes of
the inquiry.
28. Form and proof of order of Tribunal
(1) Every order made by the Tribunal shall be reduced to writing and
signed by the chairman of the Tribunal when the order is made.
(2) Every document purporting to be an order of the Tribunal and to be
signed by the chairman shall, in the absence of proof to the contrary, be
taken to be an order of the Tribunal duly made, without proof of its
making, or proof of signature, or proof that the person signing the order
was in fact the chairman.
29. Order of Tribunal may be registered in Court
An order of the Tribunal may be registered by the Tribunal, in such manner
as may be prescribed, in the High Court and shall, on such registration,
become for all purposes an order of the High Court made within the
jurisdiction of the High Court.
30. Offence
Any person who contravenes an order made under section 23 (1) (a) commits
an offence and is liable-
(a) on conviction on indictment to a fine of $1,000,000 and to
imprisonment for 2 years;
(b) on summary conviction to a fine of $100,000 and to imprisonment for 6
months.
PART IV APPEALS
31. Appeal to Court of Appeal
(1) Any person named in a report of the Tribunal who is dissatisfied with
any finding or determination of the Tribunal may appeal against such
finding or determination-
(a) on a point of law; or
(b) with the leave of the Court of Appeal, on a question of fact, to the
Court of Appeal.
(2) Any person against whom an order under section 23, 24 or 27 has been
made may appeal against such order to the Court of Appeal.
32. Powers of the Court of Appeal on appeal
(1) In the case of an appeal under section 31 (1), the Court of Appeal
may-
(a) allow the appeal;
(b) dismiss the appeal; or
(c) remit the matter to the Tribunal with such directions as it thinks
fit, which may include a direction to the Tribunal to conduct the inquiry
afresh for the purpose of determining any question specified by the Court
of Appeal.
(2) In the case of an appeal under section 31 (2) the Court of Appeal may-
(a) quash the order appealed against; or
(b) in place of such order substitute such other order as it thinks
appropriate (whether more or less onerous) being an order that the
Tribunal had power to make against the appellant.
(3) In the case of any appeal under section 31 the Court of Appeal may
make such order as to costs as it thinks appropriate.
33. Stay of execution on appeal
Neither the lodging of an appeal nor the filing of an application for
leave to appeal under section 31 shall operate as a stay of execution of
an order of the Tribunal unless the Court of Appeal otherwise orders and
any stay of execution may be subject to such conditions as to costs,
payment of money into the Tribunal or otherwise as the Court of Appeal may
think fit.
PART V MISCELLANEOUS
34. Offences by corporation, etc.
(1) Where an offence under this Ordinance committed by a corporation is
proved to have been committed with the consent or connivance of, or to be
attributable to any neglect on the part of, any officer of the
corporation, or any person who was purporting to act as an officer of the
corporation, he, as well as the corporation, shall be guilty of the
offence and shall be liable to be proceeded against and punished
accordingly.
(2) Where an offence committed by a partner in a partnership is proved to
have been committed with the consent or connivance of, or to be
attributable to any neglect on the part of, any other partner of the
partnership, that other partner shall be guilty of the offence and liable
to be proceeded against and punished accordingly.
35. Limitation on commencement of proceedings
An information or complaint relating to an offence under this Ordinance
shall be laid within 2 years from the commission of the offence.
36. Chief Justice may make rules
The Chief justice may make rules-
(a) regulating the procedure for-
(i) applying for leave to appeal, and the hearing of such applications,
under section 31;
(ii) the hearing of appeals made under section 31;
(iii) the registration of orders of the Tribunal in the High Court;
(b) providing for matters of procedure relating to an inquiry which are
not provided for in this Ordinance;
(c) prescribing anything which is to be or may be prescribed;
(d) prescribing the fees applicable to an inquiry.
37-44. (Omitted)
SCHEDULE [ss. 15 & 23]
INSIDER DEALING TRIBUNAL
1. In this Schedule, unless the context otherwise requires-
"chairman" means the chairman of the Tribunal;
"inquiry" means an inquiry under section 16;
"member" means a member of the Tribunal;
"Tribunal" means the Tribunal referred to in section 15.
APPOINTMENT OF MEMBERS
2. Subject to paragraphs 4 and 5, the chairman shall be appointed for a
term of 3 years but may from time to time, so long as he remains qualified
under section 15 (3), be reappointed.
3. The other 2 members shall be appointed to act in relation to any
specified inquiry or inquiries and any such member may be so appointed
more than once.
4. A member may at any time resign his office by notice in writing to the
Governor.
5. The chairman shall vacate his office if at any time he ceases to hold
office as a judge.
6. A member other than the chairman may be removed from office by the
Governor for incapacity, bankruptcy, neglect of duty or misconduct proved
to the satisfaction of the Governor.
7. If an inquiry has been commenced by the Tribunal but not completed
before the expiry of the chairman's term of office or before the
resignation from or vacation of office by a member takes effect, the
Governor may authorize the chairman or member to continue as chairman or a
member of the Tribunal for the purpose of completing that inquiry.
TEMPORARY MEMBERS
8. The Governor may appoint a temporary member of the Tribunal to act in
place of any member who is precluded by illness, absence from Hong Kong or
any other cause from exercising his functions or who considers it improper
or undesirable that he should exercise his functions in relation to any
specified matter.
9. A temporary member who is appointed to act in place of the chairman
shall be a person who holds office as a judge and a temporary member who
is appointed to act for an ordinary member shall not be a person who would
be disqualified under section 15 (3) from appointment as a member.
10. A temporary member who acts in place of the chairman or other member
shall be deemed for all purposes to be the chairman or other member of the
Tribunal as the case may be.
SITTINGS AND REPRESENTATION
11. The chairman shall convene such sittings of the Tribunal as he thinks
necessary for the efficient performance of its functions.
12. The chairman shall preside at all sittings of the Tribunal and no
sitting shall be held unless the other 2 members are also present.
13. Every question before the Tribunal shall be determined by the opinion
of the majority of the members except a question of law which shall be
determined by the chairman.
14. Every sitting of the Tribunal shall be held in public unless the
Tribunal considers that in the interests of justice a sitting or any part
thereof should not be held in public in which case it may hold the sitting
or part thereof in private.
15. The hearing of an application to the Tribunal to hold a sitting or
part thereof in private shall be held in private.
16. A person whose conduct is the subject of an inquiry or who is
implicated, or concerned in the subject matter of an inquiry shall be
entitled to be present in person at any sitting of the Tribunal relating
to that inquiry and to be represented by a barrister or solicitor.
17. For the purposes of paragraph 16 the Tribunal shall determine whether
the conduct of any person is the subject of the inquiry or whether a
person is in any way implicated or concerned in the subject matter of the
inquiry.
18. The Tribunal may appoint a legal officer nominated by the Attorney
General, a barrister or a solicitor to act as counsel for the Tribunal.
19. In paragraph 16 "sitting" does not include any meeting of the Tribunal
which is held for the purpose of deliberating on any question before the
Tribunal.
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