On 10 June 2022, the Securities and Futures Commission (“SFC”) launched a consultation on proposed enforcement-related amendments to the Securities and Futures Ordinance (“SFO”) to allow more effective enforcement action.
The proposed amendments are as follows:-
- Injunctions and other orders: The SFC proposes that section 213 of the SFO be amended to provide a cause of action enabling the SFC to apply for injunctions and other orders under section 213 of the SFO after having exercised any of its powers under section 194 or 196 of the SFO against a regulated person, ; in particular, to seek orders to restore the parties to any transaction to the position in which they were before the transaction was entered into, and to pay damages to other persons.
- Offence to issue advertisements, invitations or documents relating to investments in certain cases: – Section 103(1) of the SFO prohibits the issue of advertisements and other documents containing prescribed content unless the issue has been authorised by the SFC under section 105 of the SFO. One of the exemptions is the professional investor exemption under Section 103(3)(k). The Court of Final Appeal in Hong Kong has previously given a wider constructions to the aforesaid exemption than was intended by the SFC’s underlying policy reason. The proposed amendment aims to address this.
- Insider dealing provisions: Given the interconnectivity of the global financial market, the SFC propose to broaden the scope of the insider dealing provisions of the SFC to cover (i) insider dealing perpetrated in Hong Kong with respect to securities listed on overseas stock markets or their derivatives; and (ii) insider dealing perpetrated outside of Hong Kong, if it involves any securities listed on a stock market operated by The Stock Exchange of Hong Kong Limited, or their derivatives.
The SFC is accepting comments on its proposed amendments by no later than 12 August 2022. Subject to feedback received, an amendment bill will be introduced into the Legislative Council to proceed with legislative process.
We will report back on the development when the consultation conclusion is published. In the meantime, please contact us if you need assistance with SFC-related matters and investigations.
For further information please contact:
Basil Hwang, Managing Partner, Hauzen