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John | 16th May 2011, 13:25 PM | 法律英語 | (713 Reads)
The Securities and Futures and Companies Legislation (Structured Products Amendment) Ordinance 20112011年證券及期貨和公司法例(結構性產品修訂)條例was passed by the Legislative Council on 4 May 2011, and was gazatted and took effect in Hong Kong on 13 May 2011. 

中文提要

新法例引入結構性產品(structured products)的定義,將更多投資產品納入證監會發售投資監察制度(Offer of Investment Regime)的監管範圍,從而減少招股書監察制度(Prospectus Regime)和發售投資監察制度並行的情況,並取消讓面值500,000萬元或以上的債權證(debenture)豁免若干監管,但有關專業投資者的監管豁免仍然維持。

 In the past, there were three methods for making public offers of financial investments, namely: 

(1) Prospectus Regime

with a prospectus authorized by the Securities and Futures Commission (“SFC”), or, in the case of an offer of shares to be listed on the exchange, the Stock Exchange of Hong Kong (“SEHK”) for registration and registered with the Companies Registry under section 38 or 342 of the Companies Ordinance (“CO”);  

(2) Offer of Investment Regime

as an investment product authorized by the SFC under section 104 of the Securities and Futures Ordinace (“SFO”), with such advertisement, invitation or document as also authorized by the SFC under section 103 of the SFO; and  

(3) SFO (103(2)(a) exception, not commonly used

through intermediaries licensed by or registered with the SFC (essentially securities firms and banks), thereby qualifying for the exception in section 103(2) of. 

The prospectus regime is disclosure based and focuses on the prospectus and full disclosure of material information, while the offer of investment regime focuses both on the disclosure and the investment itself. 

The parallel running of the prospectus regime and the offer of investment regime allows (a) potential regulatory arbitrage and (b) products different in mere form (shares and debentures as securities in “legal form”, as contrasted with other investment products in “contractual form” like derivatives) being regulated significantly differently. 

The legislative intent of the current amendments is to bring all structured products (as newly defined in the CO and SFO) under the regulation of the offer of investment regime by (a) introducing a new definition of structured products (see below) and (b) amending section 103(2)(a) of the CO to end the application of section 103(2)(a) of the CO to structured products.   

As a result, the SFO offer of investment regime is expanded, while the CO prospectus regime will continue to apply to "vanilla" products (e.g. shares and debentures to be listed on the HKSE). 

In other words, the new legislation have unified the regulation of public offers of structured products under the SFO and reduced the parallel running of the two regimes.  

The new legislation serves to plug historic perceived "loopholes", which permitted sales of structured products (e.g., derivatives) in Hong Kong without authorization from the SFC as long as the structured products were in the form of debentures and (A) the debentures had denominations of HK$500,000 or greater, or (B) the debentures were offered to fewer than 50 investors (Section 3 of 17th Schedule of the CO). Going forward, the SFC will need to authorize such products and their offering documents (unless limited exemptions apply).  

This is a good policy choice given the public complaints and concerns, in the wake of the Lehmann Brothers’ mini-bond incident, about wrongful sale of investment products to lay investors. 

Certain terms of the Companies Ordinance and the Securities and Futures Ordinance have been amended, including adding

(A) a  new definition of "structured products" to both the CO and the SFO to cover the presently known kinds of structured products, i.e. (a) all securities the return or the amount due on which depends on (i) changes in the price, value or level of any type or combination of types [or any basket of more than one type of any combination of types] of securities, commodity, index, property, interest rate, currency exchange rate or futures contract; (ii) the occurrence or non-occurrence of any specified event or events (excluding an event or events relating only to the issuer or guarantor of the instrument or to both); (b) a regulated investment agreement; or (c) any interests, rights or property prescribed by notice as being a structured product.) and

(B) changes to the CO definition of "debenture" to make it clear that only debt securities are supposed to be covered by the definition (strangely, previously the definition was drafted so that arguably equity securities could also constitute debentures).  

The "professional investor" (who has a portfolio of $8 million or more) exemption (Section 1 of the CO and Section 103(3)(k) of the SFO) remains, so it still will be possible to offer these products to professional investors in Hong Kong without obtaining SFC authorization. 

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五區公投一周年,往事如作。

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