Hong Kong Ordinances

SECURITIES AND FUTURES ORDINANCE - SECT 23

Rules by recognized exchange company

(Past version on 01/04/2003).

(1) Without limiting any of its other powers to make rules, a recognized
exchange company may make rules for such matters as are necessary or
desirable-

   (a)  for the proper regulation and efficient operation of the market which
        it operates;

   (b)  for the proper regulation of its exchange participants and holders of
        trading rights;

   (c)  for the establishment and maintenance of compensation arrangements for
        the investing public.

(2) Without limiting the generality of subsection (1), a recognized exchange
company which may operate a stock market may make rules for-

   (a)  applications for the listing of securities and the requirements to be
        met before securities may be listed;

   (b)  the entering into of agreements between the recognized exchange
        company and other persons in connection with the listing of
        securities, and the enforcement of those agreements by the company;

   (c)  the cancellation and withdrawal of the listing of, and the suspension
        and resumption of dealings in, securities listed on the recognized
        stock market operated by the recognized exchange company;

   (d)  the imposition on any person of obligations to observe specified
        standards of conduct or to perform, or refrain from performing,
        specified acts reasonably imposed in connection with the listing or
        continued listing of securities;

   (e)  the admission of securities which are regulated in a jurisdiction
        outside Hong Kong to trading on a recognized stock market operated by
        the recognized exchange company;

   (f)  the penalties or sanctions which may be imposed by the recognized
        exchange company for a breach of rules made under this section;

   (g)  procedures or conditions which may be imposed, or circumstances which
        are required to exist, in relation to matters which are provided for
        in the rules made under this section;

   (h)  dealing with possible conflicts of interest that might arise where a
        relevant corporation or a relevant recognized exchange controller
        seeks to be or is a listed corporation;

   (i)  such other matters as are necessary or desirable for the proper and
        efficient operation and management of the recognized exchange company.

(3) The Commission may, by notice in writing served on a recognized exchange
company, request the company-

   (a)  to make rules specified in the request within the period specified in
        that request; or

   (b)  to amend rules referred to in the request in the manner and within the
        period specified in that request.

(4) Before making a request under subsection (3), the Commission shall consult
the Financial Secretary and the recognized exchange company to which the
request relates.

(5) Where the Commission is satisfied that a recognized exchange company has
not complied with a request referred to in subsection (3) within the period
specified in the request, the Commission may make or amend the rules specified
in the request instead of the company.

(6) The following persons or anyone who seeks to become any such person shall,
if required to do so by the rules of a recognized exchange company, make a
statutory declaration concerning such matters as may be specified in the
rules-

   (a)  an exchange participant or holder of trading rights of the company;

   (b)  a director of a corporation which uses the facilities of the company;

   (c)  a director of a corporation which is seeking to have any of its
        securities listed; and

   (d)  a director or adviser of a listed corporation.

(7) In making rules under this section, a recognized exchange company shall
take into account that a solicitor or certified public accountant acting in
his professional capacity in private practice has duties imposed by law and
under rules of professional conduct. (Amended 23 of 2004 s. 56)

(8) A recognized exchange company shall, in circumstances stipulated in
arrangements agreed from time to time between it and The Law Society of Hong
Kong or the Hong Kong Institute of Certified Public Accountants, refer
breaches of rules made under this section- (Amended 23 of 2004 s. 56)

   (a)  which are alleged to have been committed by a solicitor or certified
        public accountant in private practice; and (Amended 23 of 2004 s. 56)

   (b)  which may also constitute a breach of duty imposed by law or under
        rules of professional conduct, to The Law Society of Hong Kong or the
        Hong Kong Institute of Certified Public Accountants (as the case may
        be), for determination of whether to make a finding, impose a penalty
        or sanction or take other disciplinary action. (Amended 23 of 2004 s.
        56)

(9) For the purposes of subsections (7) and (8), a person shall be regarded as
acting in the capacity of a solicitor or certified public accountant in
private practice if in the course of private practice he provides legal or
professional accountancy services to a client, but shall not be regarded as so
acting where, in respect of a matter governed by rules made under this
section, he is also connected with the matter in any other capacity. (Amended
23 of 2004 s. 56)