Hong Kong Ordinances

SECURITIES AND FUTURES ORDINANCE - SECT 51

Right of relevant office-holder to recover certain amounts arising from certain transactions

(Past version on 01/04/2003).



"prescribed event" (訂明事件)

"prescribed gain" (訂明收益)

(1) Where a clearing participant ("the first participant") enters into a
transaction for the sale or purchase of securities with another
clearing participant ("the second participant") at an undervalue or an
over-value in circumstances described in subsection (2), and thereafter a
relevant office-holder is acting in relation to-

   (a)  the second participant;

   (b)  the person who was, in respect of the transaction, the
principal of the second participant ("the second principal"); or

   (c)  the estate of the second participant or the second principal, then,
        unless a court otherwise orders, the relevant office-holder may
        recover, from the first participant, or the person who was, in respect
        of
the transaction, the principal of the first participant ("the first
principal"), an amount equal to the prescribed gain obtained under the
transaction by the first participant or the first principal (as the case may
be). The amount is recoverable even if the transaction may have been
discharged in accordance with the rules of a recognized clearing house and
replaced by a market contract.

(2) The circumstances referred to in subsection (1) in which a transaction is
entered into occur when-

   (a)  a prescribed event has occurred in relation to the second  participant
        or the second principal; or

   (b)  the first participant or the first principal knew or ought reasonably
        to have known-

        (i)    in the case of the first participant, that a prescribed event
               was likely to occur in relation to the second participant or
               the second  principal;

        (ii)   in the case of the first principal, that a prescribed event was
               likely to occur in relation to the second principal, and the
               event occurs within the period of 6 months immediately
               following the date on which the transaction was so entered
               into.

(3) In this section-

"prescribed event" (訂明事件), in relation to a second participant or a
second principal, means-

   (a)  grounds exist for a creditor to present a bankruptcy petition against
        the second participant or the second principal (as the case may be);

   (b)  the making of a statement in the specified form in respect of
        the second participant or the second principal (as the case may be)
        pursuant to section 228A(1) of the Companies Ordinance ( Cap 32);
        (Amended 28 of 2003 s. 129)

   (c)  a meeting of creditors summoned in relation to the second  participant
        or the second principal (as the case may be) pursuant to section 241
        of the Companies Ordinance ( Cap 32); or

   (d)  the presentation of a petition for the winding up of the second 
        participant or the second principal (as the case may be) by a court;

"prescribed gain" (訂明收益), in relation to a transaction referred to in
subsection (1), means the difference between-

   (a)  the market value of the securities the subject of the transaction; and

   (b)  the value of the consideration for the transaction, as at the time the
        transaction was entered into.