Hong Kong Regulations

SECURITIES AND FUTURES (DISCLOSURE OF INTERESTS-SECURITIES BORROWING AND LENDING) RULES - SECT 2

Interpretation

(1) In these Rules, unless the context otherwise requires-

"approved lending agent" (核准借出代理人) means a corporation approved
by the Commission in accordance with section 8, in so far as the approval has
not been withdrawn under that section;

"collateral" (抵押品) means any money, securities, letter of credit or
guarantee deposited with, or otherwise provided by or on behalf of a borrower
of shares, to a lender of the shares (or deposited or provided in accordance
with the lender's instructions) under a relevant agreement, which is so
deposited or provided as security for the return of shares lent under the
relevant agreement;

"duty of disclosure" (披露責任) has the meaning assigned to it by section
308 of the Ordinance;

"equivalent shares" (相等股份) means shares of an identical description,
nominal value and amount to the particular shares lent by, or transferred or
delivered to, an approved lending agent or a regulated person (as the case may
be);

"listed corporation" (上市法團) has the meaning assigned to it by section
308 of the Ordinance;

"mark to market" (按照市值計算差額) means to adjust the valuation of
shares lent or collateral, being the subject of a relevant agreement, to
reflect their current market values;

"prescribed purpose" (訂明目的), in relation to shares lent or borrowed
under a relevant agreement, means-

   (a)  on-lending the shares, under the terms of another relevant  agreement,
        to a third party; or

   (b)  returning the shares, under the terms of the first-mentioned
        relevant agreement, to the same person from whom the shares were
        borrowed;

"qualified shares" (合資格股份) means shares-

   (a)  in which a person is interested;

   (b)  which the person has authorized an approved lending agent to lend as
        his agent; and

   (c)  which the approved lending agent is authorized to lend only under a
        relevant agreement, and, in the case where any of those shares have
        been lent by the approved  lending agent under a relevant agreement,
        shall include the shares so lent, only if the right of the
        approved lending agent under the relevant  agreement to require the
        return of the shares has not been extinguished;

"regulated person" (受規管人士) means-

   (a)  an intermediary licensed or registered under Part V of the Ordinance
        for Type 1 regulated activity; or

   (b)  a corporation which is licensed, registered or exempt in a place
        outside Hong Kong recognized for the purposes of these Rules by the
        Commission for an activity which in the opinion of the Commission is
        equivalent to Type 1 regulated activity;

"relevant agreement" (有關協議) means a securities borrowing and lending
agreement containing provisions under which-

   (a)  on delivery of the shares borrowed, the borrower of shares is required
        to deliver to the lender of the shares (or in accordance with the
        lender's instructions), collateral of a value exceeding the market
        value of the shares lent, as security for the return of the shares
        lent;

   (b)  the value of the collateral and the shares lent are marked to market
        on a daily basis, and the borrower is required to provide additional
        collateral if the value of the collateral is less than the market
        value of the shares lent; and

   (c)  the lender can require the return of the shares lent, and the borrower
        is obliged to return the shares, at any time on giving notice to the
        borrower, and such provisions are of the essence of the agreement;

"relevant event" (有關事件) for the purposes of these Rules, and for
determining a duty of disclosure and a duty to give a notification under Part
XV of the Ordinance pursuant to these Rules, means in a case under
section 3(3), 5(4) or (5) or 7(2), (3) or (4), the circumstances referred to
in such section;

"relevant share capital" (有關股本) has the meaning assigned to it by
section 308 of the Ordinance;

"relevant time" (有關時間) means the time of the occurrence of the
relevant  event;

"shares" (股份) means shares comprised in the relevant share capital of a
listed corporation and includes-

   (a)  an interest in the shares so comprised; and

   (b)  equivalent shares;

"short position" (淡倉) has the meaning assigned to it by section 308 of the
Ordinance.

(2) For the purposes of these Rules, a reference to shares lent shall be
construed as a reference to shares transferred or delivered by a person, under
a relevant agreement, to another person who has to return the shares to the
first-mentioned person, when required to do so, and a reference to shares
borrowed shall be construed accordingly.

"approved lending agent" (核准借出代理人)

"collateral" (抵押品)

"duty of disclosure" (披露責任)

"equivalent shares" (相等股份)

"listed corporation" (上市法團)

"mark to market" (按照市值計算差額)

"prescribed purpose" (訂明目的)

"qualified shares" (合資格股份)

"regulated person" (受規管人士)

"relevant agreement" (有關協議)

"relevant event" (有關事件)

"relevant share capital" (有關股本)

"relevant time" (有關時間)

"shares" (股份)

"short position" (淡倉)