Hong Kong Regulations

SECURITIES AND FUTURES (DISCLOSURE OF INTERESTS-SECURITIES BORROWING AND LENDING) RULES - SECT 5

Exclusion for an approved lending agent and a person controlling an approved lending agent

(1) Subject to subsection (5), an approved lending agent who would otherwise
come under a duty of disclosure under section 310 of the Ordinance in the
circumstances specified in section 313(1) of the Ordinance is not under such a
duty in the circumstances specified in subsection (3).

(2) Subject to subsection (5), a person taken under section 316(2) of the
Ordinance to be interested in shares in which an approved lending  agent is
interested who would otherwise come under a duty of disclosure under section
310 of the Ordinance in the circumstances specified in section 313(1) of the
Ordinance is not under such a duty in the circumstances specified in
subsection (3).

(3) The circumstances referred to in subsections (1) and (2), in which the
approved lending agent or person (as the case may be) is not under a
duty of disclosure, are those where-

   (a)  qualified shares are transferred or delivered by the person to the
        approved lending agent;

   (b)  shares held by, or on behalf of, the approved lending agent become
        qualified shares when the person referred to in paragraph (a)
        authorizes the approved lending agent to lend the shares;

   (c)  qualified shares are lent by the approved lending agent to a borrower
        under a relevant agreement;

   (d)  qualified shares lent by the approved lending agent are returned to
        the approved lending agent by a borrower under a relevant  agreement;

   (e)  qualified shares held by, or on behalf of, the approved lending  agent
        cease to be qualified shares; or

   (f)  qualified shares are returned to the person referred to in paragraph
        (a) by the approved lending agent.

(4) (a) In the circumstances specified in-

        (i)    subsection (3)(a) or (b), the approved lending agent and the
               person referred to in subsection (2)(if any) are taken, for the
               purposes of Divisions 2 to 5 of Part XV of the Ordinance, to
               have acquired an interest in the shares at the relevant time;
               or

        (ii)   subsection (3)(e) or (f), the approved lending agent and the
               person referred to in subsection (2)(if any) are taken, for the
               purposes of Divisions 2 to 5 of Part XV of the Ordinance, to
               have ceased to have an interest in the shares at the
               relevant time; and

   (b)  in the circumstances where the approved lending agent ceases to have a
        subsisting right, under the relevant agreement under which
        qualified shares were lent, to require the return of the shares, the
        approved lending agent and the person referred to in subsection (2)(if
        any) are taken, for the purposes of Divisions 2 to 5 of Part XV of the
        Ordinance, to have ceased to have an interest in the shares at the
        relevant time, the approved lending agent and the person referred to
        in subsection (2)(if any) shall, where a duty of disclosure arises
        under section 310 of the Ordinance in such circumstances, come under a
        duty of disclosure.

(5) If an approved lending agent fails to comply with any requirement imposed
under section 9, the approved lending agent and the person referred to in
subsection (2)(if any) are taken, for the purposes of Divisions 2 to 5 of Part
XV of the Ordinance, to have acquired an interest in all qualified shares in
which the approved lending agent was interested under the terms of a
relevant agreement-

   (a)  in the case of a failure to comply with section 9(1), on the last day
        of the period within which the approved lending agent is required to
        make the record;

   (b)  in the case of a failure to comply with section 9(3)(a), on the first
        day that the approved lending agent fails to retain the record; or

   (c)  in the case of a failure to comply with section 9(3)(b), on the last
        day of the period within which the approved lending agent is required
        to provide the record, and subsections (1) and (2) shall not apply to
        any interest of the approved lending agent in qualified shares after
        that day.