Hong Kong Society of Accountants corporate governance committee chairman Edward Chow Kwong-fai on Monday said the rule changes were not tough enough to protect the interests of small investors.

He urged the exchange to require disclosure whenever controlling shareholders pledge 50 per cent of their holdings to obtain finance, whether for business or personal use.

Stock exchange listing head Lawrence Fok Kwong-man rejected the demand.

'Overseas markets do not have a similar disclosure rule,' he said.

'Any further tightening up would result in over-regulation.' He took issue with Mr Chow's claim that the exchange should put the public interest ahead of the privacy of controlling shareholders.

'The exchange has to respect individual privacy,' he said.

'If the controlling shareholders have pledged the shares to get personal financing and the arrangement has no impact on the company's business, I think it is a personal affair and need not to be disclosed.

'The stakes are their personal assets, and anyone has the right to pledge their own assets to get personal loans.' Brokers said the pledging of shares was price-sensitive information as the holdings would be sold by banks if the borrower could not repay the loans.

Such information should be disclosed, they said.

Mr Fok said shareholders in financial difficulties could sell their shares when they had not been pledged, which would also result in sharp share-price falls.

'The share price of a listed company will be volatile when the controlling shareholders are in financial difficulties,' he said.

'A tougher disclosure rule for pledged activities would not help to reduce such volatility.'