HKEx to challenge rights ruling
Exchange will seek to overturn finding in New World case that the ban limiting legal representation is against Basic Law
The stock exchange is to contest a ground-breaking ruling on disciplinary procedures through the Court of Final Appeal.
Claiming that fundamental principles are at stake, the exchange will fight a ruling made two weeks ago that it flouted the Basic Law by banning lawyers from disciplinary hearings in a high-profile case of alleged selective disclosure involving New World Development executives and market analysts.
Hong Kong Exchanges and Clearing chief executive Paul Chow Man-yiu yesterday confirmed that its board of directors had elected to push the case to the highest appellate court.
'The exchange's legal advice considered the exchange has reasonable grounds to appeal against the case related to New World Development,' Mr Chow said on the sidelines of HKEx's fifth anniversary celebration.
An exchange source said it would pursue the action as the ruling had far-reaching implications for the regulatory body in the manner in which it conducted disciplinary inquiries into listed companies.
Formal application would be made after lawyers had prepared all documents, he said.
'We have not thought about money matters. The exchange board of directors will do what it has to do,' Mr Chow said.
New World, chairman Cheng Yu-tung, director Henry Cheng Kar-shun and two other executives fell foul of the exchange in March 2001 when details of the firm's interim results were leaked to analysts during a private briefing.
The disclosure led to a drastic cut in profit forecasts by analysts, triggering a Securities and Futures Commission investigation.
In June 2003, the SFC reprimanded Goldman Sachs analyst Ting Chuk-kwan for selective disclosure.
The stock exchange listing division in May 2002 proposed a public censure of New World. The matter was then passed to the listing committee for adjudication, which decided to hold a disciplinary inquiry in January 2003.
Executives of New World decided to seek a judicial review of the exchange decision to limit the ambit of their lawyers at the listing committee hearing.
Mr Justice Peter Cheung ruled two weeks ago that the stock exchange denied full legal representation, its hearing should be declared null and void and that the executives should be allowed to rely on lawyers to argue on their behalf and examine witnesses.
Separately, Mr Chow said the exchange would implement new rules within three to nine months compelling listed companies to issue only summarised result announcements in newspapers rather than full versions, as is required at present.
After the new rules are introduced, main-board companies will have a mandatory requirement to post their full announcements only on the HKEx website.
'We have to upgrade our electronic disclosure platform [first],' Mr Chow said. 'After the upgrade, we will give a grace period for listed companies and related parties to get used to the new way of announcing company news.'
He also said the policy arm of the listing committee would review whether the 20 per cent threshold for general share issuing mandates should be lowered.
