SFC opposes changes to buy-back limits

The Securities and Futures Commission yesterday expressed opposition to any changes in share buy-back limits, standing firm against calls to relax the rules and allow larger shareholders to grab more stock in their own companies in the volatile market environment.

A special panel of members from the financial and investment community decided by an overwhelming majority that any amendment to the rule would not be fair to all shareholders and could reflect poorly on Hong Kong's position as an international finance centre, according to an SFC announcement.

Proposals to relax the rules were also portrayed as opportunistic and favouring big business interests.

Legislator Chim Pui-chung called for a change in the rules earlier this month, saying that if larger shareholders were allowed more freedom to buy back stock, they could boost sentiment by propping up flagging shares.

Investors are obliged to make a general offer to all other shareholders if they acquire voting rights that increase their holdings to 30 per cent or more of a company. Those who hold voting rights of between 30 and 50 per cent will be compelled to make an offer if they acquire more than 2 per cent in 12 months.

The rules are not backed by law, but rather represent the consensus of market participants and regulators.