The government is proposing to expand the investigative power of the financial secretary's appointed inspectors and impose prison terms on people who refuse to co-operate with investigations.
Under the proposed law change, which is part of the effort to update the city's Companies Ordinance, people who give false information to inspectors appointed by the financial secretary may face a maximum of seven years in jail and a fine of HK$1 million. Refusing to co-operate with inspectors could lead to one year in jail and a HK$200,000 fine.
The current Companies Ordinance does not spell out the penalty for lying to inspectors looking into whether companies have engaged in serious misconduct.
The new proposals also allow inspectors and a company's appointed auditor to acquire more books and records from a wide range of employees at a company in conducting their investigation.
Meanwhile, accounting firms would have to make their reasons clearer when they resign as auditors for a company. Auditors who intentionally failed to do this could be fined HK$150,000.
The changes would also require companies, including both listed and large privately owned companies, to give forward-looking statements in their directors' report to analyse their businesses. Directors who fail to do so would face a maximum HK$150,000 fine or six months in jail.
Listing rules already require companies to give such forward-looking statement, but the penalty for failing to do so is only a public reprimanded.