NEWLY appointed Hong Kong stock exchange listing committee convenor Gordon Kwong Che-keung says stronger sanctions are needed to ensure compliance with listing rules. He said tougher sanctions could be imposed on listed companies that breached the rules by giving the existing listing rules statutory backing. The usual punishment handed down to rule-breakers has been public censure, followed by suspension of trading of the stock involved in serious cases. 'However, suspending the stocks' trading may not necessarily be in the investors' interest,' Mr Kwong said. He said it was necessary to consider turning the listing rules into laws since the rules did not have adequate teeth to deter non-compliance. 'Yet, the issue touches the whole subject of company law review and is not an easy one,' he said. Mr Kwong said that the upcoming sessions of the committee would focus on reviewing the financial disclosure requirements and identifying areas for improvement. He said listed companies had adopted a new set of standards for compiling their 1995 annual accounts, and the review would check if they were abiding by them. 'We want to see if there are additional areas that can be added to the financial disclosure of companies,' he said. Corporate governance was another area for more regulatory efforts. Various sub-working groups had been formed under the committee to study the issue. Improving communications between the exchange and the directors of listed companies would help alert the directors to their responsibilities. 'With the introduction of new listing rules in the past year, many listed companies are not too familiar with the new rules,' he said. Mr Kwong said the provision disclosing connected transactions had caught many listed companies off guard. He would review whether or not companies should disclose more information in their interim results. Regarding the recent announcement by Shanghai Haixing Shipping on the cut in interest subsidies, Mr Kwong said investors should be aware of such risks when investing. Such risks were not only present in H shares, but also in companies with China exposure. 'If not, they would not be called red chips - they should be blue chips,' he said. Whether or not the company had promptly informed investors about the loss of preferential rates for policy loans was hard to establish, he said. Mr Kwong succeeded K.S. Lo as the convenor of the listing committee. He has served on the exchange's council for four years. He was the convenor of the compliance committee last year.