HONG KONG ought to put itself in for an award for the world's most complicated, time-consuming and misleading securities disclosure laws. Rules governing the Securities (Disclosure of Interests) Ordinance are an example of what happens when a really simple and good idea gets into the hands of legal bureaucrats. Directors of listed companies and substantial shareholders with more than 10 per cent of a firm's issued share capital need to disclose what they are up to in their shares. Dealings undertaken need to be disclosed within five days of the transaction date. In the West, where the initiative came from, such disclosure is intended to aid listed companies to get information on their shareholders. It warns them, for instance, of potential predators accumulating stock. In Hong Kong the vast majority of listed company boards of directors know exactly who the main shareholders are. It is them. Disclosure in the territory was an initiative to ensure Hong Kong fell in line with other more developed securities markets in the world. It was also meant to provide the public and minority shareholders with a window on what the key shareholders in a given listed company are doing. For an investor it is particularly useful to be aware of a director's selling down in a company before any kind of investment in that company's shares might be considered. What a good idea. Unfortunately in Hong Kong the whole project has been mucked up with bureaucracy and unintelligible disclosure notification forms that seem to tell you everything except what you really want to know: who is buying and who is selling their own stock. In the United States and in the City of London the rules governing disclosure of activities of main shareholders, and insurance or investment funds, appear to be a lot more straight forward than they are in Hong Kong. What the reader wants to know is what did the director buy or sell. How much of it was bought or sold and at what price? What was the aggregate cost and how does the transaction leave that person's position, in terms of shareholding, with the company? Instead of this seemingly simple information, investors get lines and lines of names against column upon column of companies and shareholders, none of which appears to match up or make any sense. Inquiries with the publisher of the information, the stock exchange, are met with the same stock answer: we are here to publish information, notified by directors, under rules governed by the disclosure ordinance and it is not for the regulator to interpret these numbers in any way. A trained expert reading these numbers can get some good information out of them, but a definitive statement on a notified transaction always requires an inquiry back to the company concerned to check it is correct. The complicating factor in Hong Kong is the nature of ownership. It is usually spread through families, who tend to actively trade stock on a regular basis. The potential for overlap and conflicts of interest are huge as any reader through a list of cross holdings and cross directorships will tell you. Directors need to disclose their deemed interest. This includes all the activities of relatives including sons and lovers come mistresses. Holdings are complex and run through a myriad of trusts or nominee companies. This means all Lee Shau-kee needs to do is sneeze on a warrant in his group and his minions cough up three to five pages of A-4 disclosure, under deemed interests. It also means HSBC probably spends more on disclosure than every one else who needs to in the territory because of the myriad of holdings different arms in the group keep - from asset management to private client portfolio management to one of the bank's brokerage dealers doing some private share investment. To date, securities disclosure has failed to make information on directors' dealings readily accessible and understandable to the general reader. Expert reading of the sheets, a fair degree of background knowledge and regular cross checking of data with the listed companies concerned will get you the information you might need. The whole disclosure methodology needs to be overhauled to make the forms clearer and easier to read.