The market watchdog's proposals for criminal prosecution of company executives who mislead investors will enhance corporate governance but may add to business costs, according to accountants and company executives.
Bernard Charnwut Chan, executive director of Asia Financial Holdings, yesterday said the new proposals by the Securities and Futures Commission (SFC) would force executives to be more alert to their duty to make sure of the accuracy of information given to investors.
'It would add more pressure on company executives, but it would also help to promote corporate governance in Hong Kong and to enhance the competitiveness of the local market,' he said.
Under the SFC proposals, company executives who lie or mislead the public in listing documents or company announcements would face a criminal prosecution, with a maximum penalty of two years' jail and a fine of HK$1 million.
At present the stock exchange can impose only a public reprimand for those who breach the listing rules.
The new rules would add teeth to regulation of corporate disclosure and enhance the power of the SFC, handing it part of the regulatory power of Hong Kong Exchanges and Clearing.
