YOU MAY NOT have noticed it but the other day, the shareholders of Bank of East Asia voted against giving their directors what is called a 'general mandate' to issue new shares at will. There goes another bit chipped off the old Hong Kong and this time, I am happy to side with corporate governance activist David Webb in applauding. Sometimes the good old ways are just old ways and not so good at all. What makes this interesting, however, is that shareholder power has done something that the Securities and Futures Commission should have done long before but has never showed much interest in doing. Our power-hungry SFC, which all too frequently shows scant respect for civil liberties or the rule of law, has been upstaged. Let us backtrack here. The idea many years ago was that a company may sometimes have a ripe acquisition target that will only stay ripe for a short period. If it wants to pluck the fruit, it will have to do it immediately. Unfortunately, it may not always have the resources on hand. How to get around this obstacle? Simple. Allow the directors to issue new shares in their company without immediate direct approval from shareholders and the resources are immediately in hand. Of course, even at the time it was recognised that this could not be done without some restrictions. Abuse of shareholder interests is always a danger in such matters. Thus the rule became that the authority to do it, the general mandate, must be renewed every year at the annual general meeting and must stipulate what proportion of outstanding shares may be issued and at how large a discount from the price on the stock market. In Bank of East Asia's case, this was previously 20 per cent of outstanding capital at a maximum 20 per cent discount. You may well ask whether this high-minded rationale for the mandate is all that explained it. Another school of thought says it was a quid pro quo to business interests for not causing the colonial administration any trouble. Remember that this came from the days of 'positive non-interventionism', otherwise known as benign neglect and sometimes better defined as non-positive interventionism. But, however well considered and honourable the original motives may have been, the mandate increasingly appears an anachronism in the sort of modern financial centre that we like to think we have in Hong Kong. Best keep this one quiet if we value our reputation. More than that, there is increasingly no need to retain it, at least for the original reasons it was allowed. What are investment banks for if not to find ways around immediate funding difficulties for their clients? I cannot imagine that any company of Bank of East Asia's size would truly need to rely on the mandate to finance an acquisition because no other avenues were open. And this raises the constant niggling question of whether abuse of shareholder interests is a reason that many companies would like to keep the mandate. It is an easy way to sneak in a dubious deal. I do not say this of Bank of East Asia but smaller names come to mind from time to time. In any case, if Bank of East Asia does not need it, and I do not think the bank does, why retain it? Perhaps we do not need to abolish it immediately but Mr Webb is undoubtedly right in saying that if we want to bring our practices more into line with those of others, we should allow no more than a 5 per cent addition to capital at a maximum 5 per cent discount. And, once again, where has the SFC been in all of this? Let us not hear the tired old line that it is a stock exchange matter and the SFC cannot intervene. Things have come to a pretty pass when shareholders must lead the way for our most interventionist government agency in obvious regulatory matters. AND, TALKING OF where are they and what have they done, I think it past time to introduce my What-has-she-ever-done quiz about Secretary for Environment, Transport and Works Sarah Liao Sau-tung, who, when last seen, mooted the idea of a tax on plastic bags but still has not got past the talking stage. Will someone, anyone, please tell me what Sarah has ever done in all her time in office? Talk in plenty, yes indeed, and all about good righteous things, too, but let's be frank, what real achievement does she have to her credit? Any answer, however small, is sure to win it. I am not holding my breath.