THE Hong Kong Institute of Company Secretaries (HKICS) has made a submission to the Securities and Futures Commission, calling for the corporate watchdog to change parts of the Securities (Disclosure of Interests) Ordinance. HKICS chairman John Brewer said a thorough review of the Ordinance was carried out and while there had been success in the disclosure of significant movements in shareholdings, there were ways it could be improved. In particular, the HKICS has asked the SFC to look at the rules involving trustees and investment managers. It said trustee exemption was restricted to the interests of Hong Kong-incorporated trustees whose parents are, in turn, Hong Kong-incorporated banks. As a result, these conditions deprived the exemption of much of its practical use and confused the disclosure made by trustee companies. The HKICS has suggested that other reputable jurisdictions be recognised and the place of parent bank incorporation be made irrelevant. Since trustees and investment managers often retain a residual right to vote shares held in a nominee capacity, the HKICS recommended that unless a trustee or investment manager has discretion over such rights, these shares should fall outside the disclosure requirements. With the growing popularity of derivative products, the HKICS suggested the ordinance extend to these instruments, replicating the requirements now in place for warrants, options and convertibles. The HKICS has also recommended the SFC adopt a single consolidated return for disclosed interests to reduce the amount of administrative work required, which forces a disclosable interest held by one member of a group of companies to be disclosed by intermediate holding companies.