Hong Kong securities regulator tightens takeover rules to compensate scammed investors

Hong Kong investors will be compensated by individuals and companies that committed malpractice in corporate takeovers as the Securities and Futures Commission makes changes to the regulation which will be gazetted and come into immediate effect on Friday.

The change aims to increase investor protection and to bring Hong Kong in line with international standards practised in markets such as London and Singapore.

The SFC issued on Friday conclusions from the consultation on proposed amendments to the Codes on Takeovers and Mergers and Share Buy-backs. The commission said it received 26 submissions, in which most respondents showed support for the range of proposals that were put forward to solicit feedback between January until April 19.

The change is a major overhaul of the regulation as it empowered the SFC to require offenders of the takeover rule to compensate investors. The regulator could only previously ban companies or individuals from trading in the local stock market if there was any wrongdoing.

The amended code also raised the threshold for independent shareholder approval of a whitewash waiver to 75 per cent from the previous 50 per cent.