Press Release

LCQ16: Completion of share application forms

April 25, 2001

Following is a question by the Hon Ng Leung-sing and a written reply by the Secretary for Financial Services, Mr Stephen Ip, in the Legislative Council today (April 25):

Question:

In relation to the Government's sale of part of its interest in the MTR Corporation Limited (MTRC) through an initial public offering in October last year, I have received a complaint from a member of the public who had intended to subscribe for MTRC shares, alleging that one of the receiving banks had refused to accept his subscription on grounds of his failure to complete the address box in the share subscription application form (subscription form) in English. In connection with the use of Chinese and English in matters relating to the operation of the stock market, will the Government inform this Council whether:

(a) it has assessed if the requirement that subscription forms must be completed in English is unfair to people who do not know English; if the assessment result is in the affirmative, in what way it should be held responsible in respect of those whose subscription forms had thus been rejected, and whether it will abolish such a requirement when shares of public organizations are offered for sale in the future; and

(b) it is aware of any measures taken in the past two years as well as those which will be taken by the Securities and Futures Commission and the Stock Exchange of Hong Kong to facilitate and stipulate the use of both the Chinese and English languages by securities intermediaries in matters relating to the operation of the stock market, for the convenience of the investing public?

Reply:

Madam President,

(a) Existing regulations and rules have no specific requirements as to what language should be used in the completion of share application forms. Issuers in an Initial Public Offer can require the share application forms be completed in a specified language as a condition for the application of shares. The current market practice is to require investors to complete the "name" and "address" columns in English. As share registrars in Hong Kong currently use English for the production of share certificates and processing of registers of shareholders, their computer systems are not equipped to process information in Chinese. Hence, issuers have to obtain the two types of personal particulars in English. Generally, investors are reminded in share application forms that such information has to be completed in English. The MTR Privatisation Share Offer held last October also followed this market practice. The issuer had reminded applicants of the requirement to complete their names and addresses in English.

For the convenience of investors, the Securities and Futures Commission (SFC) will discuss with members of the Federation of Share Registrars and market participants to encourage them to upgrade their computer systems and explore other possible means to allow investors to complete share application forms, including information such as names and addresses, in Chinese in future.

(b) The SFC and the Stock Exchange of Hong Kong require all investor communications issued by listed companies to be in Chinese and English. The Companies Ordinance and the Listing Rules also stipulate that prospectuses, listing documents and circulars etc. must be available in Chinese and English. Furthermore, paragraph 6.1 of the Code of Conduct of Persons Registered with the Securities and Futures Commission (Code of Conduct) requires that registered persons should enter into a written agreement, risk disclosure, or supporting document, if applicable, with each client before services are provided to the client. These documents should be in Chinese or English according to the language preference of the client.