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The Securities and Futures Commission (SFC) published its “Consultation Paper on the regulation of sponsors” (Consultation Paper) on 9 May 2012. It is seeking views from the public about proposals concerning the conduct of sponsors in fulfilling their responsibilities in connection with new listings (including IPOs).

Comments in response to the Consultation Paper should be submitted to SFC on or before 6 July 2012.

THE CONSULTATION PAPER

The proposals include proposed amendments to the Companies Ordinance and the Code of Conduct for Persons Licensed by or Registered with SFC (Code of Conduct).

PROPOSALS IN RELATION TO THE COMPANIES ORDINANCE

It has been argued that sponsors may already be subject to civil and criminal liabilities under the Companies Ordinance for untrue statements in prospectuses as:

  • sponsors might fall under the definition of “promoters”, who are subject to civil liability; and
  • a sponsor might be a person “who has authorized the issue of the prospectus” and a person who authorizes the issue of a prospectus is subject to civil and criminal liabilities under the Companies Ordinance for untrue statements in the prospectus.

However, the legal position as to whether these provisions are applicable to sponsors is unclear. In the Consultation Paper, SFC intends to eliminate any ambiguities and clarify that sponsors are subject to criminal and civil liabilities for untrue statements (including material omissions) in prospectuses.

PROPOSALS IN RELATION TO THE CODE OF CONDUCT

Click here to view table.

You can download copies of the Consultation Paper via the link below: https://www.sfc.hk/sfcConsultation/EN/sfcConsultMainServlet?name=SponsorRglt