In March 2010, the Hong Kong Government published its Consultation on the Proposed Statutory Codification of Certain Requirements to Disclose Price Sensitive Information by Listed Corporations (the Proposal). The Proposal requires listed corporations to disclose to the public as soon as practicable, any price sensitive information (PSI) that has come to their knowledge. PSI is referred to as “inside information”, which adopts the same definition as “relevant information” under the current insider dealing regime in Hong Kong.

In order to safeguard the legitimate interests of listed corporations in preserving confidentiality over certain information for the purposes of its operations and business development, the Proposal includes a number of “safe harbours” to allow them to withhold or delay disclosure of certain PSI.

Further, the Proposal extends the jurisdiction of the Market Misconduct Tribunal (MMT) to deal with breaches of the statutory disclosure requirements. The Securities and Futures Commission (SFC) will have the power to institute proceedings direct before the MMT, without first having to consult the Financial Secretary. Various civil sanctions such as a regulatory fine of up to HK$8m and director/officer disqualification for up to five years have also been proposed.

To assist issuers to comply with the Proposal, the SFC has recently issued a Consultation on the Draft Guidelines on Disclosure of Inside Information (the Draft Guidelines) to provide guidance on what constitutes “inside information”. The Draft Guidelines also set out the “safe harbours” available and how they would apply.

The consultation period for both the Proposal and Draft Guidelines will end on 28 June 2010.