HKEx: Amendments To Listing Rule 38.06 Regarding The Membership Of The SFC(HKEC Listing) Committee And Listing Rule 38.07 Regarding The Quorum Necessary For The Transaction Of Business Of The SFC (HKEC Listing) Appeals Committee

Listing Rule 38.06 has been amended to provide for an increase in the number of members of the SFC (HKEC Listing) Committee and make minor changes of an administrative nature. The amendments to Listing Rule 38.07 relate to the quorum necessary for the transaction of business of the SFC (HKEC Listing) Appeals Committee where the Chairman of the Commission has a conflict of interest.

On 19 June 2000, the Securities and Futures Commission ("Commission" or "SFC") resolved to establish the SFC (HKEC Listing) Committee ("Committee") pursuant to section 6 of the Securities and Futures Commission Ordinance (Cap 24 of the Laws of Hong Kong). The Committee exercises powers and functions equivalent to those of the Main Board and GEM Listing Committees of The Stock Exchange of Hong Kong Limited ("Exchange") when, by reason of a conflict of interest or potential conflict of interest between the interests of Hong Kong Exchanges and Clearing Limited ("HKEx") and the interests of the proper performance of the Exchange's listing functions, it is desirable for the relevant Exchange's functions to be exercised by the Commission. On the same day, the Commission approved a new Chapter 38 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules") that provides for the regulation of HKEx (and other applicants for listing and other issuers) by the Commission. In August 2001, similar rules applicable to GEM companies were introduced into Chapter 36 of the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited ("GEM Listing Rules"). For more background information on Chapter 38 of the Listing Rules and Chapter 36 of the GEM Listing Rules, you may refer to the Exchange's press announcement of 19 June 2000 and HKEx's press announcement of 22 August 2001 respectively.

Listing Rule 38.06 is revised to provide that:

• the Committee shall consist of at least 10 members and that no more than five members should attend each Committee meeting;
• the Committee shall consist of at least five market representatives and at least five SFC representatives. The SFC representatives shall comprise all the Executive Directors (except the Chairman and the Executive Director in charge of Corporate Finance) and such Senior Directors or Directors of divisions of the Commission (except the Chairman's Office and the Corporate Finance Division) as the Commission shall appoint from time to time; and
• the members of the Committee that are market representatives shall normally hold office for a one-year term but may be re-appointed at the end of each term. The SFC representatives shall have no fixed term of appointment.

Listing Rule 38.07 has been amended to provide that the quorum of a meeting of the SFC (HKEC Listing) Appeals Committee should be three non-Executive Directors of the Commission where the Chairman of the Commission is absent from Hong Kong or where he has a conflict of interest.

The revised Listing Rules 38.06 and 38.07 come into effect on 14 March 2003. Re-printed pages of the Listing Rules will be distributed in due course.