The Securities and Futures Commission (SFC) today published the first issue of its Corporate Regulation Newsletter as part of an initiative to improve the quality of disclosures by listed companies and listing applicants.
The SFC welcomes the increase in the number of listed companies’ announcements to the market since the introduction of the new statutory disclosure regime (Note 1) and it is now looking to shift the focus to making those announcements more meaningful, the newsletter relates. For example, profit alerts and warnings should be price-sensitive by definition, but in 2013 only 14% of such profit alerts and warnings resulted in share price movements. If companies provided clearer, more structured disclosures, announcements would be more meaningful for the market.
The newsletter also reminds listing sponsors to look critically at what constitutes meaningful disclosures and not take a mechanical box-ticking approach. In particular, sponsors should ensure listing documents provide sufficient risk disclosure for investors to assess a company’s prospects. Sponsors are also reminded to look critically at the opinions of experts engaged on technical matters. Including unreasonable or inaccurate opinions in listing applications could result in the suspension of the vetting process or other sanction.
“To maintain the quality of our markets, it is crucial that the right information is published to investors at the right time,” said Mr Ashley Alder, the SFC’s Chief Executive Officer. “This newsletter is part of ongoing efforts to improve corporate behaviour in general.”
The SFC’s renewed emphasis on corporate behaviour is coordinated by the new Corporate Regulation team, which leads the SFC’s oversight of listed companies from their IPOs onwards. Focusing on disclosure and corporate misconduct, the team works to identify behaviour that is prejudicial to the interests of shareholders and the interest of the investing public.
The newsletter is available on the SFC website. Members of the public may subscribe by filling out the form available under the “Subscribe” link. Comments and suggestions can be sent to CRnews@sfc.hk.
Note:
- Under the new statutory regime on disclosure of inside information which came into effect on 1 January 2013, listed companies are required to disclose inside information to the public in a timely manner.