Association for Sustainable and Responsible Investment in Asia
Press releases & notable news

UPDATE: Feb. 16 - Directors' blackout extended to 60 days for annual results. Click here for details.

Directors' blackout period in Hong Kong - brief overview (& get involved here)

Jan. 22 (Association for Sustainable and Responsible Investment in Asia) - The Hong Kong Securities and Futures Commission (SFC) stepped into the controversial debate about the "blackout window" proposal when it said earlier this week that it would not oppose counter proposals to the blackout period extension.

SFC Chairman Eddy Fong Ching said, "We must listen to opinions before the implementation of the extended blackout period, which will come into effect from April 1." (The Standard, 19 January 2009)

Brief overview of the blackout period extension issue
In January 2008 the Hong Kong Stock Exchange (HKSE) published proposals on 18 substantive policy items, ranging from listing requirements to corporate governance. In late November, the HKSE published its recommendations in 'The Consultation Conclusions' which cover 15 of the 18 policy areas.

In particular, issue number 18 "Review of Model Code for Securities Transactions by Directors of Listed Issuers", (question 18.4) touched on the extension of the "black out" period as one of the points. Essentially, it covers the time during which a director is prohibited from dealing in securities of the listed issuer - from the end of the listed issuer's financial period to the date that it publishes the relevant financial results. The existing blackout period only covers one month prior to results publication.

ASrIA supports the extension of the blackout period because, in our view, the new rule would:

  1. Align Hong Kong with the model codes of other countries, such as the United Kingdom.
  2. Avoid giving the 'appearance of insider trading' from directors who trade after the period end, but prior to the blackout.
  3. Encourage listed issuers to publish their financial results earlier.

This blackout extension was set to take effect from 1st January 2009 after appropriate market consultation, the green light from the Listing Committee of the stock exchange, and approval from the Securities and Futures Commission (SFC) of Hong Kong - however it was postponed until 1st April 2009 because of the apparent support (late or otherwise) against the extension.

A group of directors, through business associations, trade groups, and companies (with or without board approval), forced the postponement by submitting letters against the extension of the blackout period. The matter is currently unresolved and implementation might not even take place in April.

We encourage individuals to support the extension of the blackout period. If you support this view and wish to make your opinion count, please download the following letter, sign it and send it to the Hong Kong Stock Exchange. <Click here to download the letter>

By email: cvw@hkex.com.hk
   
By fax: (+852) 2524 0149
   
Or by mail: Corporate Communications Dept.
Hong Kong Exchanges and Clearing Ltd.
12th Floor, One International Finance Centre
1 Harbour View Street, Central
Hong Kong

For more detailed background analysis, please <click here>


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