No.1 April 2003
                                 *****
Disclosure of Interests under the Securities and Futures Ordinance *****
    Notification of Changes in the Nature of Interests

    Any change in the nature of an interest already notified is
    required to be disclosed. The situations in which there is
    considered to be such a change are extensive and include a
    change in the nature of a person's title to shares, any of the
    person's interest whether legal or equitable or any of the
    person's interest in the underlying shares of equity derivatives
    on the exercise of rights thereunder (whether by or against
    him).

    Common situations requiring notification of a change in interest
    will include:
        * (i) the exercise of rights (by or against a person) under
          options and other derivatives;

          (ii) the lending of shares under a securities borrowing
          and lending agreement (unless the Securities Borrowing and
          Lending Exemption applies - see below); and

          (iii) the giving of shares as security to another person.
    There is not considered to be a change in the nature of an
    interest:
        * (i) where a purchaser takes delivery of shares, if he has
          previously disclosed his equitable interest arising on
          contracting to buy the shares;

          (ii) where there is a change in the terms on which rights
          under equity derivatives may be exercised which results
          from a change in the number of underlying shares in issue;


          (iii) on the exercise of rights to subscribe for or on
          delivery of shares under a rights issue;

          (iv) where a 'qualified lender' comes to have a security
          interest in a person's shares (see 'Exempt Security
          Interests' below); and

          (v) where the person is a holding company and the transfer
          is of shares from one wholly owned subsidiary to another
          (see 'Wholly Owned Group Exemption' below).

    What constitutes an interest in shares?

    The definition of an 'interest in shares' is extremely broad and
    includes the situations set out in Schedule 3 hereto.

    Buying and Selling Shares

    A buyer of shares acquires an interest in shares at the time
    when he contracts to buy and therefore is required to give
    notification within 3 business days of the contract. Whereas the
    seller only ceases to have an interest when he actually
    transfers the shares to the buyer and is therefore required to
    notify the cessation of his interest within 3 business days of
    the actual transfer.


    Deemed Interests

    There are a number of circumstances where the interests and
    derivative interests (including short positions) of others in a
    listed company's shares must be added to a person's own interest
    in calculating the number of shares in which they are
    interested.

    Family_and_Controlled_Company_Interests

    As under the previous legislation the interests of a person's
    spouse and children under 18 are attributable to him.

    Also, as previously, a person will be deemed to be interested in
    the interests of any company which he 'controls' (ie. a company
    of which he controls, either directly or indirectly, one third
    or more of the voting power at general meetings or if the
    company or its directors are accustomed to act in accordance
    with that person's directions).

    Trusts

    The interests of a trust of which a person is a trustee must
    also be aggregated with his own interests (with the exception of
    a trust of which he is a bare trustee (ie. his only powers or
    duties are to transfer the underlying shares according to the
    directions of the beneficial owner - see 'Exemptions' below).

	 A beneficiary of a trust must include the interests of the trust
    in calculating his own interest. The interest of a beneficiary
    under a discretionary trust is however disregarded provided that
    he is not also a director of the relevant listed company or a
    'founder' of the trust (see below).

    'Founders'_of_Discretionary_Trusts

    The SFO has introduced new provisions so that the interests of a
    'discretionary trust' will be attributed to the 'founder' of
    such trust. The term 'founder' is very widely defined and
    essentially will catch anyone who has procured the creation of
    the trust and (i) whose consent is a condition of a trustee's
    exercise of his discretion or (ii) in accordance with whose
    wishes a trustee is accustomed or expected to act (whether, in
    either case, legally enforceable or not).

    Concert_Party_Agreements

    The SFO broadens the previous provisions relating to concert
    party agreements. In essence, those provisions apply where two
    or more persons agree to acquire shares in a target company and
    the agreement dictates the manner in which any one or more of
    the parties may exercise the rights attached to those shares or
    dispose of them. Each party to the agreement must include the
    interests of all other parties to the agreement in determining
    whether they together hold 5% or more of the listed company. If
    so, each party will be considered to be a substantial
    shareholder whose interests must be disclosed.

    Under the SFO those provisions are extended to any arrangement
    whereby a 'controlling person' or director of a listed company
    makes a loan to a person on the understanding that the money
    will be used to acquire interests in shares in that company and
    shares are in fact acquired. A 'controlling person' for these
    purposes is any person who, either alone or with associates,
    controls at least 30% of the voting power at general meetings,
    can nominate any of its directors or veto or modify any
    resolution of a general meeting.

    The effect of extending the provisions to the borrower and
    controlling shareholder is to create an irrebutable presumption
    that the loan or funding will be provided pursuant to an
    agreement dictating how the borrower may deal with his shares.

    There is an exemption where a 'controlling person' or director
    makes the loan in the ordinary course of his business as a
    qualified lender.

    Where 2 or more persons are interested in the same shares they
    must each make separate disclosure of their interests. Hence if
    X controls Y Ltd. which holds 6% of a listed company and Y
    Limited acquires a further 1%, then X, his spouse and Y Limited
    must each file a separate notice.


    Cessation of Interests

    A person is regarded as having ceased to be interested in shares
    if:

        * (i) he delivers them to another person (or to his order)
          pursuant to a contract for sale, in fulfilment of his
          obligations under a call option, or on exercising his
          rights under a put option;

          (ii) his right to subscribe for or call for the delivery
          of shares lapses or he assigns such right to another;

          (iii) his obligation to take shares lapses or he assigns
          that obligation to another;

          (iv) he receives an amount from another person, or avoids
          or reduces a loss, on the assignment or settlement of any
          cash settled equity derivatives.





    Please note that this summary is for general information
    purposes only. Specific legal advice should be sought when
    appropriate.
                            [Previous] / [Next]