The Report recommends, amongst other measures, wider disclosure of Government Accounts. It received extensive support and press coverage.

Examination of three other subjects ("The Refuse Collection Service of the Urban Services Departments", "Water Purchased from Guangdong Province" and "Management Practices of the Vocational Training Council") has commenced. We have held two further days of public hearings to receive evidence on these three subjects and are making the best endeavours to finalise our report to the LegCo at the earliest opportunity.

On 14 February 2000, Chairman of the Securities and Futures Commission (SFC), Mr. Andrew L T SHEUNG, and Chief Executive of the Stock Exchange of Hong Kong, Mr. Alex TUSI have provided the Panel with a report on the trade disruption in the Stock Exchange of Hong Kong (SEHK) as well as the recent performances of the information technology-related stocks. The meeting was widely reported and in particular, SEHK apologised for the system failure which led to a 20-minutes suspension of trading and the cancellation of more than $100 million in trades.

A proposed list of future agenda items is also attached as Appendix II for reference.

It also discussed the implementation of the policy of one school social worker for each school. Manpower shortage of Social Security Assistants, as well as the report of the Working Group on Dementia.

It also studied the Hong Kong Disneyland (Disney Theme Park), the Safety Certification of household electrical products and the terminal handling charge)

It also studied the progress of the Cyberport projects, the Broadcasting Bill, the proposed merger of Cable & Wireless Hong Kong Telecom with Singapore Telecommunications as well as the Entertainment Special Effects Bill.

TD of HKSA was kept informed of progress on all bills on a weekly basis. The introduction of Government Bills in the current legislative session dated 3 March 2000 is attached as Appendix III. A mutual understanding has been reached between LegCo and the Administration that no further Bills will be tabled after 15^th of March unless it is urgent and essential.

This Bill proves to be very controversial but represent a significant step of the Government in liberalising the telecommunications market. HKSA had made a strong submission which is being followed up. It looks like that there will be some significant amendments to provide better check and balance on the 'draconian' powers given to the Administration. We are awaiting the Government's Committee Stage Amendments very shortly.

To address the concerns of the HKSA, the Administration has agreed to move Committee Stage amendments to Clause No. 2, No. 18, 19 (3)(b)(i), 19(4) and (5), 37, 41(2)(a) and introduce a new Clause 14A.

Clause No. 2 is to better define the term "trustworthy system"; No. 18 is to more clearing define the point of receiving electronic message in the conclusion of a transaction. Clause No. 19 (3)(b)(i), 19(4) and (5) are to make clear the provisions whereby the certification authority may apply to the director for recognition. Clause No. 37 is to remove the references to the word 'audit' and to replace it with words like report to avoid confusion with statutory audits; Clause 41 is to tighten the provision on obligation of secrecy. The new Clause 14A is to provide flexibility for persons who are not non-Government entities to agree amongst themselves as to whether electronic record / digital signature should be used in satisfying a requirement under a rule of law for one party to provide information or to sign a document for presenting to the other party.

These changes have given the Accountants a key role to play in the development of electronic transactions well ahead of other professions such as the engineers and even the IT professionals.

The Bill was passed by the LegCo on 5 January 2000.

Since the refusal of enforcement of Mainland arbitral awards in Hong Kong and vice versa after 1 July 1997, business and arbitration communities have expressed grave concerns. Given the great impact on the commercial world, this Bill warrants detailed scrutiny urgently.

The Bill was finally passed by the LegCo on 5 January 2000 and came into operation on 1 February 2000 as appointed by the Secretary for Justice by notice in the Gazette.

Under the Bill, all assets and liabilities of the existing Mass Transit Railway Corporation (MTRC) will be vested in the MTR Corporation Limited (MTRCL) on a date to be appointed by the Secretary for Transport. The new company will be granted a 50-year franchise to operate the Mass Transit Railway (MTR) and to construct and to operate any extension to the railway. The Bill requires MTRCL to maintain a proper efficient service in accordance with an Operating Agreement (OA). The OA will be a legally binding document entered into between the Government and MTRCL, similar to the franchise documents for buses and ferries.

I suggested that the arbitration report of the external auditors to be appointed by the MTR Corporation Limited under (Mass Transit Railway Bill) Clause 15 of the Principal Headings of the Operating Agreement be made final and conclusive. The Administration has agreed to my suggestion and decided to amend that provision of the Operating Agreement accordingly.

The Bill was finally passed in a marathon session in the morning hours of 23 February 2000.

The purpose of the Bill is to amend the Securities Ordinance (Cap. 333) to provide for the regulation of short-selling activities, being one of the 30-Point Programme announced by the Financial Secretary in early September 1998. The most controversial part of the Bill is to criminalise stock lenders and all intermediaries i.e. investment bankers, fund managers and stock brokers for failure to disclose short-selling activities of their client. The Government is, in my view, taking a totally unnecessary strong stance in this matter.

The objective of the Bill is to amend the Companies Ordinance (Cap. 32) ("the Ordinance") in order to - (a) implement the recommendations of the Law Reform Commission of Hong Kong ("CRC") in its Report on Corporate Rescue and Insolvent Trading; (b) implement the recommendations of the Standing Committee on Company Law Reform ("SCCLR") and (c) effect miscellaneous amendments to various sections of the Ordinance for various purpose including, inter alia.

The Bill does make significant changes to the existing regime of corporate rescue, the law governing personal liabilities of company directors and management, and in view of the possible effect on the corporate business environment and the interests of all parties affected. The Committee will have to take some time to reach conclusion. I am liaising with the Secretariat to co-ordinate our response to this wide-ranging Bill.

HKSA made a written submission to the Bill. HKSA had proposed technical amendments to section 27(1A) concerning audit reporting requirements. These amendments have now been accepted by the Administration and CSA's will be moved in due course.