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34th LEGCO REPORT (FINAL) TO HKSA COUNCIL By Hon. Eric K.C. Li I. Highlights To present this report orally (The Private Member¡¦s Bill; a survey of accountants¡¦ opinion on Constitutional Reform 2004; the evolution of the Political Responsibility System and the swing in political sentiments to conciliation). II. Committees and Panels 1. Public Accounts Committee (PAC): The Committee held a total of 25 meetings and 9 public hearings. During the public hearings, the Committee heard evidence from a total of 28 witnesses, including 3 Director of Bureau and 8 Heads of Department. The Report also contains the Public Accounts Committee's Supplemental reports on chapter 8 ¡§The acquisition and clearance of shipyard sites¡¨ of Report No 41. This will be my 18th Report to LegCo and the final chapter. The Report on the ¡§Harbour Fest¡¨ in particular, received much publicity and wide community acceptance. Speculation is rife on who will succeed me as the Chairman of this important committee. 2. Financial Affairs Panel: The Panel held 4 meetings and the relevant agenda are attached as Appendix I. On 2 April 2004, the Secretary for Financial Services and the Treasury (SFST) has provided the Panel with a briefing to explain the planning of the regulation of the accounting profession. The Administration issued a public consultation paper on the proposed to set up an Independent Investigation Board (IIB) to consider complaints of alleged accounting, auditing and / or ethics irregularities committed by professional auditors involving listed companies. The public consultation also included a proposal to establish a Financial Reporting Review Panel (FRRP), which was initiated in the Standing Committee on Company Law Reform¡¦s Phase I Corporate Governance Review in 2001. The FRRP¡¦s ambit was to enquire into apparent departures from the law and accounting standards in the annual accounts of companies. SFST briefed members on the results of the public consultation on the preliminary proposals on the way forward. He highlighted the following points: (a) The results of the public consultation indicated that there was overwhelming support for the establishment of IIB to deal with investigation of irregularities of the auditing profession relating to listed companies. Investigation of accounting anomalies relating to non-listed companies would continue to be undertaken by HKSA, as would decisions on discipline; (b) Most respondents agreed with the proposal to set up FRRP to enquire into apparent departures from the law, accounting standards and listing rules in the annual accounts of companies and to seek remedial action. FRRP¡¦s work should cover the financial statements of all listed companies; (c) On the institutional arrangements of IIB and FRRP, the Administration proposed to establish an independent governing board to oversee both bodies so that there would be one independent entity overseeing auditors and financial statements preparers. The new governing board should comprise not more than ten members. They would be from the Financial Services and the Treasury Bureau and the Companies Registry (CR), persons nominated by SFC and HKEx, and persons appointed by the Government to represent public interest; (d) As regards funding for the new governing board, the Administration proposed that the cost be shared among SFC, HKEx, the accounting profession and the Government. The Government¡¦s contribution would be borne by the Companies Registry Trading Fund (CRTF); (e) The Administration would continue discussion with the relevant parties on the details regarding the structure, functions and function of the new governing board and the preparatory work on the legislative amendments for implementing the proposal. The Administration planned to submit the legislative proposals to LegCo in the next session.) A proposed list of future agenda items is attached as Appendix II for reference. 3. Economic Services Panel: The Panel held 5 meetings since the last report. The Panel studied Hospital Hong Kong, an electricity-related item, Stanley Waterfront Improvement Project, the construction of Sha Tau Kok, Wong Shek and Ko Lau Wan public piers, the implementation of Harbour Lighting Plan Phase II as well as transport link in Tsim Sha Tsui East. It also discussed the transfer of certain statutory powers and functions of the Chief Secretary for Administration and the Financial Secretary to the Secretary for Economic Development and Labour, the development of modern cruise terminal, the progress update on Hong Kong Disneyland as well as the temporary Golf Facility at the Hong Kong International Airport. There was also a special meeting to discuss the adjustments in oil prices as well as the transfer of certain statutory powers and functions of the Chief Secretary for Administration and the Financial Secretary to the Secretary for Economic Development and Labour. 4. Information Technology and Broadcasting Panel: The Panel held 5 meetings since the last report. The Panel discussed the issues relating to the development of Radio Television Hong Kong, the Labeling Scheme for hand-held mobile phones, the proposed merger of the Information Technology Services Department and certain functions of the Communications and Technology Branch of the Commerce, Industry and Technology Bureau and the proposed creation of a Chief Information Officer post in the Government. It also studied the review on IT Easy Link services, the issues related to the regulation of pornographic and violent materials transmitted through the mass media, the licensing and distribution of the content produced by Radio Television Hong Kong, Telecommunications Authority Guidelines: Mergers and Acquisitions in Hong Kong Telecommunications Markets as well as the progress update on E-government programme. There was also a special meeting to study 2004 Digital 21 Strategy as well as the measures to facilities the development of film industry. 5. Finance Committee and House Committee: There were 13 meetings of Finance Committee (including a special meeting to receive a briefing by the Financial Secretary and the Secretary for Financial Services and the Treasury on 2004-05 Budget) and 13 meetings of House Committee (special meeting to receive a briefing by the Chief Secretary for Administration on the business sector¡¦s involvement in political development and policy-making as well as the progress of measures to improve environmental hygiene in Hong Kong). There were also several special FC meetings consisting of 19 sessions from 29 March to 1 April 2004 to examine the draft Estimates of Expenditure 2004-05. TD of HKSA was kept informed of progress on all Bills on a weekly basis. The updated list of Government Bills in the current legislative session dated 10 March 2003 is attached as Appendix III.
1. Inland Revenue (Amendment) Bill 2000 The Bills Committee which I chair started the scrutiny of the Bill in November 2000, but in view of the grave concerns expressed on the proposals in the Bill, suspended its work from December 2000 to October 2003 to allow the Administration to further consult the industry, professional bodies and the parties likely to be affected by the Bill. The Bills Committee has later held 11 meetings since recommencement. Apart from examining the Bill with the Administration, the Bills Committee has also received submissions from 13 organisations, some of which have also made oral representation to the Bills Committee. The heavily amended Bill was finally passed on 16 June 2004 under severe protest of the business community and a copy of my speech recording my ¡¥NO¡¦ vote is attached as Appendix IV. 2. Companies (Corporate Rescue) Bill At the House Committee meeting on 7 December 2001, the Bills Committee recommended that the scrutiny of the Bill should be held in abeyance to allow time for the Administration to conduct consultation on, and work out the details of, a new proposal based on ideas initiated by myself and refined by HKSA. The House Committee agreed to the Bills Committee's recommendation. At the meeting on 3 October 2003, the Bills Committee was informed that the Administration had recently issued a consultation paper on the proposal (the Trust Account Arrangement under the Companies (Corporate Rescue) Bill) to the parties concerned. We are still waiting for the results of the consultation. On 16 June 2004, the Administration provided a paper to the Bills Committee reporting on the outcome of the consultation. The Administration has received a total of 18 submissions from various parties. Of them: (a) Eleven (including the Labour Advisory Board and the Protection of Wages on Insolvency Fund Board) gave their general support to the proposal of capping the sum payable to each employee under the trust account; (b) Six did not have any comment or express any preference; and (c) One was against the proposal because they considered it as a significant impediment to the viability of corporate rescue and would affect the interests of other creditors should the corporate rescue fail. In view of the majority support for the new proposal relating to the trust account arrangement, the Administration was working on the possible changes to the Bill to put in place the proposal. Given the complexity of the proposal, the Administration did not propose that the Bills Committee be reactivated to continue its scrutiny of the Bill in the current term. The Administration, however, make use of this opportunity to review, in the light of the developments in other jurisdictions on the corporate rescue and insolvent trading matters, the need for the proposed corporate rescue and insolvent trading provisions and, if so, how best they should be taken forward in the next LegCo session. I expressed my regret in a LegCo speech that unfortunately I cannot see through the legislation as the member who proposed this ¡¥new formula¡¦ under study. 3. Bills Committee on Deposit Protection Scheme Bill The Bills Committee has held a total of 14 meetings. Apart from examining the Bill with the Administration, the Bills Committee has also invited views from the legal profession and related sectors. Seven groups have made written and / or oral representation to the Bills Committee. The Bill was passed on 5 May 2004. 4. Bills Committee on Companies (Amendment) Bill 2003 The Bills Committee has held 30 meetings. 30 organizations and 5 individuals have made written submission and / or oral representation to the Bills Committee. The Bill was passed on 9 July 2004. I expressed disappointment that the part of ¡¥consolidation of group accounts¡¦ was left out and urged the Administration to take up the matter with HKSA as soon as possible when the 3rd LegCo term commences. 5 Bills Committee on Hong Kong Sports Development Board (Repeal) Bill The Bills Committee has held two meetings with the Administration. The Bill Committee has received written submissions from the staff of Hong Kong Sports Development Board (SDB), the Staff Concern Group Secretariat of the Sports Development Board, the Hong Kong Amateur Swimming Association and the Assistant Leisure Services Manager II Association. The Bill was passed on 9 June 2004. 6. Bills Committee on Electronic Transactions (Amendment) Bill 2003 The Bills Committee has held a total of 4 meetings. Apart from examining the Bill with the Administration, the Bills Committee has also invited views from the profession and related sectors. Six groups and two individuals have submitted views to the Bills Committee. The Bill was passed on 23 June 2004. 7. Professional Accountants (Amendment) Bill 2004 ¡V A Private Member¡¦s Bill I have been invited to introduce this Private Member's Bill on behalf of the Hong Kong Society of Accountants (HKSA). At the House Committee meeting on 7 May 2004, members agreed to form a Bills Committee studying the Bill. The Bills Committee has held 4 meeting with HKSA and the Administration. The Bill seeks to amend the Professional Accountants Ordinance (Cap. 50) (the Ordinance) to- (a) Change the name of HKSA to ¡§Hong Kong Institute of Certified Public Accountants¡¨ and the designation of its members from ¡§professional accountants¡¨ to ¡§certified public accountants¡¨, (b) Expand the membership of the Council of HKSA (the Council) by increasing the number of lay members and the number of elected members, (c) Reform the investigation and disciplinary mechanism under the Ordinance, including the expansion of the membership of an Investigation Committee appointed by the Council from three to five, with the majority of members (including the chairman) being lay persons, and altering the composition of a Disciplinary Committee appointed by the Council, with the majority of members (including the chairman) being lay persons; (d) Broaden the powers of the Council and the Investigation Committee and the sanctions available to the Disciplinary Committee, (e) Provide immunity to members of the Council and its delegates, the Registrar and officers and employees of HKSA exercising statutory powers in good faith, (f) Make miscellaneous technical amendments; and (g) Make consequential amendments to the Professional Accountants By-laws (Cap. 50 sub. Leg. A) And to other Ordinance and subsidiary legislation. The Bill helps to inspire public confidence in the regulatory regime in respect of the accountancy profession. Having regard to the significant role that professional accountants play in the financial reporting framework and the governance of companies and corporations, the proposed amendments would be beneficial to Hong Kong¡¦s status as an international financial centre and the development of its capital markets. After much deliberation, the Bills Committee supported the proposals in the Bill. The Bill was passed without controversy on 9 July 2004 and a copy of my speeches are attached herewith as Appendix V. 8. Bills Committee on Airport Authority (Amendment) Bill 2004 The Bills Committee has held a meeting with the Administration to discuss the Bill. The objective of the Bill is to provide a mechanism by which the share capital of the Airport Authority (¡§AA¡¨) which is stated in section 23(1) of the Airport Authority Ordinance (Cap. 483) (¡§the Ordinance¡¨) may be reduced. The Bill was passed on 23 June 2004.
List attached as Appendix VI. In addition, I have written two ¡¥Letters to Hong Kong¡¦ for the RTHK entitled ¡¥Walk on Two Legs¡¦ and ¡¥A Tribute to Politics¡¦ on 21 March 2004 and 9 May 2004 respectively. The speeches were published in the April & June LegCo Columns of the Hong Kong Accountant. Other speeches on my Web Page and highlights will be published in my circulars to members.
To present this Report orally.
As this will be my last Council Report as the LegCo representative of the accountants, I wish to record my sincere gratitude to all the friendship, assistance, support and advice of the successive HKSA Presidents and Council Members since 1995 to date. A special thank you must also go to the Registrar and the team of highly competent and super efficient team of HKSA staff. Without all your help, I could not possibly have achieved all the tasks and responsibilities that came my way as well as I did. Thank you and goodbye!! ¡@ |
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