SECURITIES INDUSTRY ACT 1980 No. 66, 1980 - SECT 128
Prohibition of dealings in securities by insiders
SECURITIES INDUSTRY ACT 1980 No. 66, 1980 - SECT 128
Prohibition of dealings in securities by insiders
128. (1) A person who is, or at any time in the preceding 6 months has been,
connected with a body corporate shall not deal in any securities of that body
corporate if by reason of his so being, or having been, connected with that
body corporate he is in possession of information that is not generally
available but, if it were, would be likely materially to affect the price of
those securities.
(2) A person who is, or at any time in the preceding 6 months has been,
connected with a body corporate shall not deal in any securities of any body
corporate if by reason of his so being, or having been, connected with the
first-mentioned body corporate he is in possession of information that-
(a) is not generally available but, if it were, would be likely materially
to affect the price of those securities; and
(b) relates to any transaction (actual or expected) involving both those
bodies corporate or involving one of them and securities of the other.
(3) Where a person is in possession of any such information as is mentioned in
sub-section (1) or (2) that if generally available would be likely materially
to affect the price of securities but is not precluded by either of those
sub-sections from dealing in those securities, he shall not deal in those
securities if-
(a) he has obtained the information, directly or indirectly, from another
person and is aware, or ought reasonably to be aware, of facts or
circumstances by virtue of which that other person is then himself
precluded by sub-section (1) or (2) from dealing in those securities;
and
(b) when the information was so obtained, he was associated with that
other person or had with him an arrangement for the communication of
information of a kind to which those sub-sections apply with a view to
dealing in securities by himself and that other person or either of
them.
(4) A person shall not, at any time when he is precluded by sub- section (1),
(2) or (3) from dealing in any securities, cause or procure any other person
to deal in those securities.
(5) A person shall not, at any time when he is precluded by sub- section (1),
(2) or (3) from dealing in any securities by reason of his being in possession
of any information, communicate that information to any other person if-
(a) trading in those securities is permitted on a stock market, whether
within or outside the Territory; and
(b) he knows, or ought reasonably to know, that the other person will make
use of the information for the purpose of dealing, or causing or
procuring another person to deal, in those securities.
(6) Without prejudice to sub-section (3) but subject to sub-section (7), a
body corporate shall not deal in any securities at a time when any officer of
that body corporate is precluded by sub-section (1), (2) or (3) from dealing
in those securities.
(7) A body corporate is not precluded by sub-section (6) from entering into a
transaction at any time by reason only of information in the possession of an
officer of that body corporate if-
(a) the decision to enter into the transaction was taken on its behalf by
a person other than the officer;
(b) it had in operation at that time arrangements to ensure that the
information was not communicated to that person and that no advice
with respect to the transaction was given to him by a person in
possession of the information; and
(c) the information was not so communicated and such advice was not so
given.
(8) For the purposes of this section, a person is connected with a body
corporate if, being a natural person-
(a) he is an officer of that body corporate or of a related body
corporate;
(b) he is a substantial shareholder within the meaning of Division 3A of
Part IV of the Companies Ordinance 1962 in that body corporate or in a
related body corporate; or
(c) he occupies a position that may reasonably be expected to give him
access to information of a kind to which sub-sections (1) and (2)
apply by virtue of-
(i) any professional or business relationship existing between
himself (or his employer or a body corporate of which he is an
officer) and that body corporate or a related body corporate;
or
(ii) his being an officer of a substantial shareholder within the
meaning of Division 3A of Part IV of the Companies Ordinance
1962 in that body corporate or in a related body corporate.
(9) This section does not preclude the holder of a dealers licence from
dealing in securities, or rights or interests in securities, of a body
corporate, being securities or rights or interests that are permitted by a
stock exchange to be traded on the stock market of that stock exchange, if-
(a) the holder of the licence enters into the transaction concerned as
agent for another person pursuant to a specific instruction by that
other person to effect that transaction;
(b) the holder of the licence has not given any advice to the other person
in relation to dealing in securities, or rights or interests in
securities, of that body corporate that are included in the same class
as the first-mentioned securities; and
(c) the other person is not associated with the holder of the licence.
(10) Where a prosecution is instituted against a person for an offence by
reason that the person was in possession of certain information and entered
into a transaction in contravention of this section, it is a defence if the
person satisfies the court that the other party to the transaction knew, or
ought reasonably to have known, of the information before entering into the
transaction.
(11) For the purposes of sub-section (8), "officer", in relation to a body
corporate, includes-
(a) a director, secretary or employee of the body corporate;
(b) a receiver, or a receiver or manager, of the property or any part of
the property of the body corporate;
(c) an official manager or a deputy official manager of the body
corporate;
(d) a liquidator of the body corporate; and
(e) a trustee or other person administering a compromise or arrangement
made between the body corporate and its creditors.