SECURITIES INDUSTRY BILL

Order for Second Reading read.

8.03 p.m.

The Minister for Finance (Mr Hon Sui Sen): Sir, I beg to move, "That the Bill be now read a Second time."

I would like to place this Bill in its proper perspective by reminding Members that developments on the Stock Exchange have attracted both public comment and criticism since 1968. In fact, there has been, in this House and outside it, considerable pressure put upon the Government from time to time to intervene in the public interest to protect investors from unscrupulous manipulation and rigging on the Stock Exchange.

Recent developments on the Stock Exchange which have resulted in the Committee of the Exchange suspending or limiting trading in certain shares, as well as the timely study of the Securities Market in Singapore and Malaysia by Mr George M. Ferris, Jr. (which is commonly referred to as "the Ferris Report") have focused attention on the shortcomings and deficiencies of the Securities Market in Singapore and have raised the question as to what form of legislative intervention is needed to remedy these shortcomings and deficiencies, particularly as they affect the protection to be afforded to the investing public. For there can be no doubt that some form of intervention is necessary to ensure that the Securities Market operates in a fair and open manner and to prevent, as far as possible, certain persons, especially those with "insider" knowledge, from manipulating the market by illegal means for their own profit.

Even without the occurrence of the above-mentioned events, it is probably inevitable that the Securities Market in Singapore could not, having regard to the accelerated pace of economic and industrial development and the need to attract private capital investment to support and quicken this development, have continued for long in its traditional laissez-faire state.

The experience of Singapore in this respect would not, it is thought, have been unlike the experience of the more economically advanced members of the Commonwealth, for example, Australia and the United Kingdom, where the need to exercise some form of control over the Securities Market has in the period 1958-1970 found legislative expression in various Acts of Parliament in those countries. The decision of the Government to legislate to regulate the Securities Market in Singapore can, therefore, be regarded as part of a Commonwealth-wide approach towards investor protection. The form of control adopted in Australia and the United Kingdom takes substantially the same pattern and it is to be noted that in each of these countries the system of self-regulation by the Stock Exchange has been preferred to that of regulation by an independent statutory body along the lines of the Securities and Exchange Commission in the United States of America. And it is this pattern which has been incorporated in the present Bill.

In reaching the decision that self-regulation was, at least under present conditions prevailing in the stock market, preferable, the Government was influenced by the consideration that the Stock Exchange of Malaysia and Singapore is in a position to exercise close and effective control over the securities industry generally. It was also encouraged to believe that the Committee of the Stock Exchange was seriously attempting, within the limits of its capacity, to exercise this control with rigour. This has to some extent been evidenced by the new Rules and Bye-laws which the Committee have adopted, as well as by action taken by the Committee to deter manipulation. These Rules have incorporated some of the recommendations of the Ferris Report and in some respects the new Rules have gone further along the road to secure investor protection than was contemplated in the Report. No doubt future Rules will incorporate some of the other recommendations made by Mr Ferris. Indeed, I am persuaded to believe that the spirit of cooperation that has been shown by the Stock Exchange Committee with my Ministry in attaining the common objective of investor protection will continue long after this Bill has passed into law.

With this in mind, it is proposed that meetings will be held periodically between members of the Stock Exchange Committee and Government officers in a Standing Committee whose function will be to review problems arising in the implementation of this proposed legislation and the Companies (Amendment) Bill as well as the application of the New Rules of the Stock Exchange, and to make recommendations on amendments which experience may show to be necessary. The Committee can be assured that the full support of the Government will be given to it in the application of the provisions contained in these two Bills, particularly in regard to those provisions dealing with unlawful share trading and disclosure by shareholders and directors of companies and auditing of accounts of dealers in securities. Since the Committee, in many instances, will be the first to become aware of possible breaches of the provisions in the proposed legislation, it will be one of the functions of the Committee to consider these breaches and, if necessary, to bring them to the attention of the Government for appropriate action to be taken.

Members are aware that there is a unified Stock Exchange as between Singapore and Malaysia. It is the wish of, I am sure, the Malaysian Government as well as of the Singapore Government that this unified Exchange should continue for the benefit of both countries. Members will be reassured to learn, therefore, that the Malaysian Government, with which we have been in consultation, has indicated general agreement with the principles written into this. Bill and the Companies (Amendment) Bill. It is most desirable that the legislation in both countries should, in some respects, be uniform on these subjects and I am happy to say that the Malaysian Government is considering the introduction of complementary legislation. For without it, neither Bill will be fully effective in its operation.

However, the decision not to introduce into Singapore direct centralised control does not mean that other forms of statutory control are undesirable. This is far from being the case, and this has raised the question as to which forms of control are best suited to local conditions. The Bill has answered the question by introducing the following forms of control over the Stock Exchange and its members and other dealers in securities:

(1) Ministerial approval will be needed to establish any new stock exchange.

(2) Any future alteration of the-existing rules of a stock exchange may be disallowed by the Minister.

(3) The maintenance of proper trust accounts by brokers and other dealers in securities and the auditing of the same will be given statutory force and the Minister may in special circumstances appoint a special auditor.

(4) The establishment of a fidelity fund by the Stock Exchange has been placed on a statutory footing and persons who suffer loss as the result of defalcations by brokers may be compensated out of the fund.

(5) Dealers, who are not stockbrokers, will also be required to keep accounts and records and make a deposit of $100,000.

(6) All dealers in securities, including stockbrokers, will be licensed to deal in securities.

(7) Specific offences are created to deal with dishonest trading in securities.

While the Bill covers the whole of the securities industry in Singapore, I would like to make it clear that the Bill does not attempt to prevent speculation as such. Some speculation attends every anticipation or expectation of short or long term price trends which induces trading activity on the Exchange. It is and always must remain the responsibility of the individual investor to decide as to the advisability of any particular investment. What the Bill does do is to attempt to see that the stock market operates in a fair and open way and that people do not manipulate the market by illegal means for their own profit. The Bill, together with the New Rules that have recently been passed by members of the Stock Exchange, will, it is considered, go a long way to achieve these objectives. However, I would like to emphasise again that the Bill does not merely pay lip-service to but acknowledges the principle of self-regulation of the Exchange by the Committee and is not intended to interfere with the day-to-day control by the Committee of normal share trading on the Exchange, nor with the traditional form of control that the Committee exercises over members of the Exchange except on such matters as the licensing of dealers in securities and the reduction to statutory form of existing Stock Exchange Rules with regard to the maintenance of brokers' trust funds and the fidelity fund.

The scope of the proposals contained in the Bill as it affects investor protection is therefore much wider than that contemplated in the Ferris Report. This is probably inevitable since Mr G. M. Ferris, in his study of the securities industry, has concentrated, in the main, upon ways in which the Stock Exchange of Malaysia and Singapore could strengthen the basic structure of the member firms of the Exchange, could dampen down excessive speculation and could improve trading facilities. However, he has made useful recommendations with regard to investor protection on such matters as listing requirements of companies minimum capital requirements of member firms, etc., surprise financial audit of member firms, excessive speculation and disclosure of information to the public some of which have been incorporated in this Bill or the Companies (Amendment) Bill, 1970, while others have been or will be incorporated in Stock Exchange Rules.

The Bill, for the first time in Singapore, proposes to license dealers in securities and their employees who are engaged in negotiating investment in securities. The Government believes that a system of control by licensing of dealers in securities is necessary at this time and this is particularly so as regards dealers in securities who are not stockbrokers. For while stockbrokers have always been subject to certain traditional forms of control by the stock exchange, other dealers have not been subject to any real form of control. The provisions in the Bill should ensure that only persons of good character and in a sound financial position will be permitted to be licensed as dealers in securities under the Act. Licensed dealers will be required to keep trust accounts and have them audited. This will not prove burdensome to stockbrokers, for under Stock Exchange Rules they have been required to maintain trust accounts. Again, licensed dealers who are not stockbrokers will be required to enter into a fidelity bond. The reason for this is that the fidelity fund provisions in the Bill apply only to stockbrokers who are members of the Stock Exchange. With regard to the latter, they will find little that is unusual about those provisions, for under the existing Stock Exchange Rules a Fidelity Guarantee Fund was created to compensate persons who suffer loss by reason of the default of members. The provision in the Bill therefore merely gives statutory force to the establishment of such a fund. The amount of capital in the existing fund will form the basis of the fund established under this Bill.

Another significant feature of the Bill is to be found in Part VII, where new offences are created in relation to market dealings. The first offence relates to creating a false or misleading appearance of active trading in securities; the second to market rigging activities; the third to the use of fictitious transactions to affect the stock market; and the fourth to knowingly circulating false rumours with respect to securities. A maximum penalty of $30,000 or imprisonment for five years is provided for these serious offences. It may not often be necessary for prosecutions to be launched under these sections, as in the United States similar provisions have been used with great effect to inhibit those wrongful practices which do so much to destroy a true market in securities. The Government believes that it is important that Parliament should clearly state its abhorrence of such practices and that every effort should be made to stamp them out before they become widespread.

Sir, I do not propose to dwell upon the other provisions of the Bill, as these are dealt with in some detail in the Explanatory Memorandum, or will be clear in the explanations on the amendments I am introducing.

Before concluding, however, I would like to clear up a misunderstanding that has occurred due to an erroneous reference in the Explanatory Statement dealing with clause 13. It is not Government's intention that a remisier should deposit $30,000 or $100,000 as security with the Registrar of Companies. This provision will apply only to dealers who are not stockbrokers.

I commend this Bill to the House.

Sir, I beg to move.

Question proposed.

8.20 p.m.

Dr Augustine H. H. Tan: Sir, very briefly, I would like to welcome the introduction of this Bill. I think it is both timely and necessary, as the orderly development of financial institutions is indispensable for economic development. I welcome especially the Minister's assurance of the co-operation of the Government of Malaysia in this regard. This is because of the inter-relationship of the two Stock Exchanges of the two countries, and in a matter of enforcement I hope that similar co-operation would be forthcoming.

I am wondering whether the penalties which are specified in the Bill are adequate enough, especially $30,000 as the maximum penalty. The gaol sentence of five years, I think, would be adequate, but in view of the fact that the ill-gotten rewards of market rigging can be very considerable, in hundreds of thousands if not millions of dollars, the maximum penalty of $30,000 would seem to me to be very trivial.

Mr Hwang Soo Jin: Sir, it gives me considerable pleasure to rise in support of the Bill currently before the House, because in the past two years I have on two occasions raised questions concerning the Stock Exchange in this House. In 1968, I urged the then Minister for Finance to consider the setting up of an independent commission in order to supervise the Exchange. Although the scheme now proposed is very much different from what I urged, I am nevertheless satisfied that the stringent provisions and requirements will put to a stop to all the malpractices that have been going on in the Stock Exchange, very much at the expense of the small man - people who put their life savings in the Stock Exchange and one fine day wake up to find that their savings are all gone. It is all very pathetic. That is a situation that could not have been allowed to perpetuate for too long, bearing in mind particularly the socialist policy adopted by this Government.

I would like to take this opportunity of congratulating the Minister on bringing about a very timely piece of legislation. It is particularly encouraging to note that the Minister will be forming a special Standing Committee to watch over the implementation of the Ordinance. This is, to my mind, a very clear demonstration of the flexibility of the Minister and his willingness to co-operate with the private sector in ensuring that the measures introduced will be a success. I have no doubt that in the course of implementation, if it is found that there are areas which are not practicable or satisfactory, the Minister will be prepared to make suitable amendments.

8.24 p.m.

Mr Hon Sui Sen: The Member for Whampoa mentioned the penalty of $30,000 as being perhaps too light for offences of this nature. As this is an alternative to a prison sentence, I would suggest that where the penalty is considered inadequate the court might very possibly impose the other penalty, a prison sentence of five years. I am sure the Member will consider this prison sentence adequate for even a crime of rigging and manipulation.

On the comment of the Member for Jalan Kayu on the nature of the organisation which we are proposing to set up, he mentioned an independent commission. I think this was considered but it was thought that, having regard to the administrative difficulties, the problem of finding adequate persons to staff an organisation on the lines of the Securities and Exchange Commission, the solution we have arrived at - in trusting to self-regulation by the Stock Exchange - is the best that can be adopted in the circumstances.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. -[Mr Hon Sui Sen].

Bill considered in Committee.

[Mr N. Govindasamy in the Chair]

8.26 p.m.

Clause 1 ordered to stand part of the Bill.

Clause 2 -

Mr Hon Sui Sen: Sir, I beg to move,

In page 2, line 42, after "person", to insert `not being a stock broker or his representative".

Sir, the purpose of this amendment is to make it clear that "stock brokers" and "stock brokers' representatives", that is to say, remisiers, do not fall within the definition of "exempt dealer". A stock broker is a dealer and a remisier is a dealer's representative for the purpose of this Bill.

Amendment agreed to.

Mr Hon Sui Sen: Sir, I beg to move,

In page 2, after line 44, to insert - " (b) any person acting in the capacity of manager or trustee under a unit trust scheme a deed in respect of which is approved by the Registrar or the Act 42 Minister under Division 5 of Part IV of 1967 of the Companies Act, 1967;".

Sir, managers of unit trusts buy and sell units which are deemed to be securities for the purpose of the Bill directly and not through dealers. Hence, they would fall within the definition of a "dealer". It is not proposed, however, that the provisions of the Bill should apply to this category of persons as their duties and responsibilities are already laid down under the Companies Act. The amendment seeks to include managers of unit trusts in the definition of an "exempt dealer".

Amendment agreed to.

Mr Hon Sui Sen: Sir, I beg to move, In page 3, line 5, at end, to add "or" and a new paragraph (e) * as set out in the Order Paper Supplement.

• The new paragraph (e) , appearing in the Order Paper Supplement, reads as follows: "(e) such other person or class of persons as the Minister may by order declare to be an exempt dealer if the main business carried on by such person or class of persons is a business other than the dealing in securities, and if the dealing in securities is by way of - (i) making or offering to make with any person an agreement for or with a view to the underwriting of securities; (ii) making an invitation to persons to subscribe for securities or to purchase securities on the first sale thereof; Act 42 (iii) issuing any document which is or is deemed of 1967 to be a prospectus within the meaning of the Companies Act, 1967; or (iv) such other way as the Minister may from time to time declare;".

Sir, apart from the managers of unit trusts, there is another category of persons, namely, merchant banks, whose activities include the business of dealing in securities as defined in the Bill. It is not proposed, however, that the provisions of the Bill, which are designed primarily for stock brokers and other dealers, should apply to merchant banks. The amendment seeks to include merchant banks in the definition of an exempt dealer.

Amendment agreed to.

Mr Hon Sui Sen: Sir, I beg to move,

In page 3, line 34, to leave out "funds, stock, shares" and insert "stocks and shares in a public company or corporation, funds".

Sir, the definition of "securities" includes the shares of private companies as well as those of public companies. II has been represented that it would be unduly restrictive to apply the provisions of the Bill to dealings in shares of private companies. It is considered proper that shares of private companies be excluded from the definition of securities, as the primary purpose of the Bill is to regulate dealings in the shares of quoted public companies. The amendment would exclude shares of private companies from the definition of securities.

Amendment agreed to.

8.30 p.m.

Mr Hon Sui Sen: Sir, I beg to move,

In page 4, after line 13, to insert the definition of "unit trust scheme"+ as set out in the Order Paper Supplement.

+The definition, appearing in the Order Paper Supplement, reads as follows:

""unit trust scheme" means any arrangement made for the purpose, or having the effect of providing facilities for the participation by persons as beneficiaries under a trust, or profits or income arising from the acquisition, holding, management or disposal of securities or any other property."

Sir, this amendment introduces the definition of "unit trust scheme" consequent upon the inclusion under an earlier amendment of the managers of such schemes in the definition of "exempt dealers".

Amendment agreed to.

The Chairman: There are consequential amendments to be made:

(i) In page 3, line 1, paragraph (b) to be re-lettered as (c) .

(ii) In page 3, line 3, to leave out "or".

(iii) In page 3, line 4, paragraph (c) to be re-lettered as (d) .

(iv) In page 4, line 13, to leave out the full-stop and insert a semi-colon.

They will be done.

Clause 2, as amended, ordered to stand part of the Bill.

Clause 3 -

Mr Hon Sui Sen: Sir, I beg to move,

In page 4, line 31, after "shall", to insert "be".

This amendment corrects a typographical error.

Amendment agreed to.

Clause 3, as amended, ordered to stand part of the Bill.

Clause 4 -

Mr Hon Sui Sen: Sir, I beg to move,

In page 5, line 3, to leave out "twenty" and insert "ten".

Sir, it is considered that, for a place the size of Singapore, twenty is too large a number of brokers required to constitute a stock exchange. The amendment reduces the prescribed minimum number of members from 20 to 10. As a matter of fact, the Stock Exchange of Malaysia and Singapore itself has only 13 Singapore-based member firms.

Amendment agreed to.

Clause 4, as amended, ordered to stand part of the Bill.

Clause 5 -

The Chairman: There is a note to correct a typographical error,

In page 5, line 33, to leave out "recission" and insert "rescission".

This will be done.

Clause 5 ordered to stand part of the Bill.

Clauses 6 to 9 inclusive ordered to stand part of the Bill.

Clause 10 -

Mr Hon Sui Sen: Sir, I beg to move,

In page 7, line 4, to leave out "is an individual" and insert `carries on business as a dealer and is a stock broker".

Sir, the purpose of this amendment, together with the next amendment, is to make it clear that dealers' licences will be issued to individual partners or directors of member firms of a stock exchange, and not to the firms as such. This follows the practice in other professions, such as law and medicine, in which licences are issued to individuals and not to partnerships or companies. In the case of a corporate dealer who is not a member firm, however, a licence may still be issued to a corporation.

Amendment agreed to.

Mr Hon Sui Sen: Sir, I beg to move,

In page 7, line 7, to leave out "is a corporation" and insert "carries on the business of a dealer as a corporation but is not a member company".

Sir, this amendment should be taken together with the previous amendment, the purpose of which I have already explained.

Amendment agreed to.

Clause 10, as amended, ordered to stand part of the Bill.

Clauses 11 and 12 ordered to stand part of the Bill.

Clause 13 -

Mr Hon Sui Sen: Sir, I beg to move,

In page 7, line 26, to leave out "thirty" and insert "one hundred".

Sir, this amendment increases the deposit to be made by a dealer, who is not a stock broker, from $30,000 to $100,000. It is considered appropriate that the deposit should be so increased in view of the fact that dealers who are not stock brokers do not have to comply with the stringent requirements of the rules of the Stock Exchange or to observe the financial discipline to which stock brokers are subject. It is not envisaged, however, that licences will be granted to more than a few such dealers who are not stock brokers.

Amendment agreed to.

Clause 13, as amended, ordered to stand part of the Bill.

Clauses 14 and 15 ordered to stand part of the Bill.

Clause 16 -

Mr Hon Sui Sen: Sir, I beg to move,

In page 8, line 22, to leave out from "(1) " to the end of line 28 and insert the provisions* as set out in the Order Paper Supplement.

• The provisions, appearing in the Order Paper Supplement, read as follows:

" Any person who is aggrieved by any decision of the Registrar under this Part may appeal to the Minister and any person who is aggrieved by a decision of a Court under section 15 and this Act may appeal to the High Court so long as the appeal in each case is made within thirty days of the decision of the Registrar or the Court, as the case may be.

(2) In any appeal under this section the decision of the Minister or the Court as the case may be, shall be final and shall be given effect to by the Registrar.".

Sir, this amendment alters the procedure for appeal in the event of an application for the issue or renewal of a licence being refused by the Registrar of Companies. An aggrieved applicant will now have to appeal to the Minister whose decision shall be final. If, however, during the currency of the licence the Registrar decides to revoke the licence, he can only do so with the leave of a District Court. An appeal against a decision of a District Court shall lie in the High Court.

Amendment agreed to.

Clause 16, as amended, ordered to stand part of the Bill.

Clauses 17 to 23 inclusive ordered to stand part of the Bill.

Clause 24 -

Mr Hon Sui Sen: Sir, I beg to move,

In page 11, line 21, to leave out from "(1) " to the end of line 33 and insert the provisions* as set out in the Order Paper Supplement.

• The provisions, appearing in the Order Paper Supplement, read as follows:

" A dealer shall within six months of the end of the financial year lodge with the relevant authority an auditor's report containing information on such matters as are prescribed.

(2) If a dealer fails to comply with the provisions of subsection (1) of this section the relevant authority shall forthwith report the matter to the Minister.

(3) For the purposes of subsection (1) of this section "financial year" in relation to a dealer means the period of twelve months ending on the date on which his accounts were closed for the year ending on the 31st day of December, 1970.".

Sir, the purpose of this amendment is to reduce the period allowed for the lodging of an auditor's report from nine months to six months after the end of a financial year. It also allows stock brokers to carry on with their existing financial years.

The clause, as originally drafted, would have had the effect of compelling stock brokers to adopt a uniform financial year. This is unnecessary for the purposes of the Bill.

Amendment agreed to.

Clause 24, as amended, ordered to stand part of the Bill.

8.45 p.m.

Clauses 25 to 44 inclusive ordered to stand part of the Bill.

Clause 45 -

Mr Hon Sui Sen: Sir, I beg to move,

In page 20, line 4, after "in", to insert "Malaysia or".

The purpose of this amendment is to allow the Stock Exchange to maintain two bank accounts, one in Singapore and another in Malaysia in respect of the fidelity fund. The fidelity fund can be applied to meet the liabilities of any member firm of the Exchange irrespective of whether the member firm is based in Singapore or Malaysia. It is considered expedient that the Exchange should, in the circumstances, be free to operate bank accounts in both territories.

Amendment agreed to.

Clause 45, as amended, ordered to stand part of the Bill.

Clauses 46 to 75 inclusive ordered to stand part of the Bill.

New Clause (A) -

Mr Hon Sui Sen: Sir, I should like to point out that in line 2 of sub-clause (7) of New Clause (A)t shown in the Order Paper Supplement, there is a typographical error in which the word "and" should read "any". May I have the consent of the House to make this amendment, of which I have not given notice?

Hon. Members indicated assent.

The Chairman: Members will take note of this amendment. +" Inspection (1) For the purpose of ascertaining whether of books the holder of a licence has complied and records with the provisions of this Act of licensee applicable to him in that capacity, and others and any conditions or restrictions subject to which the licence was granted or renewed, the Registrar may inspect and make copies of or take extracts from - (a) any document, record or matter required by or under this Act or the conditions of the licence to be kept by the holder of that licence; and (b) the books of a dealer, in so far as they relate to the business of the holder of that licence. (2) The Registrar may require the holder of a dealer's licence to disclose to him in relation to any purchase or sale of securities the name of the person from or to or through whom the securities were bought or sold and the nature of the instructions given to the dealer in respect of that purchase or sale. (3) The holder of a licence under this Act, and the servants and agents of that person shall, on being required by the Registrar so to do, produce any document, record or matter referred to in subsection(1) or disclose the information required under subsection (2) of this section. (4) No person shall obstruct or hinder the Registrar in the exercise of any of his powers under subsection (1),(2) or (5) of this section or obstruct any person in the exercise of any of those powers that he is duly authorised to exercise. (5) Where the Registrar has reason to suspect that any person has contravened any of th provisions of this Act or has been guilty of any fraud or offence under this or any other Act or law with respect to trading or dealing in securities, the Registrar may make such investigation as he thinks expedient for the due administration of this Act. (6) Notwithstanding anything in this section, the Minister may, where it appears to him in the public interest so to do, appoint any person as an inspector to investigate any matter concerning trading or dealing in securities. (7) Except where otherwise expressly provided by or under this or any other Act, any power, authority, duty or function conferred or imposed by or under this or any other Act on the Registrar may be exercised or performed by any person authorised by the Registrar to exercise or perform that power, authority, duty or function.".-[Mr Hon Sui Sen].

Brought up, and read the First time.

Mr Hon Sui Sen: Sir, I beg to move, "That the clause be read a Second time."

Under clause 12 of the Bill, the Registrar of Companies has the power to grant or renew a licence subject to such conditions or restrictions as he thinks fit. Under clause 15 the Registrar may also take steps with a view to revoking a licence. It is important, therefore, that the Registrar should also have the necessary authority to ascertain whether the holder of a licence has complied with the provisions of the law and also whether he has complied with any conditions or restrictions subject to which his licence was granted or renewed. For this purpose New Clause (A) [the new clause 72] empowers the Registrar to inspect the books and documents of, and to require that information be supplied to him by, the holder of a licence. In addition, the Minister may appoint an inspector to investigate any matter concerning trading or dealings in securities.

Sir, I beg to move.

Question put, and agreed to.

Clause read a Second time and added to the Bill.

The Chairman: It is intended that this new clause be inserted immediately after clause 71.

New Clause (B) - "Court may (1) Where, on the application of the make certain Registrar, it appears to the High Court orders. that a person has contravened this Act or any conditions of a Licence he holds or is about to do an act with respect to dealing or trading in securities that, if done, would be such a contravention, the Court may, without prejudice to any orders it would be entitled to make otherwise than pursuant to this section, make one or more of the following orders:- (a) in the case of persistent or continuing breaches of this Act or of the conditions of a licence he holds, an order restraining a person from carrying on a business as a dealer in securities, or as a dealer's representative or from holding himself out as so carrying on business or acting; (b) an order restraining a person from acquiring, disposing of or otherwise dealing with any securities specified in the order; (c) an order appointing a receiver of the property of a dealer; (d) an order declaring a contract relating to securities to be void or voidable; (e) for the purpose of securing compliance with any other order under this section, an order directing a person to do or refrain from doing a specified act; or (f) any ancillary order deemed to be desirable in consequence of the making of an order under paragraph (a), (b), (c), (d) or (e) of this subsection. (2) The Court shall, before making an order under subsection (1) of this section, satisfy itself, so far as it can reasonably do so, that the order would not unfairly prejudice any person. (3) The Court may, before making an order under subsection (1) of this section, direct that notice of the application be given to such persons as it thinks fit or direct that notice of the application be published in such manner as it thinks fit, or both. (4) Any person who contravenes or fails to comply with an order under subsection (1) of this section that is applicable to him shall be guilty of an offence under this Act and shall be liable on conviction to a fine of three thousand dollars or to imprisonment for a term not exceeding one year or to both such fine and imprisonment. (5) Subsection(4) of this section does not affect the powers of the Court in relation to the punishment of contempts of the Court. (6) The Court may rescind, vary or discharge an order made by it under this section or suspend the operation of such an order.". -[Mr Hon Sui Sen].

Brought up, and read the First time.

Mr Hon Sui Sen: Sir, I beg to move, "That the clause be read a Second time."

Sir, the new clause 72 confers on the Registrar certain powers to ensure that the holder of a licence abides by the provisions of the Bill. The new clause 73 lays down what action can be taken if it appears to the Registrar that the holder of a dealer's licence is or is likely to be in breach of the law. The clause provides that in such circumstances the High Court may, on the application of the Registrar, make one or more of a number of orders. Before making any order, however, the Court shall satisfy itself that the order would not unfairly prejudice any person. Contravention of any order so made is an offence punishable with a fine of $3,000 or imprisonment for a term not exceeding one year or both such fine and imprisonment.

Question put, and agreed to.

Clause read a Second time and added to the Bill.

The Chairman: It is intended that this new clause be inserted immediately after New Clause (A).

New Clause (C)- " Production and (1) If, on an application made to a inspection judge of the High Court in chambers by of the Registrar, there is shown to be books reasonable cause to believe that any where person has committed an offence dealing in connection with trading or in offence securities and that evidence of the suspected offence is to be found in any books or papers of or under the control of a dealer an order may be made - (a) authorising the Registrar to inspect those books or papers or any of them and make copies thereof or take extracts therefrom for the purpose of investigating and obtaining evidence of the offence; or (b) requiring the dealer or such other person as is named in the order to produce those books or papers or any of them to a person named in the order at a place so named. (2) An order under this section shall not require books or papers to be produced at a place other than the place of business of the person named in the order unless the Court is satisfied that the books or papers are not required in the conduct of the business or that there are special reasons requiring the books or papers to be produced at some other place.".-[Mr Hon Sui Sen].

Brought up, and read the First time.

Mr Hon Sui Sen: Sir, I beg to move, "That the clause be read a Second time."

Whereas the provisions of Parts II to V of the Bill apply largely to dealers and their representatives, the provisions of Part VII of the Bill-Trading in securities-apply to any member of the public. In the same manner that the new clauses 72 and 73 provide for offences by holders of licences, the new clause 74 provides for offences by members of the public. If it appears to a Judge of the High Court, on an application by the Registrar, that any person has committed an offence under Part VII of the Bill, the Judge may, by order, cause the books of a dealer to be inspected if he considers that relevant evidence can be found in the dealer's books. The new clause 74, like the new clauses 72 and 73, is necessary for the efficient administration and enforcement of the provisions of the Bill.

Sir, I beg to move.

Question put, and agreed to.

Clause read a Second time and added to the Bill.

The Chairman: It is intended that this new clause be inserted immediately after New Clause (B). There are consequential amendments to be made:

(i) Clauses 72 to 75 to be re-numbered 7S to 78 respectively.

(ii) In page 4, line 14, to leave out "7" and. insert "78".

(iii) The contents page to be amended.

They will be done.

Bill reported with amendments; read a Third time and passed.