The Working Group was formed in March last year by the Securities and Futures Commission and comprises representatives from the SFC, the Stock Exchange of Hong Kong, and leading market practitioners.

It completed the first phase of the project last July and released proposals aimed to improve the way listed issuers present information in public announcements to investors. The proposals were well received by the market.

During the second phase, problems common in prospectuses were identified and the Working Group has suggested the following improvements:

- simplifying the first page of a prospectus so it contains only essential and important information;
- drafting a useful summary of the information in the prospectus;
- arranging the content into a logical order;
- grouping like information together under descriptive headings;
- where like information cannot easily be grouped together, using cross references to guide readers;
- eliminating unnecessary repetition; and
- writing in plain language.

The sample, contained in a handbook "How to Create a Clear Prospectus", sets out the order in which information should be presented, and suggests plain language wordings for most standard sections.

A sample application form for share subscription has also been prepared. It is easier to read and fill in, and will enable investors to retain important information regarding the application.

SFC Deputy Chairman and Executive Director, Mrs Laura Cha, who is convenor of the Working Group, said: "The Working Group has reviewed a number of prospectuses, and found that in many cases, the contents were poorly organised and not presented in a logical order."

"Information is sometimes repeated unnecessarily and the style of writing is tedious and legalistic," she said.

Mrs Cha urged the market to adopt the proposed changes to format as it is essential that prospectuses are consistent so that investors can find the same information in the same place.

The proposed plain language wordings are suggestions only and are not the only versions that will be acceptable to the SFC or the Stock Exchange.

The Working Group has also recommended changes to the content of a prospectus. However, these changes require the approval of the Listing Committee of the Stock Exchange and amendments to the Listing Rules before they can be implemented.

Mr Lawrence Fok, Executive Director of Listing Division of the Stock Exchange and a Working Group member, said: "While the proposals by the Working Group will make prospectuses easier to read and understand, I wish to emphasize that prospectuses adopting the proposals will continue to include all the important information presently available in such documents."

The English and Chinese versions of the handbook "How to Create a Clear Prospectus" are available free of charge at the offices of the SFC and the Stock Exchange. The English version can also be found on the SFC Internet Website at http://www.hksfc.org.hk and the Stock Exchange Website at http://www.sehk.com.hk.

Comments on the proposals are welcome and should be sent in to:

Working Group on Plain Language
Corporate Finance Division
Securities and Futures Commission
12/F, Edinburgh Tower
The Landmark
15 Queen's Road Central
Hong Kong

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Note to Editor:

The convenor of the Working Group is Mrs Laura Cha, Deputy Chairman and Executive Director of the SFC, and members include Mr Lawrence Fok, Executive Director of Listing Division of the Stock Exchange; Mr David Shaw, Partner, Norton Rose, and Consultant, Johnson, Stokes & Master; Mr John Brewer, Company Secretary of a listed company; Mr Eamonn McManus, Managing Director, Corporate Finance & Equity Capital Markets Division of HSBC Investment Bank Asia Limited; Mr Mark Dickens, Executive Director of Enforcement of the SFC; Ms Christine Wong, Director of Corporate Finance of the SFC; Ms Bonnie Chan, Senior Manager of Listing Division of the Stock Exchange; and Ms Cate Guthleben, Consultant - Special Projects of the SFC.

Project on the Use of Plain Language