The Board of Directors of Hong Kong Exchanges and Clearing Limited (HKEx) today (Friday) approved a memorandum of understanding (MOU) on the funding arrangements for the Financial Reporting Council (FRC), an independent statutory body established under the Financial Reporting Council Ordinance to receive and investigate complaints concerning irregularities of auditors and reporting accountants of listed companies and non-compliances in the financial reports of listed companies.

HKEx, the Securities and Futures Commission, the Hong Kong Institute of Certified Public Accountants and the Registrar of Companies as General Manager of the Companies Registry Trading Fund have agreed to contribute to the funding of the FRC.  The funding arrangements are as follows:

Pursuant to the MOU, the first annual contribution and the one-off contribution will be payable to the FRC on 1 February 2007.  The two remaining annual contributions will be payable on 1 February 2008 and 2009 respectively subject to the approval of the annual estimates of the income and expenditure of the FRC by the Financial Services and the Treasury Bureau.

After the first three financial years, the contributions to the FRC will be subject to a review of its operating experience and other factors.

HKEx supports the establishment of the FRC with the aim of enhancing the accounting and reporting standards of listed companies and helping to safeguard the public interest.