Hong Kong Securities and Futures Commission: How to create
clear announcements (Project on the Use of Plain Language)

Flashcards

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Step 2: Click Next button again to show the explanation or
"After" Plain English revision; Repeat Steps 1 and 2.
Use commonsense names and abbreviations.Choose commonsense shortened names for the parties to your transaction.

But choose your abbreviated name with care. Acronyms are confusing, and you should avoid using them unless the party is commonly referred to in that way. For example, a company with the name Hong Kong Investments Developments Limited should be called "HK Investments", not "HKIDL".

If your transaction involves a group of companies, all with a common first name, you could identify them by their main function, eg, "Holding", "Investment", "Garment" etc.

Generic names such as "Company" or "Vendor" can be confusing where there are several parties to a transaction, and should be avoided.

You should also avoid using acronyms when abbreviating terms used in your announcement.
Original:

In the event that there is any difference between the Deemed NAV and the July NAV (the "NAV Difference"), the Agreement provides that the Sale Consideration will be adjusted on the basis of the abovementioned formula by increasing or decreasing , as the case may be, the Deemed NAV by the amount of the NAV difference on a dollar for dollar basis...
Rewritten:

If there is a difference between the agreed value of HK Investments and its actual value as at 1 July 1997, then the price will be adjusted using the actual value instead of the agreed value in the above formula.
Use shorter sentences (an average length of 20 to 25 words).Long sentences are difficult to read. If you want to avoid confusing your reader you must either have very well structured long sentences, or use shorter sentences.
Original:

The rights shares to which overseas shareholders would otherwise have been entitled and any rights shares arising from the aggregation of fractional entitlements to the rights shares and which, in each case, are not sold as described herein, and any rights shares allotted provisionally but not accepted, will be made available for application on the form of application for excess rights shares by qualifying shareholders and will be allocated on an equitable basis to be decided by the directors at their sole discretion. (83 words)
Rewritten:

Application for excess shares:

Qualifying shareholders may apply for any unsold entitlements of overseas shareholders, unsold rights shares created by adding together fractions of rights shares, and any rights shares provisionally allotted but not accepted.

Shareholders can apply by completing the application for excess rights shares. The directors will allocate the excess shares at their discretion. (31, 11 and 10 words)
Prefer the active voice.Why prefer the active voice?

• It is easier to read and understand.
• It uses fewer words.
• The passive voice often fails to tell the reader who will take the action.
Original (passive voice):

A circular will be sent to qualifying shareholders shortly.
Rewritten (active voice):

HK Investments will send a circular to qualifying shareholders shortly.
Avoid hidden verbs.Verbs are often hidden as nouns. If you can uncover your hidden verbs, your announcements will be stronger, more direct, and easier to read.You can find most hidden verbs by their endings: -ment -al -ion -tion -sation -ance -ence –ity.
Original (with nouns)

Shareholders will be notified of the commencement of the offer.

If there is a refusal by the Court to...

The company will make application to the Stock Exchange...

The SFC must grant permission...

The director made the statement in reliance upon...

The shareholders have passed a resolution...

Payment will be made by the purchaser...
Rewritten (with verbs)

Shareholders will be notified when the offer commences.

If the Court refuses to...

The company will apply to the Stock Exchange...

The SFC must permit...

The director relied on...

The shareholders have resolved...

The purchaser will pay...
Use simple, common words, not jargon and legalese.

Some common examples of formal, complex words which have a simpler, more ordinary alternative appropriate for use in plain language announcements: approximately (about), because of the fact that (because), in accordance with (under), in the event that (if), prior to (before), pursuant to (under), subsequent to (after), sufficient number of (enough) until such time as (until).
Don’t use two or more words where one will do. Always use the ordinary, simple word or phrase instead of the excessively formal and complex.
Original:

Immediately following completion of the placing but prior to the completion of the subscription the Vendor’s shareholding interest will be reduced to approximately 39% and immediately following completion of the placing and the subscription such shareholding interest will be approximately 46%.
Rewritten:

After completion of the placing but before completion of the subscription, the Vendor’s shareholding interest will be reduced to about 39%. After the subscription, the Vendor’s interest will be about 46%.

Better:

The placing will reduce the Vendor’s shareholding interest to about 39%. The subscription will then increase the Vendor’s interest to about 46%.
Original:

In the event that the above conditions are not fulfilled by the Vendor on or before 1 January 1997 or such later date as may be agreed by the Vendor and the Company, then the subscription agreement and the respective rights and obligations of the parties thereunder will lapse and terminate.

Rewritten:

If these conditions are not fulfilled by the Vendor on or before 1 January 1997, or a later date agreed between the parties, then the subscription agreement will end.
Original:


The Rights Issue is conditional upon:

• the delivery to the Stock Exchange and filing and registration with the Registrar of Companies in Hong Kong respectively on or prior to the date on which the prospectus to be issued in respect of the Rights Issue (the "Prospectus") is posted (the "Posting Date") of one copy of each of the Prospectus, the provisional allotment letter and the form of application for excess Rights Shares ("Prospectus Documents") each duly certified by two Directors (or by their agents duly authorised in writing) as having been approved by resolution of the board of directors (and all other documents required to be attached thereto) and otherwise complying with the requirements of the Companies Ordinance (Cap 32 of the Laws of Hong Kong) and the Listing Rules.
Rewritten (Sometimes just using simpler expressions instead of wordier ones will not be enough. The real solution is to start again.)

Conditions of the rights issue:

• HK Investments must deliver to the Stock Exchange and file and register with the Hong Kong Registrar of Companies all relevant documents as required by the Listing Rules and the Companies Ordinance.
Prefer the positive to the negative.Positive statements are easier to understand than negative ones. To understand a negative statement, a reader must first understand the positive and then negative it.

Of course, it is not always possible to turn a negative statement into a positive one, but if you can make a positive statement, do so.
Origina (negative)l:

HK Investments expects the subscription to be completed not later than 14 days after the completion of the placing.
Rewritten (positive):

HK Investments expects the subscription to be completed within 14 days after the completion of the placing.
Original (negative):

No adjustments shall be made to the sale consideration if the net asset value difference does not exceed 5% of the deemed net asset value.
Rewritten (positive):

If there is a difference of more than 5% between the deemed value of the company and its actual value, then the sale consideration will be adjusted.

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