Delicious Noodle Limited ("DNL") is a limited company incorporated in Hong Kong and its shares are listed on Main Board of The Stock Exchange of Hong Kong Limited. DNL focuses on the catering business and owns over 100 Shanghai-style rice noodle restaurants and 50 Italian-style pizza restaurants in Hong Kong. Mr. Ho is the executive director of DNL. Recently, he has been in the process of negotiating the sale of DNL's noodle restaurants (the "Transaction") with a potential buyer, Omasaki Holdings Limited ("Omasaki"), which is a Japanese company. In fact, their negotiation is confidential and only the directors and senior

executives of DNL and Omashaki have knowledge about the Transaction.

Mr. Wong, a shareholder of DNL holding 6% of its share capital, joins one of the meetings for the Transaction. He knows that the offer proposed by Omashaki is very attractive and DNL may declare special dividends to its ordinary shareholders. It is also expected that the Transaction will boost up DNL's share price if the negotiation is successful. All participants in the meeting agree to preserve confidentiality of the Transaction. Shortly after the meeting, Mr. Wong tells his wife about the proposed Transaction and Mrs. Wong buys 5,000 shares of DNL on the same day. When the Transaction is announced to the public, the share price of DNL increases substantially and Mrs. Wong earns a profit by selling her shares.

Now, the Securities and Futures Commission decides to take a legal action against Mr. and Mrs. Wong in the Market Misconduct Tribunal on the grounds of insider dealing under Part XIII of the Securities and Futures Ordinance (Cap. 571) (the "SFO").

Required:

1. (a)Discuss whether the information about the Transaction would be regarded as inside information under the relevant provision(s) of the SFO.(13 marks)
2. (b)Critically analyze whether the following persons would be liable for insider dealing under the relevant provision(s) of the SFO:

i)Mr. Wong; and(8 marks)ii)Mrs.Wong(4marks)

(c)Discuss any safe harbours under Part XIVA of the SFO which may allow DNL's delay in disclosing the Transaction to the public.(5 marks)