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Regulatory Overview

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Regulatory Overview THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED ‘‘WARNING’’ ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW REGULATORY REQUIREMENTS IN HONG KONG We principally carry on the business of the sale and transportation of diesel oil and related products in Hong Kong. A summary of certain material aspects of the Hong Kong laws and regulations applicable to our business and operation is set out below: DANGEROUS GOODS RELATED Dangerous Goods Ordinance (Chapter 295 of the Laws of Hong Kong) (‘‘DGO’’) The DGO controls the usage, storage, manufacturing and conveyance of the dangerous goods under the ordinance and sets out the relevant licensing requirements in relation to these activities. Section 3 of the DGO gives a broad meaning of dangerous goods, which include all explosives, compressed gases, petroleum and other substances giving off inflammable vapours, substances giving off poisonous gas or vapour, corrosive substances, substances which become dangerous by interaction with water or air, substances liable to spontaneous combustion or of a readily combustible nature, and there are over thousands of substances and chemicals which are classified as dangerous goods. These dangerous goods are grouped into categories and classes in accordance with their potential hazardous nature. As at the Latest Practical Date, there were 11 categories of dangerous goods according to the subordinate legislations of the DGO (namely Categories 1 to 9, 9A and 10). Diesel oil is categorised as one of the dangerous goods in Category 5, Class 3 thereunder. As such, our Group’s transportation of diesel oil is regarded as conveyance of dangerous goods under the DGO. As such, our business is regulated by the DGO. The Fire Services Department is the licensing authority for Categories 2 to 10 dangerous goods (excluding liquefied petroleum gas (‘‘LPG’’)) on land. Pursuant to section 6 of the DGO, no person shall store, convey or use any dangerous goods in excess of exempted quantity in any premises or places without a licence issued by the director of the Fire Services Department. Any person who contravenes section 6 of the DGO shall be guilty of an offence and is liable to a fine of HK$25,000 and to imprisonment for 6 months. Pursuant to section 9B of the DGO, a breach of any term or condition endorsed upon any licence issued pursuant to section 9 of the DGO shall constitute an offence which shall be punishable on summary conviction by a fine not exceeding $10,000 and imprisonment not exceeding 1 month. Under section 10 of the DGO, no person shall deliver to any warehouse owner or carrier from any part of Hong Kong by land or water unless the (a) true name or description of such goods is distinctly written, printed or marked in English and Chinese on the outside of the case or other package containing such goods; (b) the prescribed label, if any, is attached to the outside of the case or other package containing such goods; and (c) in the case of delivery, notice in writing has been given to any warehouse owner or carrier of the true name or description of such goods and the dangerous nature thereof. Any person who contravenes section 10 commits an offence and is liable on summary conviction to a fine of HK$25,000 and to imprisonment for 6 months. Pursuant to section 15 of the DGO, any employee or agent of any person holding a licence issued under the DGO who commits an offence under this ordinance is liable for such offence and to the penalty provided therefor, unless he proves that the offence was committed without his knowledge or consent and that he had exercised all due diligence to prevent the commission of the offence. And – 56 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED ‘‘WARNING’’ ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW pursuant to section 16 of the DGO, where an offence under the DGO is committed by a company, every director and every officer concerned in the management of the company shall be guilty of the like offence unless he proves that the act constituting the offence took place without his knowledge or consent. Where a person by whom an offence under the DGO has been committed is a company, every director and every officer concerned in the management of the company shall be guilty of the like offence unless he proves that the act constituting the offence took place without his knowledge or consent. Dangerous Goods (Application and Exemption) Regulations (Chapter 295A of the Laws of Hong Kong) (‘‘DG (AE) R’’) Diesel oils (distillates and/or light residuals), furnace oils and other fuel oils having a flash point of or over 66°C, are categorised as dangerous goods in Category 5, Class 3. Dangerous Goods (General) Regulations (Chapter 295B of the Laws of Hong Kong) (‘‘DG (G) R’’) DG (G) R sets out certain restrictions and requirements in relation to various categories of dangerous goods. It also provides the exempted categories and quantity of the dangerous goods for which a licence is not required for the conveyance, storage and usage of the dangerous goods. According to regulation 99 of the DG (G) R, dangerous goods in Category 5, Class 3, have to be stored or conveyed in any appropriate main or inner packing. The maximum quantity for which no licence is required for storage is 2,500 litres. Further, according to regulation 99A of the DG (G) R, no person shall store in bulk in liquid form any dangerous goods in Category 5, Class 3, except in a tank which has been approved in writing by the Director of Fire Services Department subject to the compliance of conditions set out in the DG (G) R. Meanwhile, pursuant to regulation 95 of the DG (G) R, nothing in part IV of the DG (G) R shall apply to any fuel conveyed in the fuel tank of any mechanically propelled vehicle. Regulation 101 of the DG (G) R provides that unless a licence approved by the director of Fire Services Department is obtained for the use of such vehicle, no person shall use, or cause or permit to be used, any mechanically propelled vehicle for the conveyance by road of any Category 5 dangerous goods in containers. There are mainly three (3) types of dangerous goods licences issued by the Fire Services Department, namely (i) licence for the storage of dangerous goods (Categories 2 to 10 (excluding LPG)), (ii) licence for the manufacture of dangerous goods (Categories 2 to 10 (excluding LPG), and (iii) licence (‘‘DGV Licence’’) for any mechanically propelled vehicle (‘‘DGV’’)forthe conveyance by road of any dangerous goods (Category 2 (other than LPG) and/or Category 5). According to the DGO, ‘‘conveyance’’ includes the situation when dangerous goods are loaded in a vehicle irrespective of whether the vehicle is moving or being parked stationary until the dangerous goods are unloaded from the vehicle. Our Group is required to obtain the DGV Licence for our daily operation. Our diesel tank wagons have to meet the requirements as set out in the DG (G) R, which includes (but not limited to) the engine design, and notice in English and Chinese conspicuously displayed at the front and rear of the vehicle declaring the presence of inflammable goods. – 57 – THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED ‘‘WARNING’’ ON THE COVER OF THIS DOCUMENT. REGULATORY OVERVIEW Part VI of the DG (G) R also stipulates other operations and maintenance of tank wagon and the storage of dangerous goods in Category 5 including but not limited to the following: — No person shall deposit, or cause or permit to be deposited, any dangerous goods in Category 5 in any place, other than a store, for any purpose or for any length of time except such as is reasonably necessary in the course of handling such goods in transit. — No person shall cause or permit any dangerous goods to enter any sewer or drain or, in the case of any substance immiscible with water, the waters of Hong Kong. — No person shall convey or cause or permit to be conveyed, by road any dangerous goods in liquid form in bulk except in a tank wagon of a size, type and construction approved, either generally or in any particular case, by the Fire Services Authority and equipped for the carriage, loading and discharge of such liquid to the satisfaction of the Fire Services Authority. — No person shall fuel any vehicle directly from any tank wagon. — Except in the case of a tank wagon equipped with a radio communication system to the satisfaction of the Fire Services Authority, no person shall convey, or cause or permit to be conveyed, on any tank wagon any dangerous goods in Category 5 in liquid form unless the wagon is attended by at least one person, in addition to the driver, having reasonable experience in the carriage of such liquids in bulk. Contravention to the above commits an offence and the maximum penalty could range from a fine of HK$5,000 to HK$25,000 and imprisonment from 1 month to 3 months. DANGEROUS GOODS (APPLICATION AND EXEMPTION) REGULATION 2012 (‘‘DG(A&E)R 2012’’) The DG(A&E)R 2012 was published in the Gazette on 27 April 2012 but it has not come into operation until it is appointed by the Secretary for Security by notice in the Gazette.
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