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Hong Kong Exchanges and Clearing Limited (HKEx) today (Friday) published a consultation paper, combining a number of proposed changes to the Listing Rules (Combined Consultation Paper).
The Combined Consultation Paper seeks the market’s views regarding eighteen substantive policy issues. It sets out, where appropriate, draft amendments to the Main Board Listing Rules and the Growth Enterprise Market Listing Rules (together, the Rules) to implement those proposals. It also sets out some draft minor amendments to the Rules.
“The publication of the Combined Consultation Paper is part
of our ongoing effort to ensure that our Rules address developments in the
market and, where appropriate, international best practice”, HKEx’s Head of
Listing,
HKEx seeks comment in response to the Combined Consultation
Paper by
The Combined
Consultation Paper can be downloaded from the HKEx website.
Copies are also available from the HKEx offices at 11/F, One International
Finance Centre,
Background
The Combined Consultation Paper seeks the market’s views regarding eighteen substantive policy issues. It sets out, where appropriate, draft amendments to the Rules to implement those proposals. It also sets out the text of some draft minor amendments to the Rules.
The proposals and draft Rule amendments have been prepared in consultation with the staff of the Securities and Futures Commission (SFC).
Contents of the Combined Consultation Paper
The substantive policy issues dealt with in the Combined Consultation Paper are as follows:
|
Issue No. |
Subject |
Nature of Consultation |
|
|
1. |
Use of websites for communication with shareholders |
HKEx is consulting on proposed Rule amendments which
would facilitate the greater use of listed issuers’ websites and
electronic rather than physical copy for making available to
shareholders corporate communications required under the Rules. |
|
|
2. |
Information gathering powers |
HKEx is consulting on the proposed introduction of a
new Main Board Rule 2.12A (and a GEM Rule equivalent) to provide for an
express provision in relation to HKEx’s powers of gathering
information from issuers. |
|
|
3. |
Qualified accountants |
In view of developments in financial reporting and
corporate governance practices over the past several years, HKEx is
consulting on a proposal to remove the requirement for a qualified
accountant from both the Main Board and GEM Rules. |
|
|
4. |
Review of sponsor’s independence |
HKEx is consulting on proposed Rule amendments to
require sponsors to demonstrate independence from the new applicant
during the entire listing process. |
|
|
5. |
Public float |
HKEx is consulting on proposed Rule amendments with
regard to the minimum level of public float and the constituents of
“the public”. HKEx also seeks public comment on the need for a
minimum level of market float and the manner in which it should be
regulated. |
|
|
6. |
Bonus issues of a class of securities new to listing |
HKEx is consulting on proposed Rule amendments to
disapply the requirement for a minimum spread of securities holders at
the time of listing in the event of a bonus issue of a new class of
securities involving options, warrants, or similar rights to subscribe
or purchase shares. |
|
|
7. |
Review of HKEx’s approach to pre-vetting public documents of listed issuers |
HKEx is consulting on proposed Rule amendments to
progressively move away from pre-vetting announcements, to reduce
pre-vetting of circulars of listed issuers and to deal with certain
other issues relating to issuers’ public documents. |
|
|
8. |
Disclosure of changes in issued share capital |
HKEx is consulting on proposed Rule amendments to
require greater disclosure by a listed issuer to enhance transparency on
changes in issued share capital and other movements in its securities
and to require disclosure by a listed issuer as soon as possible of
grants of share options. |
|
|
9. |
Disclosure requirements for announcements regarding issues of securities for cash and allocation basis for excess shares in rights issue |
HKEx is consulting on proposed Rule amendments to
codify disclosure practices in respect of announcements for issues of
securities for cash, irrespective of whether general mandates are
involved, and require disclosure of the allocation basis for excess
shares in the rights issue/open offer announcement, circular and
prospectus. |
|
|
10. |
Alignment of requirements for material dilution in major subsidiary
and deemed disposal |
HKEx is consulting on proposed Rule amendments to align the respective requirements for shareholders’ consent in respect of material dilution and deemed disposal of interest in subsidiary. |
|
|
11. |
General mandates |
HKEx seeks public comment on various issues relating
to the issue of securities under a general mandate. HKEx has an open
mind about the policy direction and does not propose a preferred
position at this stage. |
|
|
12. |
Voting at general meetings |
HKEx seeks public comment on the extent to which
voting by poll should be made mandatory at general meetings and the
minimum notice period required for convening shareholders meetings. |
|
|
13. |
Disclosure of information about and by directors |
HKEx is consulting on proposed Rule amendments which
would facilitate investors and the market obtaining enhanced and more
up-to-date information on directors. |
|
|
14. |
Codification of waiver to property companies |
HKEx is consulting on proposed Rule amendments to
codify an exemption for listed issuers actively engaged in property
development as a principal business activity from the shareholders’
approval requirement of the Rules in certain scenarios of acquisitions
of land or property development projects in |
|
|
15. |
Self-constructed fixed assets |
HKEx is consulting on proposed Rule amendments to
exclude from the definition of “transaction” in the notifiable
transactions Rules any construction of a fixed asset by a listed issuer
for its own use in the ordinary and usual course of its business. |
|
|
16. |
Disclosure of information in takeovers |
HKEx is consulting on the proposed introduction of a
new Main Board Rule 14.67A (and a GEM Rule equivalent) to codify
HKEx’s current practice of granting of waivers to listed issuers of
the Rules concerning publication of prescribed information on target
companies in certain situations such as hostile takeovers. |
|
|
17. |
Review of director’s and supervisor’s declaration and undertaking |
A. Streamlining disclosure of director’s and supervisor’s information through an issuer’s announcement HKEx is consulting on proposed Rule amendments to streamline the disclosure of directors’ and supervisors’ biographical information in the various prescribed forms of declaration and undertaking. B. Information gathering powers of HKEx Given the proposed introduction of a new Main Board Rule 2.12A (under Issue 2), HKEx is consulting on the proposed inclusion of an express provision in the director’s undertaking imposing a similar obligation on directors. C. Service of disciplinary proceedings on directors HKEx is consulting on proposed amendments to the Main
Board Rules to include detailed provisions for service similar to those
of the GEM Rules and to make express its ability to change the terms of
the director’s undertaking without the need for every director to
re-execute his undertaking. |
|
|
18. |
Review of Model Code for Securities Transactions by Directors of Listed Issuers |
HKEx is consulting on proposed Rule amendments to four areas of the Model Code, namely expanding the list of exceptions to the definition of “dealing” in paragraph 7(d), clarifying the meaning of “price sensitive information” in the context of the Model Code, extending the current “black out” periods provided in Rule A.3 and restricting the time for responding to the request for clearance to deal and the time for dealing once clearance has been received. |
|
Timetable
|
Publication of Combined Consultation Paper on HKEx website |
|
|
Deadline for submission of comments on the Combined Consultation Paper |
|
|
Publication of consultation conclusions |
From second quarter of 2008 |
If the proposals made in the Combined Consultation Paper are adopted, HKEx plans to make the relevant Rule amendments in the third quarter of 2008. In respect of other issues, HKEx in consultation with the staff of the SFC will develop appropriate Rule amendment proposals in due course and expose these for public comment.
