The Stock Exchange of Hong Kong Limited ("Stock Exchange") has recently launched two new listing enforcement initiatives  to assist listed issuers in understanding the Listing Rules from the enforcement perspective. These comprise publication of the listing enforcement guidance letters ("Guidance Letters") and posting of Request for Assistance Announcements ("RFA Announcements") on the Stock Exchange website. 

For further details, please refer to the HKEx News Release on 17 November 2008:

Publication of Guidance Letters

Guidance Letters are issued to listed issuers following an investigation by the Listing Division of suspected breaches of the Listing Rules and where the Stock Exchange has decided not to pursue disciplinary action.  Such letters contain guidance, including interpretation of the Listing Rules and actions that the Stock Exchange expects should have been taken in the circumstances of the case.

Posting of RFA Announcements

Situations have arisen where regulatory issues or concerns have emerged, on which the Stock Exchange wishes to make enquiries of a listed issuer's directors or former directors.  The objective of the RFA Announcements is to inform the market that the Stock Exchange has an interest in contacting the named directors in relation to facts or issues already publicly known but that attempts to do so have been frustrated.   

An express statement is included in the RFA Announcements to the effect that no adverse inference should be drawn as to the conduct of the relevant persons by the publication of the announcement.

First series of the Guidance Letters

The first instalment of a series of the Guidance Letters (altogether four letters) has been published on the Stock Exchange website. A summary is set out below:-




Listing Rules




Guidance on compliance with the announcement requirement in the event of delay in the completion of an intended notifiable transaction  


The listed issuer failed to timely disclose the signing of the second supplemental agreements and the further extension of the completion date of an intended notifiable transaction.

Guidance at a glance:

  • Management of the listed issuer was urged to seek independent and professional advice to ensure Listing Rules obligations are complied with in a timely manner.
  • The listed issuer should have in place an effective control system to embed its disclosure and other compliance obligations and the directors of the listed issuer were urged to undergo training on compliance and corporate governance matters to refresh their knowledge. 

Rule 14.36




Guidance on who constitutes a connected person of an issuer  

Guidance on what procedures an issuer should adopt to ensure compliance with the connected transactions provisions in the Listing Rules


  • A non-executive director informed the listed issuer that the counterparty to the transaction was a boyfriend of his sister and thus the counterparty was not regarded as a connected person.
  • The non-executive director was not aware that the counterparty was actually his brother-in-law.

Guidance at a glance:

  • If the listed issuer is on notice that the counterparty has a relationship with a person referred to in Rules 14A.11(1), (2) or (3), the listed issuer should:
      • (a)              make more detailed enquiries as to whether the such relationship falls within the definition of connected person under Rule 14A.11(4)(b); and
      • (b)              consult with the Stock Exchange and/or external lawyer
  • Procedures to ensure compliance with Chapter 14A of the Listing Rules may include:
  • (a)              establishing a list of connected persons of the listed issuer, with a periodic review, to ensure that the list is kept up-to-date;
  • (b)              ensuring that all transactions are cleared by the Corporate Governance Committee, which is responsible for overseeing the listed issuer’s corporate governance matters; and
  • (c)               seeking professional advice (for example from the Company’s Compliance Advisor) before transactions are entered into.


Rules 2.13, 14A.47, 14A.49 and 14A.52




Guidance on dealing with press interviews and analyst

Information regarding prospects for new business and state of order book to be included in the Management Discussion and Analysis


  • The clarification announcement that was published following publication of an article reporting on a statement made by the chief executive officer of the listed issuer, regarding increase in orders and gross profit margin, did not contain any reference to such statement.
  • No reference at all was made to the order book in the MD&A for the Interim or Final Results disclosure.

Guidance at a glance:

  • The listed issuer should put in place a communications policy and procedure to govern systematic dissemination of potentially price sensitive information.  Selective dissemination of material information to the media should be avoided.
  • The listed issuer and its management were urged to consider carefully and to comply with the requirements of Appendix 16 in the future in the preparation of its periodic financial reports.

Rules 2.13(2) and 13.09




Guidance on arrangements to maintain effective accounting procedures and controls following the implementation of revised accounting standards


  • There were misstatements concerning the amount of the listed group’s unaudited net profit from ordinary activities attributable to shareholders in the listed group’s announced results.
  • Such misstatements were a result of cumulative failings on the part of the listed issuer, including (among others) no formal engagement of the auditors at the material time to assist the  accounting department in ensuring that the consequences of adoption of an accounting standard were comprehensively addressed.

Guidance at a glance:

  • Whenever the listed issuer considers the adoption of a new accounting policy or standard, it should seek, where deemed necessary, external professional advice, including advice on the steps which should be taken to ensure proper implementation of the new accounting policy.

Rule 2.13(2)  

For further information, please contact:

Jeckle Chiu (
Yuki Wong (

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