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On 30 March 2012, Hong Kong Exchanges and Clearing Limited ("HKEx") issued its listing decision "HKEx-LD28-2012" in relation to the granting of a waiver from the requirement for an accountants' report to be included in the circular of a major transaction.


A Main Board listed issuer ("Listco A") intended to acquire all the shares of Company B which was a company listed on the Toronto Stock Exchange ("Transaction"). The Transaction amounted to a major transaction under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules"). Upon completion, Company B would become a subsidiary of Listco A.

Waiver Application

According to the Listing Rules, Listco A was required to include an accountants’ report on Company B in its circular for the Transaction. Listco A applied for a waiver from such requirement based on the reasons below:

  • Company B was a company listed on the Toronto Stock Exchange and was regulated under the supervision of the relevant regulatory bodies. It had regularly published its financial information, including its audited accounts, to the market to allow investors to asses its activities and financial position under the relevant overseas regulatory requirements.
  • Substantial time and costs would be required if Listco A was to engage a professional accountant to prepare an accountants' report on Company B as required by the Listing Rules. Listco A considered that it would be unduly burdensome to do so.
  • Listco A would include the following alternative disclosures ("Alternative Disclosures") in its circular to facilitate the assessment of Company B's financial performance by its shareholders:

    • Company B’s published audited financial statements for the last three financial years and its latest published unaudited 9-month financial information prepared under the Canadian generally accepted accounting principles ("Canadian GAAP"). The auditors of Company B had issued a clean opinion on the audited financial statements and reviewed the unaudited 9-month financial information respectively. Although the auditors of Company B were not registered under the Hong Kong Professional Accountants Ordinance, they were a firm of accountants with an international name and reputation and registered with a recognised body of accountants.
    • A line-by-line reconciliation of Company B’s financial information for the differences between its accounting policies under the Canadian GAAP and Listco A’s accounting policies under the Hong Kong Financial Reporting Standards ("HKFRS"), with an explanation of the differences. Listco A’s auditors would review the reconciliation under the Hong Kong Standard of Assurance Engagements 3000.
    • Additional information which was required for an accountants’ report under the Listing Rules but not disclosed in Company B’s published accounts.

Listing Decision

After considering the submission made by Listco A, HKEx decided to grant a waiver to Listco A from the accountants' report requirement in relation to the Transaction.

You can download copies of the listing decision "HKEx-LD28-2012" via the link below:


Previously in October 2009, HKEx published another listing decision "HKEx-LD74-2" under which HKEx had also granted a waiver to the listed issuer from the requirement to include an accountants’ report on the target company in its circular for the subject acquisition. You can download copies of the listing decision "HKEx-LD74-2" via the link below:


For inquiries related to this Legal Update, please contact Jeckle Chiu, Juliana Lee, or your usual contacts with our firm.

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