septiembre 09 2020

Codification of Existing Practices into Hong Kong Listing Rules Effective from 1 October 2020


The Stock Exchange of Hong Kong Limited (Exchange) has announced that changes to the Rules Governing the Listing of Securities on the Exchange (Rules) arising from the 'Consultation Conclusions on Codification of General Waivers and Principles Relating to IPOs and Listed Issuers and Minor Rule Amendments' (Conclusions) will take effect from 1 October 2020.

The amendments are effectively codification into the Rules of certain waivers that have been granted by the Exchange with general effect (General Waiver) as approved by the Securities and Futures Commission (SFC) or granted on multiple occasions on the basis of similar principles and conditions (General Principle), as well as administrative guidance set out in listing decisions or guidance letters. The key changes are summarised in the table below. The proposal relating to a company secretary's qualification requirement, which was not adopted in the Conclusions, will be discussed separately at the end of this Legal Update.

Area of Codification
(Main Board Rules Reference)
Details of Amendment
New Listing Applicants

Listing qualification – No change of financial year period

(Rule 8.21(3))

An application for a waiver may be considered if the applicant is an investment holding company and the change is to allow its financial year to be coterminous with that of all or a majority of its major operating subsidiaries, PROVIDED all Rule 8.05 listing qualification requirements are satisfied.

Accountant's report – Disclosure of financial information of subsidiaries or businesses acquired or to be acquired after trading record period 

(Rule 4.02A and Notes to Rules 4.04(4), 4.05A and 4.28)

An application for a waiver may be considered if:

  1. the acquisition is not material (i.e., all percentage ratios being less than five percent); 
  2. the requisite SFC exemption has been obtained for financing the acquisition from the proceeds of the offer; and 
  3. where the applicant's principal activities involve the purchase of equity securities, the applicant has no control (30% voting power or more) or significant influence over the underlying target; or where the acquisition of a business is involved for which historical financial information is unavailable or unduly burdensome to obtain, the applicant has disclosed this in its listing document information required for the announcement of a discloseable transaction.

Publication of first interim results/reports or annual results/reports 

(Notes to 13.46, 13,48 and 13.49; PN108.21(3))

The publication/distribution requirements may be exempted if the same level of financial information as required under the relevant Rules has been disclosed in the applicant's listing document, BUT the newly listed issuer should, at the time such results/reports are to be published, make an announcement that the relevant information was included in the listing document. 

Disclosure - HKMA's Guideline on the application of the Banking (Disclosure) Rules -Overseas banking company

(Note to Rule 4.10) 

An application for a waiver may be considered if the applicant can demonstrate that it is under the adequate supervision of a foreign regulator having similar functions to Hong Kong Monetary Authority (HKMA); and that alternative disclosure in its listing document is sufficient for potential investors to make a fully informed investment decision.

Working capital statement -Banking/insurance company

(Rule 8.21(A)) 

The inclusion of a working capital statement in listing document is exempted if the applicant is a banking company or an insurance company, subject to appropriate alternative disclosure. 

Documentary requirement - Re-submission of listing application 

(Notes to Rule 9.10A) 

An application re-submitted after the lapse of a previous application (i.e., more than six months after the original application) must address all outstanding matters with supporting documents. 

Documentary requirement - Change in sponsors 

(Rule 9.10B) 

A remaining or replacement sponsor must make a submission explaining the change and enclosing a copy of the outgoing sponsor's clearance letter (if any).

Arrangements for applicants during Bad Weather Signals 


The new practice note sets out arrangements in the event a No. 8 typhoon warning signal or above, extreme conditions caused by a super typhoon and/or a black rainstorm warning signal is issued during the period from the registration of a prospectus to the commencement of dealing of shares. 

Listing by Introduction - Calculation of listing fee 

(Para 9(4) of Appendix 8) 

The monetary value of the equity securities to be listed shall be the applicant's expected market capitalisation, but if the applicant is listed on another exchange, its average market capitalisation from the 6th to 10th business days before application. 
PRC Incorporated Issuers

Shareholder approval requirement for bonus or capitalisation issues

(Rule 19A.38)

PRC-incorporated issuers will be exempted from shareholders' approvals in general meetings and separate class meetings when making bonus or capitalisation issues to existing shareholders on a pro-rata basis. 

Dually listed A+H Issuers - Calculation of consideration ratio 

(Rule 19A.38A) 

Market capitalisation of the issuer's PRC-listed domestic A shares will be determined based on the average closing price of its A shares for the five business days immediately preceding the transaction. 

Dually listed A+H Issuers – Share option scheme - Exercise price requirement 

(Rule 19A.39C) 

The Exchange may waive the exercise price requirement if the scheme involves only the issuer's domestic A shares listed on a PRC stock exchange and the exercise price is no less than the prevailing market price of its A shares at the time of grant. 
Issuers from Specific Industry

Banking/insurance companies

(Rules 11.09A, 14.66(10)) 

The inclusion of a working capital statement in transaction circulars is exempted if the applicant is a banking company or an insurance company, subject to appropriate alternative disclosure. 

Airline operators - Acquisition of aircrafts – Transaction Announcement

(Note to Rule 14.58(4)) 

The Exchange may waive the requirement to disclose the aggregate value of consideration if there are contractual restrictions due to confidentiality, subject to appropriate alternative disclosure. 

Inclusion of stock code in documents

(Rule 13.51A) 

Issuers need not display their stock code on the cover page of annual or interim reports if it is already displayed prominently in the corporate or shareholder information section. 

Share option scheme - Spin-off – Scheme limit 

(Rule 17.03(3)) 

Issuers may seek shareholders' approval for the scheme limit of its subsidiary to be spun off based on the subsidiary's shares in issue at the date of listing, rather than the date of approval of the subsidiary's scheme. 

Share option scheme – Restriction on time of grant

(Rule 17.05) 

A restriction on the time of grant while in possession of inside information will be extended to the trading day after the information is announced. 


Experience and Qualification Requirements of Company Secretary –New Guidance Letter GL108-20 (Guidance Letter)

Instead of codifying into the Rules the factors it considered in granting waivers for a company secretary not having the required qualification or experience under Rule 3.28 (Rule 3.28 Waivers) as originally proposed in the consultation, the Exchange has now published the Guidance Letter explaining the policy reasons of granting Rule 3.28 Waivers and the factors it considered.

As in the past, an issuer seeking a Rule 3.28 Waiver (which is to be considered on a case-by-case basis) should demonstrate that its principal business activities are primarily outside Hong Kong and the proposed company secretary (Appointee), though without the required qualification or experience, is a suitable candidate (e.g., Appointee is an existing employee familiar with issuer's operations and board) and would be assisted by a person possessing Rule 3.28 qualification.

The Guidance Letter highlights that a Rule 3.28 Waiver, if granted, will be for a fixed period of time not exceeding three years and the Appointee is expected to have acquired the relevant qualification or experience within this period. The issuer should, before the end of this period, make a submission, with a view to seeking the Exchange's confirmation, demonstrating that Appointee meets the company secretary requirement under Rule 3.28.

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