25 May 2016
Though it is widely known that Hong Kong has adopted a "no-par" regime since the commencement of the Companies Ordinance, Cap 622 (the "New Ordinance") in 2014, minor details in routine practice may easily slip away. Recently, there has been a notable increase in listed companies making clarification announcements for failing to replace references to "issued share capital" with "number of issued shares" in their annual general meeting (AGM) notices.
In light of the abolition of the concept of "nominal value" (also known as "par value") under the New Ordinance, The Stock Exchange of Hong Kong Limited (the "Exchange") made a number of amendments in April 2015 to replace "nominal value" or "issued share capital" under various parts of the Listing Rules, with "number of issued shares", or "issued voting shares". Among the amendments include changes to Rules 10.06(1)(c) and 13.36(2) which relate to the respective restriction on the size of the repurchase mandate and the general mandate that issuers may seek from their shareholders in an AGM.
Apparently, the Exchange has in recent months taken actions to remind issuers of the Listing Rules amendments by requesting them to make necessary changes in the AGM notices and publish corresponding clarification announcements.
Issuers should be reminded that in addition to the repurchase mandate and the general mandate, similar amendments were made in various other parts of the Listing Rules, which may have disclosure implication, such as the share option scheme and disclosure on changes in shareholdings. For details, please see paragraph 120 of the Consultation Paper on Review of Listing Rules on Disclosure of Financial Information with reference to the New Companies Ordinance and Hong Kong Financial Reporting Standards and Proposed Minor/Housekeeping Rule Amendments.