On 30 March 2012, Hong Kong Exchanges and Clearing Limited ("HKEx") issued its listing decision "HKEx-LD29-2012" to decide whether the proposed acquisition of a company ("Target Company") by a listed issuer ("Listco A") from its controlling shareholder ("Shareholder B") would amount to a reverse takeover under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules").
At the relevant time:
It was proposed that Listco A would acquire the Target Company from Shareholder B and to settle the consideration, new shares would be issued by Listco A to Shareholder B ("Transaction").
The Transaction would amount to a very substantial acquisition for Listco A according to the Listing Rules. Since it was made within 24 months after a change in control of Listco A, it might also be classified as a reverse takeover under the Listing Rules.
However, Listco A submitted that the Transaction should not be classified as a reverse takeover due to the following reasons:
Whether the Transaction would amount to a reverse takeover for Listco A under Rule 14.06(6) of the Listing Rules.
Rule 14.06(6) of the Listing Rules defines a “reverse takeover” as:
"an acquisition or a series of acquisitions of assets by an issuer which, in the opinion of the Exchange, constitutes, or is part of a transaction or arrangement or series of transactions or arrangements which constitute, an attempt to achieve a listing of the assets to be acquired and a means to circumvent the requirements for new applicants set out in Chapter 8 of the Exchange Listing Rules. A “reverse takeover” normally refers to:
HKEx decided that the Transaction would amount to a reverse takeover for Listco A as:
Although Listco A submitted that the Transaction was only a group reorganization and its purpose was not to achieve a listing of the Target Company's business, the Target Company was of a very significant size to Listco A. HKEx was of the view that the Transaction, together with the change in control of Listco A, was a means to list the Target Company's property business.
You can download copies of the listing decision via the link below:
Previously in July 2010, HKEx published three other listing decisions "HKEx-LD95-2", "HKEx-LD95-4" and "HKEx-LD95-5". In each case, it had decided that the proposed acquisition of the listed issuer would constitute a reverse takeover under the Rule 14.06(6) of the Listing Rules. You can download copies of the listing decisions via the links below:
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