On 12 October 2023, our Partner Gordon Tsang was invited by LexisNexis to give a Continuing Professional Development (CPD) course on “The latest development and practice on IPO and ESG”.

During the 3-hour webinar, Mr Tsang, along with Kinglsey Cheng, Partner and Director and Head of Risk & ESG Advisory of Prism Advisory Limited, provided a comprehensive overview of Hong Kong’s IPO market by sharing their insights into the latest updates on listing requirements, relevant listing decisions, and new regimes. In the second part of the webinar, they focused on the crucial aspect of ESG considerations in the IPO process and outlined the corresponding listing requirements.

Please contact Mr. Gordon Tsang for any enquiries or further information.

On 6 October 2023, our Partner Mr. Rodney Teoh was invited as a keynote speaker at the 2023 Digital Asset Series (DAS) Seminar titled “Opportunity for RWA (Real World Asset) Tokenization” took place at the HKUST Business School.

Rodney delivered an engaging and insightful keynote address “Raising capital in the web3 era”. He provided a comprehensive overview of recent deals in Hong Kong and highlighted key developments in RWA tokenization around the globe. He also shared valuable insights into transaction structures, requirements, and challenges associated with Security Token Offerings (STOs).

Following his keynote speech, Rodney participated in a panel discussion with the other speakers, including Mr. Samson Lee, Founder and CEO at Coinstreet, Mr. Robert Lui, Hong Kong Digital Asset Leader at Deloitte, Mr. Michael Wong, President of Society of Registered Financial Planners, and Mr. Kevin Ho, COO of Fusang to engage in further discussion on the topic of Security Token and RWA Tokenization.

The seminar received an overwhelmingly positive response from the audience, attracting over 80 participants from various sectors and industries.

About Digital Asset Series (DAS)

DAS is a series of educational seminars delivered by industry leaders and practitioners, legal and consulting professionals, regulators, and academic scholars from the fintech ecosystem in Hong Kong. The objective of DAS is to educate the general public about the ever-growing landscape of digital assets and facilitate mass adoption by covering key topics across the digital asset space including Investment Strategies, Asset Management, Security Tokens, Web3, Metaverse, NFT, Regulatory, Stablecoin, CBDC, DeFi, Cryptocurrencies, ESG, Impact and Social Good.

For more information, please contact our Partner Rodney Teoh.

(中文)

引言

于2023年9月21日，证券及期货事务监察委员会（「证监会」）就《公司收购丶合并及股份回购守则》（「《收购合并守则》」）的建议修訂刊发咨询总结 （「咨询总结」）。证监会先前已在2023年5月19日刊发有关咨询文件（「咨询文件」）。

在截至2023年6月23日的咨询期间，证监会总共收到了12份来自公众的回应。在考虑了回应者提出的意见后，证监会采纳了咨询文件中提出的所有修訂案，其中进行了一些轻微修改。关于将要对《收购合并守则》进行的修訂的详细信息，请参阅我们在咨询文件上的新闻快讯。上述修訂已于2023年9月29日生效。

证监会在咨询总结的附录2标注了对咨询文件中原始提案的几处修改，其中与咨询文件中有所不同的重要变更总结如下：

第2部：连锁关系原则

在咨询文件中，证监会提议扩大规则26.1的注释8，目的是针对证监会企业融资部的执行人员（「执行人员」）就以下情况作出决定时将会考虑的因素，提供更佳的指引：如一个人或一组人取得或巩固第一间公司的控制权，而第一间公司持有第二间公司30%或以上的投票权，那么是否须就第二间公司作出强制全面要约。鉴于市值有其客观性，以及是用来表示公司规模的公认指标，证监会采纳了市值作为其中一项比较参数。

因为有关修订有助釐清是否须作出连锁关系原则要约，建议加入的内容广受回应者的正面反馈。为应对其中一项意见，证监会在咨询总结中进行了轻微修改，以釐清草案草拟过程中市值测试只有两间公司均为上市公司的情况下方属相关。

第3部：要约期及时间表（私有化行动及私有化交易中第60天的最后可能期限）

证监会建议对规则15.5作出修订，藉以将其惯常做法编纂为守则条文，即就第60天（一项要约就接纳而言须宣布为无条件的最后日期）的延期给予同意，而该日期在经延迟后不会超过要约文件发送后的四个月，这与规则2.11的精神相符。尽管有一名回应者建议将「第60天」一词重新命名，证监会认为沿用该词有其可取之处因「第60天」普遍被市场理解为一项要约就接纳而言可宣布为无条件的最后日期。鉴于有一条评论要求执行人员釐清规则15.5下的4个月期间应始于最初的要约文件的日期，还是任何修订要约文件的日期，证监会明确表示应始于最初的要约文件的日期，这亦与规则2.11的精神相符。

第5部：部分要约 （就可转换证券及认股权证等作出的同等基础的要约）

咨询文件第5部建议增加规则28.10，规定在部分要约中就可转换证券、期权及认购权作出规则13下的同等基础的要约，以纳入在部分要约中作出有关要约的这个市场惯常做法。在咨询总结中，证监会已对新规则28.10的建议措辞作出修订，而现实所指的是「同等基础的」要约而非「适当」要约，以釐清可转换证券的要约只需按与股份的部分要约相同的百分比作出。

第7部：杂项修订（场内股份回购的定义）

证监会在咨询文件中建议场内股份回购应定义为仅限于必须藉着联合交易所的自动对盘系统来进行的股份回购，即买盘及卖盘须透过一个自动化系统来进行对盘。此外，回购其股份的公司及该公司的董事不应直接或间接涉及招揽、拣选或识别股份的卖方。证监会认为使用自动对盘系统来进行交易是一个良好的表面指标，显示有关公司及其董事没有涉及股份回购。

所有回应者均支持有关的建议修订，亦有一位要求证监会釐清，委任经纪进行股份回购这行为本身是不会令有关公司或其董事被视为直接或间接涉及招揽、拣选或识别卖方的。因此，证监会在咨询总结中添加了以下注释：

「场内股份回购的定义的注释：

委任经纪进行股份回购本身不会令有关公司或其董事被视为涉及招揽、拣选或识别股份的卖方。」

分析和总结

为了增加市场对于规则执行的确定性，证监会在咨询文件中对执行人员现有的做法编进规例，并在咨询总结中进一步进行了相关澄清。对于在《收购合并守则》的修订生效之前已经宣布的交易，证监会在咨询总结中建议相关人士咨询执行人员，以寻求对各方公平的解决方案。

如有任何查询或进一步资料，请联系我们的合伙人张源辉律师。

本新闻简讯更新仅供参考。其内容不构成法律咨询意见，不应视为法律咨询意见。史蒂文生黄律师事务所不会就任何因倚赖本处所载资料而作出的决定、采取的行动或不采取的行动所引致的或与之有关的任何特别、间接或间接损失或损害向阁下承担法律责任。

Introduction 

On 26 September 2023, The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) published a consultation paper (the “Consultation Paper”) inviting public feedback on its proposed GEM listing reforms.

The proposed reforms aim at bolstering GEM’s attractiveness while maintaining high standards of investor protection.  The three main proposals include: (1) a new alternative eligibility test for companies in the high-growth segment; (2) removal of quarterly reporting requirements; and (3) a new streamlined transfer mechanism for eligible GEM companies to transfer to the Main Board.  The consultation period would last for six weeks, ending on 6 November 2023.

Proposed Reforms

Initial Listing Requirements

The Hong Kong Stock Exchange noted that GEM’s positive cash flow requirement deters the listing of companies with high growth potential that do not have a track record of positive operating cash flow since they are engaged heavily in R&D.  With reference to the Beijing Stock Exchange’s adoption of R&D spending as an initial listing eligibility criterion, the Hong Kong Stock Exchange proposes to introduce an alternative financial eligibility test targeting high growth enterprises that are heavily engaged in R&D activities (the “market capitalisation / revenue / R&D test”).

Under the market capitalisation / revenue / R&D test, GEM listing applicants must have:

(a)   an adequate trading record of at least two financial years;

(b)   an expected market capitalisation of at least HK$250 million at the time of listing;

(c)   revenue of at least HK$100 million in aggregate for the two most recent audited financial years, with year-on-year growth over the two financial years; and

(d)   incurred R&D expenditure of at least HK$30 million in aggregate for the two financial years prior to listing, where the R&D expenditure incurred for each financial year must be at least 15% of its total operating expenditure for the same period.

Lock-up period

Given shell activities have largely ceased due to joint efforts of the Hong Kong Stock Exchange and the Securities and Futures Commission, the Hong Kong Stock Exchange considers it unnecessary to have a prolonged lock-up period for GEM controlling shareholders.  Therefore, the Hong Kong Stock Exchange also proposed to reduce the post-IPO lock-up period imposed on GEM controlling shareholders from 24 months to 12 months.

Continuing Obligations

To reduce the compliance costs incurred by GEM issuers, the Hong Kong Stock Exchange purported to align the relevant GEM’s continuing obligations in line with those for Main Board issuers.

The Hong Kong Stock Exchange proposed removing quarterly reporting as a mandatory requirement for GEM issuers.  Nevertheless, quarterly financial reporting will be a recommended best practice in GEM’s Corporate Governance Code.  As a result, a GEM issuer would be required to publish only:

(a)   annual reports not later than four months after the end of each financial year; and

(b)   interim reports not later than three months after the end of the first six months of each financial year.

Accordingly, the Hong Kong Stock Exchange suggested requiring a GEM issuer to publish preliminary announcements of results for the first six months of each financial year not later than two months (instead of the shorter 45 days now required) after the end of that six-month period.

With a view to match GEM issuer’s ongoing compliance officer and compliance adviser obligations with those of the Main Board, the Hong Kong Stock Exchange also proposed to:

(a)   remove the existing requirement for one of the executive directors of a GEM issuer to assume responsibility for acting as the issuer’s compliance officer; and

(b)   shorten the period of engagement of the compliance adviser of a GEM issuer so that it ends on the date on which the issuer publishes its financial results for the first (instead of the second) full financial year commencing after the date of its initial listing.

It is worth noting that certain GEM requirements in relation to the compliance adviser’s responsibilities are to be removed, including: (1) due diligence on listing documents published, and dealing with the Hong Kong Stock Exchange, in relation to certain transactions during the period of engagement of the compliance adviser; and (2) disclosure of interests of the compliance adviser for this purpose.

Transfer Mechanism

Following the abolishment of the previous GEM streamlined process in 2018, GEM has been positioned as a “stand-alone board” for small and/or medium-sized enterprises (“SMEs”).  As a number of targeted actions have been taken to tackle the issues relating to shell activities, the Hong Kong Stock Exchange now considers it appropriate to reinstate a streamlined transfer mechanism to enable qualified GEM issuers to transfer their listings to the Main Board, without the need to (1) appoint a sponsor to carry out due diligence, or (2) produce a “prospectus-standard” listing document.

Under the streamlined transfer mechanism, a GEM issuer that intends to transfer to the Main Board must:

(a)   meet all the qualifications for listing on the Main Board;

(b)   have published financial results for three full financial years as a GEM issuer with ownership continuity and control and no fundamental change in its principal business;

(c)   meet

• i.          a daily turnover test – a streamlined transfer applicant must have reached a prescribed minimum daily turnover threshold (proposed to be either HK$100,000 or HK$50,000) on at least 50% of the trading days over a prescribed reference period of 250 trading days before the transfer application and until the commencement of dealings on the Main Board (the “Reference Period”);
• ii.          a volume weighted average market capitalisation test – a streamlined transfer applicant must have a volume weighted average market capitalisation over the Reference Period that could meet the minimum market capitalisation requirement for Main Board listing; and
• iii.          a clean compliance record – requirement over the 12 months preceding the transfer application and until the commencement of dealings on the Main Board.

Where a GEM issuer cannot meet these eligibility requirements under the streamlined transfer mechanism, the issuer may still apply for a transfer to the Main Board under the existing requirements.

Analysis and takeaways

The last key reform to GEM took place in 2018 with an aim to improve the overall quality of GEM listings.  However, in view of the rapid development of stock exchanges in other jurisdictions, in particular the Beijing Stock Exchange in recent years, GEM seems to have lost competitiveness to its counterparts.  The general lack of GEM listings in the recent years is noted.  Therefore, there has long been a demand for transformation of GEM to vitalise its competitiveness to SMEs.

In this long-awaited reform proposal, the Hong Kong Stock Exchange has proposed to reinstate the streamlined transfer mechanism.  While attempting to encourage new GEM listings, the Hong Kong Stock Exchange appears to be cautious in outlining the proposed reforms to strike a balance between facilitating fundraising and investor protection.  It remains to be seen whether the proposed reforms would be perceived as conducive to reviving the GEM market.

Please contact our Partner Mr. Rodney Teoh for any enquiries or further information.

This news update is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

 Introduction

On 25 August 2023, a new Fintech Promotion Roadmap (the “Roadmap”) was published by the Hong Kong Monetary Authority (“HKMA”).  The Roadmap contains a series of initiatives to be undertaken by the HKMA over the next 12 months to further drive the adoption of Fintech in the financial services industry.

Background

 The HKMA unveiled the “Fintech 2025” Strategy (the “Strategy”) on 8 June 2021, aiming to encourage the financial sector to adopt technology comprehensively by 2025, as well as to promote the provision of fair and efficient financial services for the benefit of Hong Kong citizens and the economy.  One of the five key directives suggested under the Strategy was “All banks go Fintech”, which targeted at fostering the adoption of Fintech solutions in Hong Kong’s banking sector.  A core component of the “All banks go Fintech” initiative was a Tech Baseline Assessment that evaluated banks’ current and planned adoption of Fintech.

Building upon the results of the Tech Baseline Assessment published in June 2022, the HKMA identified five key Fintech focus areas including (1) Wealthtech / Investech; (2) Insurtech; (3) Greentech; (4) Artificial Intelligence (“AI”); and (5) Distributed Ledger Technology (“DLT”), recognising the potential for further growth in these areas.

The Roadmap

With the assistance from external consultants, the HKMA formulated the Roadmap by undertaking extensive research and consultation with financial institutions, industry associations and Fintech solution providers.

To implement the Roadmap, the HKMA will launch a series of activities in the coming 12 months, including:

Analysis and takeaways

The Roadmap proposed a wide range of tactical initiatives to tackle the challenges and concerns in relation to Fintech adoption in Hong Kong.  As acknowledged by the HKMA in the Roadmap, these initiatives require “extensive planning, dedicated resources and cross-sectoral collaboration”.  It is anticipated that as these initiatives mature, more details will be released to further guide Fintech adoption in Hong Kong.

Please contact our Partner Mr. Rodney Teoh for any enquiries or further information.

This news update is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.