Introduction
On 16 December 2022, The Stock Exchange of Hong Kong Limited (the “Exchange”) published a consultation paper seeking public feedback on proposals to expand the paperless listing regime and make other rule amendments (the “Consultation Paper”). The public comment period ends on 28 February 2023.
The Consultation Paper was published to further simplify the Exchange’s administrative procedures and reduce the use of paper after the success of the consultation paper on proposals to introduce a paperless listing and subscription regime, online display of documents and reduction of the types of documents on display published by the Exchange in July 2020 and its conclusions paper published in December 2020 (see our news update).
Key Proposals
Proposal 1: Reduce the number of documents required to be submitted to the Exchange and mandate submission by electronic means
Currently, new applicants and listed issuers are required to submit to the Exchange a considerable number of documents. As such, the Exchange proposes the following measures in order to reduce the number of required documents for submission:
(a) remove submission of documents that are unnecessary to the Exchange’s regulatory objectives, including those that simply reiterate parties’ obligations already set out in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) or guidance materials issued by the Exchange from time to time or overlap with other submission or disclosure requirements;
(b) codify obligations contained in various undertakings (e.g. DU Form and Form M110), listing agreements and other standalone confirmations or declarations into the Listing Rules and to remove documents that become duplicative as a result;
(c) to consolidate certain requirements into existing forms (e.g. Form A1);
(d) remove unnecessary signature and certification requirements, i.e. if they only: (i) evidence the sponsors’ approval of the contents; or (ii) certify that the submissions are true copies of their originals; and
(e) mandate electronic submission for a majority of submission documents.
The Exchange shall explore with the Companies Registry on the feasibility of digitalising the prospectus authorisation and registration processes.
Proposal 2: Mandate electronic dissemination of corporate communications 1 to securities holders by listed issuers after listing
The Exchange proposes to amend the Listing Rules to: (a) mandate that listed issuers electronically disseminate corporate communications to the extent permitted by the laws and regulations applicable to them and their constitutional documents; and (b) enable listed issuers to elect their own consent mechanism for disseminating corporate communications electronically to the extent that the chosen mechanism is permissible under the laws and regulations applicable to them and their constitutional documents.
Proposal 3: Simplify the Listing Rules Appendices
The Exchange proposes to restructure the appendices to the Listing Rules (the “Appendices”) to simplify navigation and enhance the online experience for Listing Rules users, by: (a) moving fee-related Appendices and certain forms to new sections on the website of Hong Kong Exchanges and Clearing Limited while specifying in that new location that they still form part of the Listing Rules; (b) repealing Appendices that are administrative in nature (e.g. Headline Categories) and separately displaying their contents on the Exchange’s website outside the Listing Rules section; (c) deleting the Appendices that have already been repealed or are unnecessary to be set out in the Listing Rules; and (d) reorganising the remaining Appendices by theme.
Analysis and takeaways
This Consultation Paper marks the Exchange’s further efforts to expand its paperless initiatives and simplify its administrative procedures. This can, in turn, enhance environmental sustainability and modernise the Hong Kong’s listing regime, which is in line with the general favouring market sentiment for the greener path forward in Hong Kong. As such, we welcome the Exchange’s proposals and the proposed Listing Rules that will give effects to the proposals.
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.
1 “Corporate communications” means: any document issued or to be issued by an issuer for the information or action of holders of any of its securities or the investing public, including but not limited to:—
(a) the directors’ report, its annual accounts together with a copy of the auditors’ report and, where applicable, its summary financial report;
(b) the interim report and, where applicable, its summary interim report;
(c) a notice of meeting;
(d) a listing document;
(e) a circular;
(f) a proxy form;
(g) an Application Proof; and
(h) a Post Hearing Information Pack or “PHIP”.