USM is coming on 16 November 2026. Early planning may help Hong Kong listed issuers identify legal, governance and implementation issues before they affect corporate timetables and shareholder approvals.

 Hong Kong’s Uncertificated Securities Market (“USM”) regime will take effect on 16 November 2026, introducing a framework that facilitates the electronic holding and transfer of listed securities and reduces reliance on physical share certificates.

While much of the market’s attention has focused on operational changes affecting securities registrars and intermediaries, listed issuers should not overlook the potential legal, governance and implementation considerations arising from the transition. For some issuers, USM preparation may extend beyond administrative arrangements and involve corporate approvals, constitutional documentation, disclosure considerations and coordination among multiple stakeholders.

As the implementation date approaches, issuers may wish to assess whether their existing arrangements remain fit for purpose and whether any preparatory work should commence before key corporate milestones, including annual general meetings and other planned corporate actions.

Particular attention may be warranted for issuers with cross-border structures, overseas incorporation jurisdictions, complex capital arrangements or corporate actions anticipated during the implementation period. Early review can help identify potential issues and facilitate smoother implementation planning.

How We Can Help

Stevenson, Wong & Co. advises listed issuers on Hong Kong corporate and regulatory matters. We assist clients in assessing the legal and governance implications of USM implementation, including constitutional review, shareholder approval requirements, transaction planning and cross-jurisdictional coordination.

For further information regarding USM readiness and implementation considerations, or to arrange an initial discussion, please contact Rodney Teoh, our Deputy Head of Corporate Finance.

The full client alert discusses selected legal and implementation considerations arising from the launch of USM and is available on request.

14 October 2026

On 8 October 2026, the Securities and Futures Commission (the “SFC”), the Accounting and Financial Reporting Council (the “AFRC”) and The Stock Exchange of Hong Kong Limited (the “Exchange”) issued a joint statement addressing the growing number of listed issuers whose financial statements carry a disclaimer of opinion solely relating to going concern (the “Joint Statement”). The Joint Statement sets out clear expectations for listed issuers, their management (including their boards), audit committees and auditors. For affected companies, inadequately supported action plans and updates that do not demonstrate meaningful progress are unlikely to satisfy the regulators’ expectations.

The Joint Statement is especially important for listed issuers experiencing, or at risk of experiencing, going concern difficulties. Under Rule 13.50A of the Main Board Listing Rules and Rule 17.49B of the GEM Listing Rules, trading would normally be suspended where an issuer publishes financial statements with a disclaimer of opinion or an adverse opinion. The current exception applies where the disclaimer of opinion or adverse opinion relates solely to going concern. However, the Joint Statement focuses specifically on cases involving a disclaimer of opinion solely relating to going concern. The regulators are concerned by both the sharp rise and the prolonged use of such disclaimers. The number of affected listed issuers increased from 12 in 2017 to 95 in 2025. Of those 95 issuers, 65 had received such a disclaimer for more than one year, and the longest-running case had continued for 14 years.

Why the Regulators Are Concerned

The carve-out was introduced in 2019 because an opinion relating solely to going concern concerns management’s use of the going concern basis of accounting rather than gross errors or inaccuracies in the financial statements, and to avoid prolonged suspensions that could limit investors’ ability to exit and restrict an issuer’s ability to raise funds or comply with debt covenants. The regulators nevertheless expected such disclaimers to be resolved within a reasonable period. They have identified recurring weaknesses, including boilerplate disclosure, insufficient detail about assumptions and action plans, limited issuer-specific explanation and inadequate support for audit committee conclusions. Since early 2025, the Exchange has intensified scrutiny by requesting quarterly updates on implementation and outcomes. Issuers should expect close review of their disclosures, evidence and progress against stated milestones. Perhaps the most significant regulatory message is that management must be able to substantiate the feasibility and achievability of its proposed remedial measures with issuer-specific evidence, rather than relying on generic statements regarding market conditions, financing opportunities or future business prospects.

What Listed Issuers and Management Should Do

Listed issuers should prepare rigorous going concern assessments supported by reasonable assumptions, reliable data and concrete evidence. Action plans should identify specific measures, implementation timelines, expected cash-flow contributions or savings, and key assumptions as to timing and amount. Measures may include revenue growth, cost reductions, recovery of receivables, asset disposals, debt restructuring or loan extensions, fundraising and financial support from controlling shareholders. The assessment should explain the underlying issues, remediation strategy, audit committee’s views and measurable progress, and should be capable of withstanding challenge from auditors and regulators rather than merely satisfying a reporting formality. Management should also be able to substantiate the feasibility and achievability of its proposed remedial measures with issuer-specific evidence and reasonable assumptions.

Where the Exchange requests quarterly updates, issuers should report material events, changes and developments affecting previously disclosed plans and cash-flow forecasts. Any departure from the original plan should be explained, together with resulting adjustments to forecasts and assumptions and the reasons the revised plan remains achievable. Contemporaneous evidence will be important when responding to regulatory enquiries.

Audit Committees Must Demonstrate Effective Challenge

Audit committees must do more than endorse management’s conclusions. They should engage early with management and auditors, critically test whether all relevant events and conditions have been identified, and assess whether proposed plans, assumptions and data are feasible and adequately supported. Their challenge, deliberations and conclusions should be actively documented and evident from the issuer’s disclosures. Where a committee agrees with management despite an auditor issuing or proposing a disclaimer, the annual report should clearly describe the auditor’s concerns, the committee’s assessment and the basis for its agreement. The committee should then monitor implementation and ensure that material deviations, delays and revised assumptions are promptly reviewed and disclosed.

Auditors Are Expected to Apply Greater Rigour

Auditors are expected to adopt a proactive and rigorous approach to management’s going concern assessment and disclosures. They should critically assess significant assumptions, underlying data and action plans, consider all relevant audit information, communicate deficiencies promptly, and consider alternative procedures before concluding that a scope limitation exists.

If a disclaimer is issued, the auditor should identify the aspects for which sufficient appropriate evidence could not be obtained and explain the work performed and why the evidence was insufficient. A going concern disclaimer does not relieve the auditor of responsibility for the remaining areas of the financial statements, and any other matter that would independently result in a modified opinion should be clearly described under the applicable auditing standards.

Enforcement and Trading Suspension Risks

The SFC, the AFRC and the Exchange will continue to monitor listed issuers and the conduct of their management, audit committees and auditors. If misconduct or non-compliance is identified, including false or misleading disclosures or a material misstatement by way of omission, the regulators may pursue regulatory, disciplinary or enforcement action under the Securities and Futures Ordinance, the Accounting and Financial Reporting Council Ordinance and the Listing Rules, as applicable.

Separately, where a going concern disclaimer persists for a prolonged period, the Exchange may also consider whether the issuer continues to maintain a sufficient level of operations and assets under Rule 13.24 of the Main Board Listing Rules or Rule 17.26 of the GEM Listing Rules. Non-compliance with those requirements may itself result in a trading suspension.

The direction of travel is particularly significant. If the Joint Statement does not lead to significant improvement, the Exchange will consider amending the Listing Rules as necessary. This could include requiring the suspension of issuers whose financial statements contain a disclaimer of opinion solely relating to going concern. Any such change could narrow or remove the current carve-out and expose affected issuers to suspension where a going concern disclaimer is issued.

How We Can Assist

Issuers should act early to stress-test going concern assessments, substantiate assumptions, convert remedial measures into measurable plans, document audit committee challenge, prepare quarterly updates and coordinate management, the audit committee and auditors before the reporting deadline. Early legal advice should be considered where a going concern disclaimer has been issued or is anticipated, previously announced plans are delayed or revised, or the issuer is responding to Exchange enquiries. We can assist with coordinating legal, financial and audit workstreams, reviewing annual and quarterly disclosures, and identifying potential Listing Rule, enforcement and trading risks.

 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.

5 October 2026

On 4 September 2026, Korea’s Financial Services Commission (“FSC”) introduced a policy roadmap on the digital transformation of securities issuance and circulation at the third meeting of the private-public joint consultative body on the tokenisation of securities. The roadmap sets out Korea’s proposed approach to progressively integrating distributed ledger technology into its securities issuance, circulation and settlement infrastructure.

The policy direction is particularly significant because it moves beyond the initial focus on fractional investment products and outlines a phased strategy for the tokenisation of traditional financial instruments, including stocks, bonds and funds.

The roadmap is particularly relevant to financial institutions, asset managers, fintech companies and issuers exploring tokenisation initiatives in Asia, as it provides greater regulatory certainty regarding the issuance, distribution and trading of tokenised securities in Korea. Following the publication of the roadmap, on 1 October 2026 the FSC announced proposed amendments to subordinate regulations to implement key aspects of the new framework.

1. Security Tokens Recognised as a New Form of Securities

The FSC reiterated that security tokens are not a separate asset class, but merely a different method of issuing and recording existing securities through distributed ledger technology (“DLT”). With the amendments to the Act on Electronic Registration of Stocks and Bonds scheduled to take effect on 4 February 2027, security tokens, or tokenised securities, will be legally recognised as a digitised form of securities.

Under the proposed framework, traditional securities such as shares, bonds and fund interests may be issued in tokenised form while retaining their existing legal characteristics. The proposed subordinate regulations announced on 1 October 2026 further confirm that the types of securities capable of being tokenised will include not only fractional investment securities, such as non-monetary trust beneficiary certificates and investment contract securities, but also existing standardised securities such as shares, bonds and fund interests. The use of distributed ledger technology is expected to enhance transparency and efficiency in the recording and management of securities ownership and transactions.
 

2. Phased Development of Tokenised Securities Issuance Infrastructure

The FSC has adopted a phased approach to implementation in recognition of the operational and regulatory complexities involved in tokenising traditional financial products.

Phase 1 is scheduled to commence when the amended legislation takes effect in February 2027 and will focus on tokenisation of securities for:

• privately pooled money market funds (“MMFs”) and bonds exclusively reserved for institutional investors;
• unlisted shares through a trust structure; and
• publicly offered fractional investment products.

Implementation of the second and third phases will remain flexible, taking into account the outcome of the first phase, the pace of technological innovation among market participants and the progress of pending stablecoin legislation.

3. Expansion of Fractional Investment Opportunities

The roadmap is accompanied by model standards governing fractional-investment products structured as non-monetary trust beneficiary certificates or investment contract securities.

For non-monetary trust beneficiary certificates, the standards would permit the pooling of underlying assets subject to specified conditions, including that the assets are of the same type, that the standards and purpose of the pooling are clearly identified, that distressed assets are excluded and that information concerning each underlying asset is provided. Future receivables may also be included where sufficient investor-protection measures are in place.

The FSC has proposed that the maximum subscription amount for an individual investor should be the lower of KRW30 million and 5% of the total issuance volume. It has also recommended establishing a specific retail allocation and reserving a minimum portion for equal distribution.

For investment contract securities, the existing investor-protection-focused screening process will remain in place. The authorities will conduct further studies on the circulation of equity-sharing investment contract securities and the issuance of business-project investment contract securities. The policy direction also broadens the scope of assets that may be used in fractional investment structures.

4. Distribution and Trading Framework

There will be no separate authorisation regime exclusively for dealing in tokenised securities. Financial-investment business operators may handle tokenised securities within their existing licensed business areas, although prior consultation with the Financial Supervisory Service (FSS) will be required before undertaking the intermediation of tokenised-securities transactions.

The proposed subordinate regulations will establish an additional over-the-counter (“OTC”) licensing category for debt securities, alongside the categories applicable to unlisted shares and non-monetary trust beneficiary certificates. A corresponding category for investment contract securities may be considered following further study.

To protect retail investors, the proposed subordinate regulations set an annual net purchase limit of KRW100 million per retail investor on each OTC exchange, calculated as the total purchase amount less the total sale amount. OTC exchanges will remain subject to operational standards for preventing, monitoring and responding to unfair trading, and contraventions may be sanctioned under the Financial Investment Services and Capital Markets Act. This approach is intended to facilitate market participation by leveraging Korea’s existing financial services regulatory framework, rather than creating a standalone licensing regime for tokenised securities.

5. New Role for Issuer Account Management Entities

Under the new system, qualifying issuers of tokenised securities may be permitted to manage securities accounts for customers in respect of their own issuances. This function was previously reserved for financial companies. The change reflects the FSC’s assessment of the operational stability of distributed ledger systems and the potential efficiency of DLT-based securities-rights management.

The proposed subordinate regulations announced on 1 October 2026 further specify the registration requirements applicable to issuer account management entities. Applicants will be required to have minimum equity capital of KRW4 billion, at least one account-management professional, one internal-control professional and two information-technology professionals, together with the other applicable registration requirements.

6. Distributed Ledger Screening and Operational Standards

The Korea Securities Depository has prepared screening criteria for distributed-ledger systems used in the electronic registration of tokenised securities. When securities companies apply to connect to a distributed ledger, the Korea Securities Depository will conduct screening and operational testing against these criteria.

The proposed subordinate regulations announced on 1 October 2026 further specify requirements applicable to distributed ledgers used for electronic registration. Among other things, the distributed ledger must include, in addition to the electronic registration institution, at least two account management entities (which may include issuer account management entities). The proposals also prohibit the payment of direct consideration for the use of a distributed ledger for electronic registration, having regard to the distributed ledger’s function as a public register and the need to mitigate risks such as delays in the determination of securities rights.

In addition to core functionality relating to the issuance and circulation of tokenised securities, the criteria address information-technology and cybersecurity standards and contingency planning for system errors or malfunctions, including business-continuity arrangements. Securities companies will be expected to maintain existing levels of operational stability when incorporating distributed-ledger technology into their systems.

7. Looking Ahead

The FSC’s roadmap unveiled in September 2026 has already been followed by a further implementation step. On 1 October 2026, the FSC announced proposed amendments to subordinate regulations under the Financial Investment Services and Capital Markets Act and the Electronic Registration Act to facilitate the introduction of tokenised securities from 4 February 2027. The proposed amendments are subject to a legislative notice and public consultation period running from 2 October 2026 to 11 November 2026.

The regulatory proposals provide additional detail on matters including the scope of securities eligible for tokenisation, requirements applicable to distributed-ledger infrastructure, registration requirements for issuer account management entities, and the establishment of an OTC exchange licensing category for debt securities and investment limits applicable to retail investors. Together with the September roadmap, these developments provide greater clarity regarding the practical implementation of Korea’s tokenised-securities regime and demonstrate continued regulatory momentum towards the digitalisation of securities issuance and circulation.

Following the consultation period, the proposed amendments are expected to undergo further regulatory and governmental procedures, including FSC approval and review by the Ministry of Government Legislation, before taking effect alongside the amended legislation on 4 February 2027.

Financial institutions, issuers, asset managers and fintech businesses considering tokenisation projects involving Korea should continue to monitor development during and following the legislative notice and consultation process as well as further developments concerning stablecoins, OTC trading platforms and technical standards for distributed-ledger infrastructure. With the first phase scheduled to commence on 4 February 2027, market participants are expected to begin preparing operational, technology and compliance frameworks well in advance of implementation.

 Please contact our Partner 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.

2 October 2026

Introduction

On 30 September 2026, the Securities and Futures Commission (the “SFC”) and the Securities Commission Malaysia (the “SC”) announced the implementation of simplified regulatory procedures and submission arrangements to facilitate simultaneous listings in Hong Kong and Malaysia (the “Single Submission Arrangement”).

The Single Submission Arrangement brings into operation the simplified dual initial public offering (“IPO”) listing framework contemplated under the Memorandum of Understanding between the SFC and SC concerning mutual recognition of covered funds and the simplified dual IPO listing framework signed on 23 July 2026 (the “MoU”).

Under the Single Submission Arrangement, an applicant seeking a primary listing on either the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) or the MAIN Market of Bursa Malaysia Securities Berhad (the “Bursa Malaysia”), together with a simultaneous secondary listing on the other market, may proceed through a streamlined application process via a single listing application submission supported by a single listing document.

The new arrangement is intended to reduce regulatory duplication and compliance costs at the IPO application stage and facilitate greater connectivity between the Hong Kong and Malaysian capital markets.

The arrangement applies to a simultaneous primary and secondary listing involving the Main Board of the Stock Exchange and the MAIN Market of Bursa Malaysia. It does not create a general passporting regime for all forms of cross-listing, nor does it remove the substantive eligibility, disclosure or investor protection requirements applicable in either jurisdiction.

How the Single-Submission Process Works

The submission package should be divided into separately identified Hong Kong and Malaysian parts. Where the same application materials or documents are required in both parts, cross-references may be made to the relevant materials or documents in the other part.

Key Features of the Single Submission Arrangement

The Single Submission Arrangement introduces a coordinated approach to the application and regulatory review processes for simultaneous listings in Hong Kong and Malaysia. Its key features include:

• Single Listing Document: An applicant may use one listing document for both listings, provided that the document satisfies the applicable statutory, prospectus, disclosure and listing requirements of both Hong Kong and Malaysia.
• Single Point of Submission: An applicant will submit the application materials required by both markets through the authority responsible for its primary listing. Where Hong Kong is the primary-listing market, the full application materials required by the Stock Exchange and the SC materials, including the prescribed additional information, will be submitted to the Stock Exchange. Where Malaysia is the primary-listing market, the full application materials required by SC and the Stock Exchange will be submitted to SC. The submission package must be divided into separately identified Hong Kong and Malaysian parts, although cross-references may be used for documents required in both parts.
• Dedicated Dual-Listing Review Teams: Dedicated teams and communication channels have been established by the regulators to act as direct points of contact for applicants and their professional advisers. This is intended to facilitate active case management, coordination between the relevant authorities and efficient handling of applications throughout the listing process.
• Coordinated Regulatory Review: The SFC, the Stock Exchange and the SC have established coordinated review processes to align regulatory review timelines, minimise duplication and streamline comments and queries raised with applicants.

The streamlined procedures do not dispense with the regulatory requirements applicable in either jurisdiction. Applicants will remain required to satisfy the relevant statutory, listing, disclosure and investor protection requirements applicable to their proposed listing in each market.

Facilitating the Dual Listing Application Process

In connection with the implementation of the Single Submission Arrangement, the SFC has published a “Circular on the Single Submission Arrangement for Dual Listings in Hong Kong and Malaysia”, setting out the arrangements applicable to prospective dual-listing applicants.

Related guidance materials have also been made available by the Malaysian and Hong Kong authorities. In particular, SC has published the Guidance for Listing of Hong Kong Companies on MAIN Market of Bursa Malaysia Securities Berhad. Reference should also be made to the Stock Exchange’s existing explanatory note concerning a Malaysia-incorporated company’s compliance with Hong Kong’s core shareholder-protection standards and applicable Malaysian laws and regulations.

SC also revised its Guidelines on Submission of Corporate and Product Proposals, Prospectus Guidelines and Equity Guidelines on 30 September 2026 to operationalise the simplified dual-listing framework.

These materials are intended to assist prospective applicants and their advisers in navigating the requirements applicable in the two markets. Applicants, sponsors and other professional advisers are encouraged to consult the SFC, the Stock Exchange or the SC, as appropriate, before formally submitting a listing application to discuss the proposed transaction structure and indicative timetable.

By enabling applicants to prepare a single listing document and proceed through a coordinated submission and regulatory review process, the Single Submission Arrangement is expected to reduce repetitive work and enhance efficiency in the execution of simultaneous Hong Kong-Malaysia listings. At the same time, the continued application of the respective regulatory requirements in both jurisdictions is intended to ensure that the efficiencies introduced by the new arrangement do not compromise existing regulatory standards or investor protection.

Strengthening Connectivity between the Hong Kong and Malaysian Capital Markets

The introduction of the Single Submission Arrangement represents a further development in the regulatory cooperation between Hong Kong and Malaysia following the signing of the MoU in July 2026. It also reflects the broader objective of the two regulators to deepen regional capital market connectivity and facilitate cross-border fundraising opportunities.

Prospective applicants should determine the intended primary-listing market at an early stage, as this will determine the submission channel and the principal application process. They should also conduct an early gap analysis of the eligibility, prospectus, financial-information, corporate-governance and shareholder-protection requirements applicable in both jurisdictions. Although common documents may be cross-referenced, the application package must still address jurisdiction-specific requirements. Applicants should also coordinate with both authorities at an early stage regarding the timing of prospectus exposure and registration and keep them informed of subsequent changes to the timetable. An applicant contemplating a dual-primary listing may also consult the relevant authorities at an early stage regarding the potential application of the Single Submission Arrangement.

The Single Submission Arrangement is also expected to benefit sponsors and other professional advisers by reducing duplication in the preparation and submission of listing materials and facilitating greater coordination in responding to regulatory comments. Nevertheless, applicants and their advisers should consider the applicable requirements of both jurisdictions at an early stage and carefully coordinate the proposed transaction structure, disclosure requirements and listing timetable.

More broadly, the initiative reflects continued efforts to strengthen Hong Kong’s connections with other major capital markets in the region and to enhance its role as an international fundraising platform.

Conclusion

The Single Submission Arrangement is a meaningful procedural development for issuers considering simultaneous access to the Hong Kong and Malaysian capital markets. Its principal benefit lies in allowing the materials required by both markets to be submitted through a single channel, supported by one listing document and a coordinated regulatory review process.

The framework does not, however, amount to mutual recognition of listing eligibility or regulatory requirements. Issuers and their advisers will still need to address the requirements of both jurisdictions and coordinate the transaction structure, disclosure package and timetable from an early stage.

From a commercial perspective, the arrangement may be particularly relevant to suitable businesses seeking to broaden their exposure to investors in Mainland China and Southeast Asia and to diversify their fundraising channels.

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.