THE STOCK EXCHANGE OF HONG KONG LIMITED
(A wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited)
Minor and housekeeping amendments to the Main Board and GEM Listing Rules
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited, has made various minor and housekeeping amendments to the Main Board and GEM Listing Rules. These minor and housekeeping rule amendments relate to the following subject matters:
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disclosure of pre-acquisition financial information;
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disclosure by and removal of directors;
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housekeeping amendments relating to listing of securities;
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notifiable transactions and connected transactions;
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accounting matters and the Pro Forma Rules;
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structured products; and
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other minor and housekeeping amendments. |
Further details of the more significant changes are set out below:
Disclosure of "advances to entities"
Rules 13.13 to 13.16 of the Main Board Listing Rules and Rules 17.15 to 17.18 of the GEM Listing Rules require the disclosure of “advances to entities” where certain thresholds are exceeded. Previously, five tests were required to be applied, the most pertinent tests being the total assets test and consideration test. The applicable tests have been amended to only the total assets test. The rule amendments also introduce a new rule 13.15A to the Main Board Listing Rules and rule 17.17A to the GEM Listing Rules that exclude a trade receivable from advances to entities in the calculation of the assets ratio where the trade receivable (other than as a result of the provision of financial assistance) arose in the ordinary and usual course of business of the issuer and the transaction from which the trade receivable arose was on normal commercial terms.
Notifiable transactions - exemption for IPO financing and securities margin financing by listed securities houses
Rules 14.04 and 14A.10 of the Main Board Listing Rules and rules 19.04 and 20.10 of the GEM Listing Rules have been amended to exempt listed securities houses from the disclosure and shareholder approval provisions in respect of IPO financing and securities margin financing provided by listed securities houses in the ordinary and usual course of business and upon normal commercial terms.
Disclosure of pre-acquisition financial information
A new rule 4.05A of the Main Board Listing Rules and rule 7.04A of the GEM Listing Rules have been introduced to require the disclosure by new listing applicant of pre-acquisition financial information on material businesses/companies acquired in an accountants' report for a listing document in order to provide full and useful information to investors.
Disclosure by and removal of directors
Paragraph 4(3) of Appendix 3 and paragraph 5(1) of Appendix 13B of the Main Board Listing Rules and Paragraph 4(3) of Appendix 3 and Paragraph 5(1) of Appendix 11B of the GEM Listing Rules have been amended to provide that a director may be removed by an ordinary resolution in general meeting instead of a special resolution and also to reflect the requirement of the Companies Ordinance.
The other rule amendments also require a director of an issuer to:—
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disclose his directorships held in other listed companies in a prospectus;
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include in the disclosure of his biographical details on appointment other relevant details that mirror the disclosure made in director's declaration and undertaking to the Exchange; and
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disclose in an announcement upon appointment full particulars of his emoluments irrespective of whether a service contract has been entered into between issuer and him.
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Notifiable transactions and connected transactions
Amendments to rule 14.64(4) of the Main Board Listing Rules and rule 19.64(5) of the GEM Listing Rules clarify that a circular required for discloseable transaction also includes a transaction that does not involve any acquisition or disposal of assets, such as in the case of a financial assistance transaction.
Amendments to rule 14A.14 of the Main Board Listing Rules and rule 20.14 of the GEM Listing Rules codify the Exchange's existing interpretation that continuing connected transactions include financial assistance.
Accounting matters and the Pro Forma Rules
Amendments have been made to:
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rule 13.22 of the Main Board Listing Rules and rule 17.24 of the GEM Listing Rules to clarify that a combination of balance sheets of affiliated companies is not "pro forma" financial information as required under rule 4.29 of the Main Board Listing Rules and rule 7.31 of the GEM Listing Rules; and
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rule 14.69(7) of the Main Board Listing Rules and rule 19.69(8) of the GEM Listing Rules to clarify that that two separate management discussion and analysis statements, one on the existing group and one on the business or company acquired or to be acquired, are required in a circular for a very substantial transaction.
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Structured products
Certain minor amendments have been made to Chapter 15A of the Main Board Listing Rules to facilitate the listing of callable bull/bear contracts and other types of structured products which may be developed in future.
Other minor and housekeeping amendments
The other more significant minor amendments include the:
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change in the definition of "subsidiary" to reflect amendments made to the definition of "subsidiary" in the Companies Ordinance; and
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requirement that the Exchange be informed and an announcement be published whenever there is change in Share Registrar.
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Coming into effect
The amendments to the Main Board and GEM Listing Rules will come into effect on 1 March 2006.
The revised Listing Rules are available for viewing on HKEx's website at http://www.hkex.com.hk/eng/rulesreg/listrules/mbrulesup/pages/mb_ruleupdate.htm (for the Main Board Listing Rules) and http://www.hkex.com.hk/eng/rulesreg/listrules/gemrulesup/pages/gemrule_update.htm (for the GEM Listing Rules).
Re-printed pages of the Main Board and GEM Listing Rules will be distributed in due course.