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HKEx Publishes Consultation Conclusions on Proposed Changes to Requirements for Qualified Property Acquisitions and Formation of Joint Ventures

Corporate
21 Jan 2011

Hong Kong Exchanges and Clearing Limited (HKEx) published Consultation Conclusions today (Friday) on proposed changes to its requirements for listed issuers’ Qualified Property Acquisitions and formation of joint ventures.

HKEx received 22 submissions on the proposed changes set out in a consultation paper published on 10 September 2010.  An overwhelming majority of the respondents supported the proposals to: (i) extend the Qualified Property Acquisition1 exemption to cover Mainland government land acquisitions by property developers; (ii) remove some of the qualification criteria for the Qualified Property Acquisition exemption; and (iii) relax the requirements for the formation of joint ventures by all issuers.  HKEx will implement the proposals with minor modifications based on suggestions from respondents.

"The new Listing Rules will facilitate bidding or tendering by property developers of different sizes for government land for real estate development in Hong Kong and the Mainland,” said Mark Dickens, HKEx’s Head of Listing. “Currently small and medium-size issuers are particularly affected by the Rules as their land acquisitions are likely to be material relative to their size and it is impractical to seek shareholder approval before submitting a bid for land.”

HKEx has amended the Listing Rules to: 

  • Expand the scope of the Qualified Property Acquisition exemption to cover government land acquisitions in the Mainland through public auctions or tenders (the current exemption applies to land acquisitions in Hong Kong only).  For government land acquisitions in other jurisdictions, individual waiver applications will be considered if they meet the criteria described in the new Rules;

  • Remove the exemption conditions that are considered to be impractical or burdensome, including: (i) the restrictions on the joint venture’s financing and profit distribution arrangements when the Qualified Property Acquisition is undertaken on a joint basis; and (ii) the requirements for the issuer to obtain an annual general mandate from shareholders before it engages in any Qualified Property Acquisition on a joint basis with a Qualified Connected Person;

  • Accelerate the disclosure of information relating to the formation of joint ventures for Qualified Property Acquisitions in the annual report to the announcement and circular published at the time of the transaction;

  • Exempt Qualified Property Acquisitions from the property valuation requirement; and

  • Exempt the formation of a joint venture from being treated as a transaction under the Rules on notifiable transactions if it is engaging in a single-purpose project of a revenue nature to the issuer and in its ordinary and usual course of business. 

The Consultation Conclusions can be downloaded from the “News & Consultations – Market Consultations – Consultation Conclusions” section of the HKEx website.

The Rule amendments can be downloaded from the “Rules & Regulations – Rules and Guidance on Listing Matters –Amendments to Main Board Listing Rules” and the “Rules & Regulations – Rules and Guidance on Listing Matters –Amendments to GEM Listing Rules” sections of the HKEx website.  

The Rule amendments will be effective from 1 February 2011. 

1  Qualified Property Acquisitions refer to acquisitions of government land by listed property developers through public auctions or tenders in Hong Kong and, after the new Rules becoming effective, the Mainland.


Ends

Updated 21 Jan 2011