Practice Note 15 to the Exchange Listing Rules sets out the Exchanges requirements on proposals submitted by listed issuers to effect a separate listing of assets or businesses wholly or partly within their existing group ("spin-off"). These requirements have only applied to spin-offs of subsidiaries of listed issuers. Spin-offs of associated companies of listed issuers have not been subject to the requirements of Practice Note 15.

There have been instances where listed issuers have reduced their interests in subsidiaries so that they became associated companies. Listed issuers have therefore been able to spin off such associated companies without complying with the requirements of Practice Note 15 even though these companies had previously been subsidiaries. Accordingly, the Exchange has amended Practice Note 15 so that the spin-off requirements will also apply to the spin-off of an associated company which was previously a subsidiary of the listed issuer at any time during the latest completed financial year of the listed issuer up to the date of the submission of the spin-off proposal to the Exchange.

The Exchange is also introducing new requirements governing the spin-off of any associated company as mentioned above. The listed issuer will be required to submit its spin-off proposal to the Exchange for approval before its associated company applies for listing on the Exchange or any other exchanges. The listed issuer will also be required to provide to the Exchange details of the changes in ownership of issued share capital of such associated company during the latest completed financial year of the listed issuer up to the date of submission of the spin-off proposal to the Exchange. The listed issuer will further be required to use its best endeavours to provide its shareholders with an assured entitlement to the shares in the associated company.

The rule changes will come into effect on 16 July 2001. Reprinted pages of the Listing Rules will be distributed in due course. The revised Listing Rules will also be available for viewing on the website of Hong Kong Exchanges and Clearing Limited at http://www.hkex.com.hk from 16 July 2001.