Hong Kong Exchanges and Clearing Limited (HKEx) published a consultation paper today (Friday) on proposed changes to the requirements for circulars and listing documents of listed issuers.
The consultation paper seeks the public's views on proposals to streamline certain requirements for listed issuers’ circulars and listing documents and codify existing practices in applying the Listing Rules of The Stock Exchange of Hong Kong (the Exchange) Limited, a whollyowned subsidiary of HKEx. The proposals are intended to make the contents of these documents more relevant for shareholders and to encourage more timely dispatch of the documents to the market by eliminating unnecessary restrictions or burdens on issuers.
Under the Listing Rules, issuers must send circulars to shareholders for major or larger transactions and connected transactions that require shareholders’ approval. In addition, issuers must issue listing documents when applying for the listing of certain securities (eg rights issue or open offer). The Listing Rules set out specific disclosure requirements for these circulars and listing documents. The Listing Rules also contain timing requirements for despatch of circulars.
Some market practitioners and issuers have commented to the Exchange that certain rules for circulars and listing documents require disclosure of information about the issuers which is not directly relevant to the subject covered in the document or is publicly available, and some requirements may cause delays without materially adding value to the content of the documents.
In the consultation paper, the Exchange has also proposed changes to improve disclosure standards in circulars and listing documents. This includes improvements to transparency by requiring information and expected timetables for transactions to be disclosed to investors and not only to the Exchange, and modification of the directors’ responsibility statement on the content of the documents to reflect the current standards.
The proposals include:
- allowing issuers to make reference in their documents to their published information instead of reproducing the information;
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- for listed PRC and overseas issuers, removing requirements to disclose in the listing documents (and make available for inspection) provisions of constitutive documents and regulatory provisions in the jurisdiction of incorporation;
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- requiring information contained in board minutes for connected transactions to be disclosed in circulars;
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- requiring issuers to disclose the expected date of dispatch of the circular and to update shareholders of changes, instead of the 21day deadline for circulars requiring shareholders’ approval;
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- modifying the directors’ responsibility statement on the content of the documents to reflect the current standards;
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- rule amendments to clarify the application of certain rules.
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"We have undertaken this review in response to market comments on the relevance of information in issuers’ circulars and listing documents. We are mindful of investors’ need to be kept informed and to be given sufficient information to enable them to make properly informed decisions, and we believe the proposals have struck the right balance." Mark Dickens, HKEx's Head of Listing, said. “The proposals form part of our initiatives to improve our listing regulatory regime further.”
The consultation paper can be downloaded from the HKEx website. Interested parties are encouraged to respond to the consultation paper by completing and returning the questionnaire.
The deadline for replies to the consultation paper is 18 November 2009.