SFC and SEHK publish revised Joint Policy Statement regarding listing of overseas companies

The Securities and Futures Commission (SFC) and The Stock Exchange of Hong Kong Limited (SEHK), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), today published a revised Joint Policy Statement regarding the listing of overseas companies (revised JPS) to replace the JPS issued in March 2007 (Note 1).

The objective of the revised JPS is to: 

• promote transparency in the listing process; 
   
• provide regulatory certainty for overseas companies seeking either primary or secondary listing in Hong Kong, and
   
• maintain the quality of Hong Kong’s financial market, which is recognised for its high standards of regulation, investor protection and corporate governance (Note 2).

“The revised JPS consolidates all relevant issues regarding listing of overseas companies into a single document. It is comprehensive, and should facilitate a clear understanding of the ways in which listing of overseas companies can be achieved in line with regulatory expectations,” the SFC’s Chief Executive Officer, Ashley Alder said. 

“Setting out our approach in the revised JPS enables us to adapt our requirements quickly.  It also provides transparency on our approach to help those overseas companies planning to make a listing application”, said David Graham, HKEx’s Chief Regulatory Officer and Head of Listing.

The key elements of the revised JPS are:

• Shareholder protection standards – refining key shareholder protection standards by removing from the revised JPS those already covered by the SEHK Listing Rules;
   
• Regulatory co-operation arrangements – expanding the regulatory co-operation arrangements expected to be in place with relevant overseas jurisdictions;
   
• Accounting and auditing related and other disclosure requirements – providing guidance on acceptable overseas accounting and auditing standards;
   
• Practical and operational matters– highlighting some practical or operational matters that overseas companies contemplating a listing in Hong Kong may encounter, such as cross-border clearing and settlement; 
   
• Suitability for secondary listing – clarifying the approach to vetting the suitability of companies applying for secondary listings;
   
• Waivers – providing guidance on the common waivers the SEHK is prepared to grant an overseas company with, or seeking, a listing and on the waivers that are automatically granted to companies with, or seeking, a secondary listing if they meet the criteria described in the revised JPS.
   

SEHK has requested and been granted the SFC’s consent for these waivers.  The SFC and SEHK have agreed that SEHK will likely amend the Listing Rules in the longer term to incorporate the experience SEHK gains from using the revised JPS in practice.

SEHK aims to publish a Country Guide for each acceptable jurisdiction by the end of 2013 setting out, among other things, comprehensive and user friendly guidance on how companies incorporated in the jurisdiction can meet the requirement for equivalent shareholder protection standards in the Listing Rules. 

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