- Exchange to amend Listing Rules to make delisting framework more effective to address concerns about prolonged trading suspensions
- Rule changes to take effect on 1 August this year
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published its conclusions from responses to its Consultation Paper on Delisting and Other Rule Amendments1 (Consultation Conclusions) and announced it will implement the proposals with minor modifications in response to the comments received. The Listing Rule amendments will become effective on 1 August 2018 (Effective Date).
The Exchange received a total of 43 responses2 during the consultation period3 including comments from a broad range of stakeholders. The feedback indicated strong support for the proposals in the consultation paper.
“The purpose of the Rule amendments is to establish a framework to facilitate timely delisting of issuers that no longer meet our continuing listing criteria and provide certainty to the market on the delisting process,” said David Graham, HKEX’s Chief Regulatory Officer and Head of Listing. “Our goal is to maintain the quality and reputation of Hong Kong’s securities market.”
“We believe the amendments will encourage issuers to work towards resuming trading in their shares as soon as possible when trading has had to be suspended,” Mr Graham said. “We expect the number and duration of prolonged suspensions of trading in issuers’ listed securities to decline.”
The changes to the Listing Rules include the following:
- Under the Main Board Listing Rules:
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add a separate delisting criterion to allow the Exchange to delist an issuer after a trading suspension of 18 continuous months;
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allow the Exchange to (i) publish a delisting notice stating its right to delist an issuer if the issuer fails to resume trading within the period specified in the notice, or (ii) delist the issuer immediately in appropriate circumstances;
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remove Practice Note 17, which sets out a three stage delisting procedure for issuers without sufficient operations or assets that will no longer be needed after the new delisting process takes effect;
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- under the GEM Listing Rules, make changes to align the delisting process with that of the Main Board except for allowing the Exchange to delist a GEM issuer after a trading suspension of 12 continuous months; and
- provide transitional arrangements for issuers whose securities are under a trading suspension immediately before the Effective Date. The current Rules will continue to apply for issuers currently under Practice Note 17 or having been given a notice period before delisting.Other Main Board issuers suspended for 12 continuous months or more may be delisted if they fail to resume trading within 12 months from the Effective Date. All other Main Board and GEM issuers will be subject to the new Rules.
There are other Rule amendments to (i) remove a bright line trading halt requirement where a major (or above) transaction has not been announced by an issuer, in which case a trading suspension may still be required if the transaction is inside information, and (ii) expedite the process for the Exchange directing resumption of trading, with a view to keeping any trading suspension to a minimum.
The Consultation Conclusions and copies of respondents’ submissions can be downloaded from the “News – Market Consultation” section of the HKEX website.
A Guidance Letter on Long Suspension and Delisting which provides guidance relating to the new delisting framework can be downloaded from the “Listing – Interpretation and Guidance – Guidance Letters – Guidance Letters for Listed Issuers” section of the HKEX website.
Amendments to the Main Board Listing Rules can be downloaded from the “Listing - Rules and Guidance – Listing Rules – Amendments to Main Board Listing Rules” section of the HKEX website.
Amendments to the GEM Listing Rules can be downloaded from the “Listing - Rules and Guidance – Listing Rules – Amendments to GEM Listing Rules” section of the HKEX website.
Note 1: The consultation paper was published on 22 September 2017.
Note 2: Submissions were received from 43 respondents, of which six were identical in content. Submissions with identical content were counted as one response in the quantitative analysis.
Note 3: The consultation period began on 22 September 2017 and ended on 24 November 2017.
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