Hong Kong Exchanges and Clearing Limited (HKEx) published its Consultation Conclusion on Issue 11 of the 2008 Combined Consultation Paper (Consultation Conclusion) today.

On 11 January 2008, HKEx published a combined consultation paper on proposals to address 18 substantive policy issues.   Under Issue 11 of the paper, HKEx sought public comment on various aspects relating to the issue of securities under a general mandate.  HKEx kept an open mind about the policy direction and did not include a preferred position in the paper.  

Having considered the market responses and based on our analysis of the current facts and circumstances, HKEx considers that there are on balance no compelling grounds for deviation from the status quo, neither does there appear to be any prevailing general consensus on the appropriate direction and extent of any possible reform.

Accordingly, no amendments will be made to the Listing Rules with regard to general mandates.

“There have been profound changes in market conditions since 2004 when the general mandate Rules were last amended, in particular the increased volatility and difficulties faced by issuers in raising funds since the financial turmoil of 2008,” said Mark Dickens, HKEx's Head of Listing. 

Under the current Listing Rules, listed issuers are allowed, pursuant to a general mandate, to issue securities representing up to 20 per cent of their existing issued share capital.  The general mandate generally lasts for 12 months and can be refreshed.  In 2004, amendments were made to the Rules that imposed a 20 per cent limit on discounts to the market price in the case of a placing of securities for cash consideration.

The Consultation Conclusion can be downloaded from the “Market Consultation - Consultation Conclusions” section of the HKEx website.