Hong Kong Exchanges and Clearing Limited (HKEx) today (Friday) published its Consultation Conclusions on Acceptance of Mainland Accounting and Auditing Standards and Mainland Audit Firms for Mainland Incorporated Companies Listed in Hong Kong.
HKEx has decided to adopt the proposals in its consultation paper on the subject, which was published to seek public comments on a framework to:
- Allow Mainland incorporated issuers to prepare their financial statements using Mainland accounting standards;
- Allow Mainland audit firms vetted, nominated and endorsed by the Central Government’s Ministry of Finance and the China Securities Regulatory Commission to service these issuers using Mainland auditing standards; and
- Provide for a reciprocal arrangement to allow companies incorporated or registered in Hong Kong and listed on the Mainland to prepare their financial statements using Hong Kong Financial Reporting Standards or International Financial Reporting Standards and be audited by Hong Kong audit firms that are vetted, nominated, endorsed and registered with the Hong Kong Institute of Certified Public Accountants (HKICPA) and use Hong Kong Standards on Auditing or International Standards on Auditing for the audits.
The proposed framework was a joint effort of Mainland authorities and Hong Kong regulators, including the Financial Services and the Treasury Bureau, the Securities and Futures Commission, the Financial Reporting Council, the HKICPA and The Stock Exchange of Hong Kong Limited, a wholly-owned subsidiary of HKEx.
Mark Dickens, HKEx’s Head of Listing, said, “The framework was developed based on mutual recognition. The new rules will provide Mainland incorporated listed issuers with an option to prepare their financial statements using Mainland accounting standards and have them audited by endorsed Mainland audit firms using Mainland auditing standards. This is expected to increase market efficiency and reduce compliance costs of Mainland incorporated companies listed in Hong Kong.”
The overwhelming majority of the 30 respondents to the consultation paper supported the proposals in the paper.
The Consultation Conclusions andrelated Consultation Paper are posted in the News & Consultations section of the HKEx website (see Market Consultations). The related amendments to the Listing Rules are posted in the Rules & Regulations section of the HKEx website (see Amendments to Main Board Listing Rules and Amendments to GEM Listing Rules under Rules and Guidance on Listing Matters).
The related Listing Rule amendments come into effect on 15 December 2010.