On the Horizon
Moves to Modernise HKEX
Moves to Modernise HKEX<br/>港交所與時俱進

HKGCC welcomes the opportunity to comment on this initiative to amend and modernise the Listing Rules to reflect the digital age, and to reduce the types of documents that have to be displayed for certain transactions. 

These proposals would help to reduce the administrative burden and costs of both HKEX and issuers, resulting in greater efficiency. Given the widespread internet access in Hong Kong, we hope that it will also be possible to implement them in a way that does not harm the interests of the investing public in Hong Kong, which is of paramount importance.

 

Preliminary Comments

The proposals would largely dispense with the requirement to make listing documents available physically, so that they would only need to be made available online. It is therefore all the more important for website access to the documents, on both HKEX’s and the issuers’ websites, to be made as easy and user-friendly as possible for potential investors. It is also important that the option of access to the physical documents also be made available.

We understand that it is not HKEX’s intention to prohibit issuers from making the documents available physically (as well as online) and believe that they should be entitled to do so. We suggest that this be made clear in your consultation conclusions.

While the proposals overall should reduce the administrative burden and costs for issuers (as well as HKEX), the new regime will result in significant changes to the current position, with different requirements applying to different types of listings. We would therefore recommend that when the proposals are finalised, HKEX publishes detailed guidelines, in a simple and easy-to-use format, explaining how the new regime will operate. 

 

Answers to Questions in the Consultation Paper

Q: Do you agree with our proposal to amend the Listing Rules to require:

(i)     all listing documents in a New Listing to be published solely in an online electronic format; and 

(ii)     except for MMOs, all New Listing subscriptions, where applicable, to be made through online electronic channels only? 

A: We note the statistics cited in the Consultation Paper showing the minute number of paper applications received in 2019; the near-ubiquitous availability of internet access in Hong Kong; and the benefits of the proposal in terms of improved efficiency and being better for the environment. Nevertheless, potential investors should still be entitled to physical access to the documents, and be given the option of receiving physical share certificates.

 

Q: Do you agree that documents listed in Appendix I should be displayed online for the periods set out in that appendix except for those documents that are required by the Rules to be made available on an ongoing basis? 

A: Yes. We do not see any valid reason why the proposed required period of display online should be any longer than the current required period for physical display.

 

Q: Do you agree that the Exchange should continue to allow redaction of documents on display in only very limited circumstances?

A: By “very limited circumstances”, we understand that the CP is referring to the three criteria in the Waiver Guide. On this basis, we agree.

 

Q: Do you agree that the current definition of “material contract” remains fit for purpose and that the Exchange should continue to apply it?

A: Yes. We do not see any valid reason for changing the definition, and agree that it should be kept consistent with the definitions in the Companies (Winding Up and Miscellaneous Provisions) Ordinance and the Takeovers Code.

 

Q: Do you agree that restrictions should not be placed on downloading and/or printing documents that are published online in accordance with the proposals set out in this paper?

A: Yes.

 

Q: Do you agree with our proposal not to put in place a system that would enable issuers to record and verify the identity of a person who accesses documents on display online?

A: Yes.

 

Q: In respect of a relevant notifiable transaction, do you agree with our proposal to:

i)     require the issuer to display the contracts pertaining to the transaction only; and

ii)     remove the requirement to display all material contracts entered into by the issuer within the last two years before the issue of the circular?

A: Yes. We agree with the view expressed in the Consultation Paper that the purpose of these requirements should be to provide investors with information about the proposed transaction and how they should vote, and that it is unnecessary to require the provision of access to other material contracts.

 

Q: In respect of a connected transaction that is subject to the shareholders’ approval requirement, do you agree with our proposal to:

i)     require the issuer to display the contracts pertaining to the transaction only; and

ii)    remove the requirement to display contracts referred to in the circular and relevant directors’ contracts?

A: Yes, for the same reason in relation to a relevant notifiable transaction.

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