The Hong Kong Stock Exchange’s Consultation Paper on the Listing Regime for Overseas Issuers1 published on 31 March 2021 (Consultation Paper) puts forward potentially far-reaching changes to the requirements for listing offshore companies on the Hong Kong Stock Exchange (HKEX). For an overview of the proposed changes, please see Charltons’ newsletter The HKEX Consultation Paper on the Listing Regime for Overseas Issuers.2
This newsletter looks in detail at the HKEX’s proposals to simplify its listing requirements for companies incorporated outside Hong Kong and the PRC (Overseas Companies) by removing the existing distinction between Overseas Companies incorporated in a Recognised Jurisdiction (Bermuda or the Cayman Islands) and Overseas Companies incorporated in Acceptable Jurisdictions (the 28 jurisdictions which the HKEX has accepted as a listing applicant’s place of incorporation). The listing requirements for companies incorporated in the PRC as joint stock companies (PRC Companies) (i.e. H share issuers) will continue to be set out separately in Chapter 19A of the Listing Rules.
Another key change proposed by the HKEX Consultation Paper is that all companies listed on the HKEX (including secondary listed companies) should provide the same level of shareholder protection irrespective of the company’s place of incorporation and the nature of the listing (primary or secondary). The HKEX is thus proposing that all companies applying to list on HKEX (including Hong Kong and PRC Companies) should be required to demonstrate how they comply with a single set of 14 core shareholder protection standards.
The key changes to the Listing Rules proposed in order to implement the above proposals are:
- The text of Appendix 3 to the HKEX Listing Rules will be replaced by the core shareholder protection standards;
- The Joint Policy Statement3 regarding the Listing of Overseas Companies first issued by the SFC and the HKEX in 2007 (the SFC-HKEX Joint Policy Statement) will be withdrawn;
- Section 1 in Parts A (Bermuda) and B (the Cayman Islands) of Appendix 13 to the HKEX Listing Rules will be repealed. The shareholder protection standards required of Bermuda and Cayman Islands incorporated companies currently set out in Parts A (Bermuda) and B (the Cayman Islands) of Appendix 13 will be replaced by the Core Standards set out in revised Appendix 3 to the HKEX Listing Rules;
- HKEX Listing Rules 19C.06 to 19C.09 in respect of Grandfathered Greater China companies and Non-Greater China companies will be repealed and superseded by the Core Standards;
- Consequential changes will be made to the requirements for PRC Companies in Chapter 19A of the HKEX Listing Rules; and
- Certain requirements of the SFC-HKEX Joint Policy Statement will be codified.
