Listing Rules and Guidance: Contents


 
 

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3A.07
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At least one sponsor of a new applicant must be independent of it. The sponsor is required to demonstrate to the Exchange its independence or lack of independence and declare in accordance with the terms set out in Appendix 17.

A sponsor is not independent if any of the following circumstances exist at any time from the date of submission of a listing application on Form A1 up to the date of listing:

(1) the sponsor group and any director or close associate of a director of the sponsor collectively holds or will hold, directly or indirectly, more than 5% of the number of issued shares of the new applicant, except where that holding arises as a result of an underwriting obligation;
(2) the fair value of the direct or indirect current or prospective shareholding of the sponsor group in the new applicant exceeds or will exceed 15% of the net equity shown in the latest consolidated financial statements of the sponsor's ultimate holding company or, where there is no ultimate holding company, the sponsor;
(3) any member of the sponsor group or any director or close associate of a director of the sponsor is a close associate or core connected person of the new applicant;
(3A) the sponsor is a connected person of the new applicant;
(4) 15% or more of the proceeds raised from the initial public offering of the new applicant are to be applied directly or indirectly to settle debts due to the sponsor group, except where those debts are on account of fees payable to the sponsor group under its engagement for sponsorship services;
(5) the aggregate of:
(a) amounts due to the sponsor group from the new applicant and its subsidiaries; and
(b) all guarantees given by the sponsor group on behalf of the new applicant and its subsidiaries,
exceeds 30% of the total assets of the new applicant;
(6) the aggregate of:
(a) amounts due to the sponsor group from:
(i) the new applicant;
(ii) its subsidiaries;
(iii) its controlling shareholder; and
(iv) any close associates of its controlling shareholder; and
(b) all guarantees given by the sponsor group on behalf of:
(i) the new applicant;
(ii) its subsidiaries;
(iii) its controlling shareholder; and
(iv) any close associates of its controlling shareholder,
exceeds 10% of the total assets shown in the latest consolidated financial statements of the sponsor's ultimate holding company or, where there is no ultimate holding company, the sponsor;
(7) the fair value of the direct or indirect shareholding of:
(a) a director of the sponsor;
(b) a director of its holding company;
(c) a close associate of a director of the sponsor; or
(d) a close associate of a director of its holding company
in the new applicant exceeds HKD 5 million;
(8) an employee or director of the sponsor who is directly engaged in providing the sponsorship services to the new applicant, or his close associate, holds or will hold shares in the new applicant or has or will have a beneficial interest in shares in it;
(9) any of the following has a current business relationship with the new applicant or a director, subsidiary, holding company or substantial shareholder of the new applicant, which would be reasonably considered to affect the sponsor's independence in performing its duties as set out in this Chapter, or might reasonably give rise to a perception that the sponsor's independence would be so affected, except where that relationship arises under the sponsor's engagement to provide sponsorship services:
(a) any member of the sponsor group;
(b) an employee of the sponsor who is directly engaged in providing the sponsorship services to the new applicant;
(c) a close associate of an employee of the sponsor who is directly engaged in providing the sponsorship services to the new applicant;
(d) a director of any member of the sponsor group; or
(e) a close associate of a director of any member of the sponsor group;
(10) the sponsor or a member of the sponsor group is the auditor or reporting accountant of the new applicant.

Notes:
1. In addition to being a breach of the Exchange Listing Rules, if it comes to the Exchange's attention that a sponsor is not independent but is required to be (for example, where the sponsor is the sole sponsor appointed), the Exchange will not accept documents produced by that sponsor in support of the subject application for listing or a request for approval or vetting of any document required under the Exchange Listing Rules in relation to the subject listing application.
2. Sub-paragraphs (1) to (3) will not apply where the circumstance occurs because of an interest:
(a) held by an investment entity on behalf of its discretionary clients;
(b) held by a fund manager on a non-discretionary basis such as a managed account or managed fund;
(c) held in a market-making capacity; or
(d) held in a custodial capacity.
3. In calculating the percentage figure of shares that it holds, or will hold, for the purposes of this rule, a sponsor group is not required to include an interest in shares that would be disregarded for the purposes of Divisions 2 to 4 of Part XV of the Securities and Futures Ordinance under section 323 of that Ordinance.
4. For the purposes of this rule, references to a "new applicant" include references to the new applicant once it is listed, that is, the newly listed issuer, as applicable.