Listing Rules and Guidance: Contents


 
 

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13.84
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An independent financial adviser must be independent from any issuer for whom it acts. An independent financial adviser is not independent if any of the following circumstances exist as at the time of making the declaration required by rule 13.85(1):

(1) the IFA group and any director or close associate of a director of the independent financial adviser holds, directly or indirectly, in aggregate more than 5% of the number of issued shares of the issuer, another party to the transaction, or a close associate or core connected person of the issuer or another party to the transaction;
(1A) in the case of a connected transaction, the independent financial adviser holds more than 5% of the number of issued shares of an associate of another party to the transaction;
(2) any member of the IFA group or any director or close associate of a director of the independent financial adviser is a close associate or core connected person of the issuer or another party to the transaction;
(2A) in the case of a connected transaction, the independent financial adviser is an associate of another party to the transaction;
(3) any of the following exceeds 10% of the total assets shown in the latest consolidated financial statements of the independent financial adviser's ultimate holding company or, where there is no ultimate holding company, the independent financial adviser:
(a) the aggregate of:
(i) amounts due to the IFA group from:
(A) the issuer;
(B) its subsidiaries;
(C) its controlling shareholder; and
(D) any close associates of its controlling shareholder; and
(ii) all guarantees given by the IFA group on behalf of:
(A) the issuer;
(B) its subsidiaries;
(C) its controlling shareholder; and
(D) any close associates of its controlling shareholder;
(b) the aggregate of:
(i) amounts due from the IFA group to:
(A) the issuer;
(B) its subsidiaries; and
(C) its controlling shareholder; and
(ii) all guarantees given on behalf of the IFA group by:
(A) the issuer;
(B) its subsidiaries; and
(C) its controlling shareholder;
(c) the aggregate of:
(i) amounts due from the IFA group to any of the following (referred to in this rule as "the Other Parties"):
(A) another party to the transaction;
(B) any holding company of another party to the transaction;
(C) any subsidiary of any holding company of another party to the transaction;
(D) any controlling shareholder of:
(1) another party to the transaction; or
(2) any holding company of another party to the transaction; and
(E) any close associate of any controlling shareholder referred to in paragraph (D) above; and
(ii) all guarantees given by any of the Other Parties on behalf of the IFA group; and
(d) the aggregate of:
(i) amounts due to the IFA group from any of the Other Parties; and
(ii) all guarantees given by the IFA group on behalf of any of the Other Parties;
(4) any of the following has a current business relationship with the issuer or another party to the transaction, or a director, subsidiary, holding company or substantial shareholder of the issuer or another party to the transaction, which would be reasonably considered to affect the independent financial adviser's independence in performing its duties as set out in the Exchange Listing Rules, or might reasonably give rise to a perception that the independent financial adviser's independence would be so affected, except where that relationship arises under the independent financial adviser's appointment to provide the advice:
(a) any member of the IFA group;
(b) an employee of the independent financial adviser who is directly engaged in providing the advice to the issuer;
(c) a close associate of an employee of the independent financial adviser who is directly engaged in providing the advice to the issuer;
(d) a director of any member of the IFA group; or
(e) a close associate of a director of any member of the IFA group;
(5) within 2 years prior to making the declaration pursuant to rule 13.85(1):
(a) a member of the IFA group has served as a financial adviser to:
(i) the issuer or its subsidiaries;
(ii) another party to the transaction or its subsidiaries; or
(iii) a core connected person of the issuer or another party to the transaction; or
(b) without limiting paragraph (a), an employee or a director of the independent financial adviser who is directly engaged in providing the subject advice to the issuer:
(i) was employed by or was a director of another firm that served as a financial adviser to any of the entities referred to at paragraphs (a)(i) to (a) (iii) above; and
(ii) in that capacity, was directly engaged in the provision of financial advice to the issuer or another party to the transaction;
(6) the independent financial adviser or a member of the IFA group is the issuer's auditor or reporting accountant.

Notes:
1. In addition to it being a breach of the Exchange Listing Rules, if it comes to the Exchange's attention that an independent financial adviser is not independent, the Exchange will not accept documents produced by that independent financial adviser for any purpose required under the Exchange Listing Rules in relation to the subject transaction.
2. In calculating the percentage figure of shares that it holds or will hold for the purposes of sub-paragraphs (1), (2) and (4), an entity is not required to include 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;
(d) held in a custodial capacity;
(e) 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; or
(f) in shares held by a member of the entity's group that is an investment manager whose interest would not be aggregated with its holding company under section 316(2) of the Securities and Futures Ordinance by reason of the operation of section 316(5) of that Ordinance.
For these purposes "investment manager" has the meaning given to it in section 316(7) of the Securities and Futures Ordinance.
3. For the purposes of this rule, ultimate holding company means a holding company that itself does not have a holding company.