Listing Rules and Guidance: Contents


 
 

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  • Interpretation and Guidance

    • Frequently Asked Questions

      The following frequently asked questions (FAQs) are designed to help issuers understand and comply with the Listing Rules, particularly in situations not explicitly set out in the Rules or where further clarification may be desirable.

      Users of the FAQs should refer to the Rules themselves and, if necessary, seek qualified professional advice. The FAQs are not substitutes for the Rules. If there is any discrepancy between the FAQs and the Rules, the Rules prevail.

      In formulating our "answers", we may have assumed certain underlying facts, selectively summarised the Rules or concentrated on one particular aspect of the question. They are not definitive and do not apply to all cases where the scenario may at first appear similar. In any given case, regard must be had to all the relevant facts and circumstances.

      The Listing Division may be consulted on a confidential basis. Contact the Listing Division at the earliest opportunity with any queries.

      For searches by rules or topics, please download the consolidated version of FAQs here.

      Please visit Archive to view marked-up versions and versions that have been superseded or withdrawn.

      Please click here for a glossary of acronyms and terms commonly used in the frequently asked questions published in this section.

      By Series

      By Listing Rules

      • By Series

        FAQ Number/
        Series Number
        First Release Date
        (Last Update Date)
        (dd/mm/yyyy)
        Particulars
        005-2017
        006-2017
        007-2017
        20/10/2017 Questions relating to the Financial Institutions (Resolution) Ordinance (“FIRO”) and its impact
        001-2017
        002-2017
        003-2017
        004-2017
        06/01/2017 Questions relating to the audit terminology used in the Rules with reference to the HKICPA new and revised Auditor Reporting Standards effective on 15 December 2016
        001-2016
        002-2016
        003-2016
        02/02/2016
        (13/05/2016)
        Questions relating to Guidance Letter HKEX-86-16 "Guide on Producing Simplified Listing Documents Relating to Equity Securities for New Applications"
        Series 31 06/02/2015
        (21/12/2015)
        Questions relating to the Review of Listing Rules on Disclosure of Financial Information with reference to the New Companies Ordinance and Hong Kong Financial Reporting Standards and Proposed Minor/Housekeeping Rule Amendments
        Series 30 19/12/2014 (14/07/2015) Questions relating to the Risk Management and Internal Control section of the Corporate Governance Code (Effective for accounting periods beginning on or after 1 January 2016)
        Series 29 17/11/2014
        (04/11/2016)
        Shanghai-Hong King Stock Connect
        Series 28 21/03/2014
        (29/05/2015)
        Rule Requirements Relating to Connected Transactions (effective 1 July 2014)
        Series 27 14/03/2014 Selection of Headline Categories and Titles for Announcements (effective 1 April 2014)
        Series 26 21/02/2014
        (01/04/2015)
        Questions relating to the New Companies Ordinance and its impact on issuers (Effective from 3 March 2014)
        Series 25 27/09/2013 Listing of Overseas Companies
        Series 24 26/07/2013
        (11/11/2016)
        Rule changes to complement new sponsor regulation (effective from 1 January 2013)
        Series 23 21/06/2013
        (17/10/2014)
        Disclosure of a new applicant's unaudited net profits/ losses after its track record period in a listing document
        Series 22 30/04/2013 Rule changes consequential on the statutory backing of the obligation on listed corporations to disclose inside information (effective from 1 January 2013)
        Series 21 27/03/2013 Questions relating to the Corporate Governance Code and Associated Listing Rules
        Series 20 28/02/2013
        (01/07/2014)
        Rule Requirements relating to Notifiable Transactions, Connected Transactions, Mineral Companies, Issues of Securities and Corporate Governance Code
        Series 19 13/12/2012
        (01/04/2015)
        Amendments to the Corporate Governance Code and Corporate Governance Report relating to Board Diversity (effective 1 September 2013)
        Series 18 31/08/2012
        (21/12/2015)
        The Environmental, Social and Governance Reporting Guide
        Series 17 19/12/2011
        (01/04/2015)
        Review of the Corporate Governance Code And Associated Listing Rules
        Series 16 28/10/2011 Review of the Corporate Governance Code and Associated Listing Rules (Superseded by Series 17)
        Series 15 20/10/2011
        (01/04/2015)
        Rule amendments relating to property valuation requirements (effective 1 January 2012)
        Series 14 31/05/2011
        (02/01/2013)
        Model Code for Securities Transactions by Directors of Listed Issuers
        Series 13 26/11/2010
        (08/07/2015)
        Rules amendments relating to Mixed Media Offer (effective 1 February 2011)
        Series 12 26/05/2010
        (01/07/2014)
        Amendments relating to New Listing Rules for Mineral Companies (effective 3 June 2010)
        Series 11 20/05/2010
        (01/07/2014)
        Rule Amendments relating to Circulars and Listing Documents of Listed Issuers (effective 3 June 2010)
        Series 10 20/05/2010
        (01/07/2014)
        Amendments to Connected Transaction Rules (effective 3 June 2010)
        Series 9 14/12/2009
        (01/07/2014)
        Rule Requirements relating to Notifiable Transactions, Connected Transactions, Amendments to Articles of Association and Notices of Meeting
        Series 8 28/11/2008
        (01/04/2015)
        Rule Amendments relating to the 2008 Combined Consultation
        Series 7 28/11/2008
        (29/05/2015)
        Rule Requirements relating to Notifiable Transactions, Connected Transactions and Issues of Securities by Listed Issuers
        Series 6 09/05/2008
        (17/04/2014)
        HKEx's Framework for Depositary Receipts (HDRs)
        Series 5 02/05/2008 (31/10/2014) Rule Amendments relating to GEM Review
        Series 4 05/11/2007
        (17/04/2014)
        Web Proof Information Pack (WPIP) (Withdrawn in July 2014)
        Series 3 22/03/2007
        (23/06/2014)
        Electronic Disclosure
        Series 2 01/03/2006
        (30/09/2009)
        Minor and Housekeeping Rule Amendments
        Series 1 31/03/2004
        (11/11/2016)
        Rule Amendments relating to Corporate Governance and Listing Criteria Issues

      • By Listing Rules

        • Main Board Listing Rules

          • Chapters

            • Chapter 1

              View Current PDF

              Question:

              Under the revised Rules, the definitions of "close associate" and "associate" include any trustee by virtue of its capacity as such trustee, of which any director, chief executive or substantial shareholder (being an individual) or any of his family interests is a beneficiary of the trust.

              Do the definitions of "close associate" and "associate" include a trustee where the beneficiary of the trust is a company controlled by any of these parties?

              Answer:

              Yes. For the purpose of the definitions of "close associate" and "associate", the interest of a director, chief executive or substantial shareholder or any of his family interests includes all beneficial interests directly or indirectly held by any of these parties. This would include the trustee of any trust of which a company beneficially controlled by a director, chief executive or substantial shareholder or any of his family interests is a beneficiary. Similarly, where the substantial shareholder is a corporation, "close associate" and "associate" include the trustee of any trust of which a subsidiary of the substantial shareholder is a beneficiary.

              FAQ Series 1, FAQ No. 1
              LR reference: Main Board Rules 1.01, 14A.12(1)(b), 14A.13(2) / GEM Rules 1.01, 20.10(1)(b), 20.11(2)
              Released on 30/3/2004 (Updated on 1/7/2014)

              Question:

              What are depositary receipts?

              Answer:

              Depositary receipts (DRs) are securities issued by a depositary representing underlying shares of an issuer which have been placed with the depositary or its nominated custodian. The subject matter of listing is the underlying shares represented by DRs. DRs are purchased by investors (DR holders) in accordance with the terms of the deposit agreement. The depositary is the agent of the issuer and acts as a bridge between the DR holders and the issuer.

              DRs are issued to investors in the target market (the host market) where they are traded, cleared and settled in host market currency in accordance with host market procedures. One DR will represent a number of underlying shares (or a fraction of a single share), according to the DR ratio. The depositary converts dividends into the host market currency and pays the amounts (net of its own fees) to the DR holders. The depositary also transmits other entitlements and corporate communications from the issuer to the DR holder, and transmits the DR holder's instructions back to the issuer. The rights and obligations of the issuer, the depositary and the DR holders are set out in the deposit agreement.

              FAQ Series 6, FAQ No. A1
              LR reference: Main Board Rules 1.01
              Released on 9/5/2008 (Updated on 1/12/2010)

              Question:

              Company X is a jointly controlled entity of Listco A whose securities are listed on the Exchange.

              Company X proposes to acquire certain assets from a third party. Is Listco A required to comply with the requirements of Chapter 14 of the Main Board Rules / Chapter 19 of the GEM Rules for the proposed acquisition of assets by Company X?

              Answer:

              It would depend on whether Company X is a subsidiary of Listco A as defined in Main Board Rule 1.01/ GEM Rule 1.01. An assessment of whether an undertaking is a subsidiary for Listing Rules purposes would include consideration of how the entity is accounted for and whether the entity is a subsidiary undertaking as defined by schedule 1 to the Companies Ordinance. For example, Listco A owns more than 50% of the equity interest in Company X but it does not control the majority of the board of Company X under the terms of the joint venture agreement. Even though Company X is only accounted for as an associated company in Listco A's consolidated accounts, Company X is still a subsidiary of Listco A for the purpose of the Listing Rules due to Listco A's shareholding in Company X.

              The notifiable transaction requirements under Chapter 14 of the Main Board Rules / Chapter 19 of the GEM Rules generally apply to transactions undertaken by the listed company and/or its subsidiaries. For the purposes of Chapter 14 of the Main Board Rules / Chapter 19 of the GEM Rules, the term "listed issuer" is defined under Main Board Rule 14.04(6) / GEM Rule 19.04(6) to include the listed company itself and its subsidiaries, unless the context otherwise requires.

              In the circumstances described, if Company X is regarded as a subsidiary of Listco A pursuant to Main Board Rule 1.01/ GEM Rule 1.01, Listco A must ensure compliance with the requirements under Chapter 14 of the Main Board Rules / Chapter 19 of the GEM Rules in respect of the proposed acquisition of assets by Company X.

              FAQ Series 7, FAQ No. 1
              LR reference: Main Board Rules 1.01, 14.04(6) / GEM Rules 1.01, 19.04(6)
              Released on 28/11/2008 (Updated April 2015)

              Question:

              Where written shareholder approval has been obtained for a transaction, the amended rule requires an information circular to be despatched within 15 business days after publication of the announcement.

              If the stock market is open for only half day due to a typhoon or other reason, is it counted as a business day?

              Answer:

              The Listing Rules define a "business day" as any day on which the Exchange is open for the business of securities dealing. Accordingly if, for whatever reason, the Exchange is open for the business of dealing in securities for only half day, it is counted as a business day.

              FAQ Series 11, FAQ No. 11
              LR reference: Main Board Rules 1.01, 14.41, 14A.46, 14A.48 / GEM Rules 1.01, 19.41, 20.44, 20.46
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              Does "chief executive" in these Rules mean "chief executive officer"? Or does it also refer to chief financial officer, chief operations officer, etc.?

              Answer:

              The definition of chief executive is set out in the Rules: "a person who either alone or together with one or more other persons is or will be responsible under the immediate authority of the board of directors for the conduct of the business of a listed issuer".

              FAQ Series 17, FAQ No. 8
              LR reference: Main Board Rules 1.01 / GEM Rules 1.01
              Released on 19/12/2011

              Question:

              Listco has appointed Trustee A the trustee of its employee share scheme established for a wide scope of participants including Listco's directors and certain employees who are not connected persons. Since the interests of Listco's directors in the scheme are together less than 30%, Trustee A is not an "associate" of the directors under Rule 14A.12(1)(b) and therefore not a connected person of Listco.

              (a) Is Trustee A a "close associate" of the directors under Rule 1.01?
              (b) Will the shares held by Company A on behalf of the beneficiaries of the scheme be regarded as being "in public hands"?
              (c) Trustee A, acting as the trustee of the scheme, holds more than 10% of Listco's total issued shares. Under the scheme, it is not allowed to exercise the voting rights attaching to shares. Is Trustee A a substantial shareholder of Listco?

              Answer:

              (a) Yes. The exclusion for the definition of "associate" under Rule 14A.12(1)(b) does not apply to the definition of "close associate" under Rule 1.01.
              (b) No, because Trustee A is a close associate of Listco's directors and therefore a core connected person for the purpose of Rule 8.24.
              (c) No. Trustee A does not fall under the definition of "substantial shareholder" under Rule 1.01.

              FAQ Series 28, FAQ No. 4A
              LR reference: Main Board Rules 1.01, 8.24, 14A.12(1)(b) / GEM Rules 1.01, 11.23(11) Notes 2 and 3, 20.10(1)(b)
              Released on 1/7/2014

            • Chapter 2

              View Current PDF

              Question:

              Rule 13.36(2) states that an issuer may exclude overseas shareholders from a rights issue/open offer if, having made enquiries regarding the legal restrictions under the laws of the relevant place and the requirements of the relevant regulatory body or stock exchange, the directors of the issuer consider such exclusion to be necessary or expedient. Can Southbound Shareholders be excluded from participation in rights issues/open offers made by Eligible SEHK Issuers?

              Answer:

              No. Based on the CSRC Announcement [2016] No. 21 "Filing Requirements for Hong Kong Listed Issuers Making Rights Issues to Mainland Shareholders through Mainland-Hong Kong Stock Connect" which sets out the procedure for the filing of rights issue/open offer prospectus documents of Eligible SEHK Issuers, the Listing Department does not consider that Eligible SEHK Issuers have grounds to exclude the Southbound Shareholders from participation in the rights issues/open offers.

              Rule 2.03 sets out the general principle expected to be upheld by issuers, and requires that (i) all holders of listed securities should be treated fairly and equally; and (ii) all new issues of equity securities by a listed issuer should first be offered to the existing shareholders by way of rights unless they have agreed otherwise. This rule seeks to secure for holders of securities equality of treatment. Accordingly, on the basis of Rule 13.36, an Eligible SEHK Issuer failing to make its rights issue/open offer available to the Southbound Shareholders will not be granted an approval for the listing of the rights/open offer shares by the Listing Department under Rule 2A.06.

              FAQ Series 29, FAQ No. 3
              LR reference: Main Board Rules 2.03, 13.36(2)
              Released on 14/11/2014 (Updated on 04/11/2016)

              Question:

              What are the additional considerations for Eligible SEHK Issuers if the securities to be offered or distributed to shareholders in the above corporate actions are not eligible for trading under Shanghai and Shenzhen Connect?

              Answer:

              The scope of securities eligible for southbound trading under the Shanghai and Shenzhen Connect (Eligible Securities) is set out in http://www.hkex.com.hk/eng/market/sec_tradinfra/chinaconnect/Eligiblestock.htm.

              Southbound Shareholders may receive different types of securities from SEHK Eligible Issuers as entitlements under pre-emptive issues or distributions (e.g. warrants or convertible securities of the issuers, or shares of other entities):

              •   if the entitlement securities are not Eligible Securities but are listed on SEHK, Southbound Shareholders may sell them on SEHK through Shanghai and Shenzhen Connect, but they will not be allowed to buy such securities1; and
              •   if the entitlement securities are not listed on SEHK, Southbound Shareholders will not be allowed to buy or sell the securities on SEHK. HKSCC and ChinaClear will determine how to deal with the securities subscribed or received by Southbound Shareholders on an individual case basis2.

              Issuers are reminded of their obligation to treat all shareholders fairly and equally when they propose to offer or distribute securities to shareholders. They should consider making the following arrangements2:

              •   providing all shareholders with an option to receive their entitlements in cash rather than securities; and
              •   if the entitlement securities are not to be listed, offering a means for the shareholders to dispose of these securities.

              Issuers should also make clear disclosures in their corporate communications about actions their shareholders need to take in respect of the offered/distributed securities.

              Note
              1: See Article 77 of SSE Stock Connect Pilot Provisions 《上海證券交易所滬港通試點辦法》, Article 76 of SZSE Stock Connect Implementation Rules《深圳證券交易所深港通業務實施辦法》, and Article 24 of ChinaClear Stock Connect Implementation Rules
              2: See the "Guide on distribution of dividends and other entitlements" published on the HKEX website

              FAQ Series 29, FAQ No. 4
              LR reference: Main Board Rules 2.03, 13.36(2)
              Released on 14/11/2014 (Updated on 04/11/2016)

              Question:

              Company A is an issuer of debt/ structured products listed on the Exchange. Company B, an unlisted group company of Company A, guarantees Company A's obligations under the listed debt/structured products.

              Company A is subject to Part 9 of the FIRO, while Company B is not.

              Where Company A's disclosure obligations are deferred under section 150 of the FIRO or suspended under section 153 of the FIRO, will Company B's disclosure obligations remain intact?

              Answer:

              Where Company A's disclosure obligations are deferred under section 150 of the FIRO or suspended under section 153 of the FIRO, the Exchange will exercise the general waiver approved by the SFC under Main Board Rule 2.04 (or GEM Rule 2.07) to waive Company B's disclosure obligations under the Rules arising out of or in connection with the possible resolution which may be triggered, or the resolution triggered under the FIRO.

              FAQ Series N/A, FAQ No. 006-2017
              LR reference: Main Board Rule 2.04 / GEM Rule 2.07
              Released on 20/10/2017

              Question:

              Does HKEx have any plans to abolish the requirement to publish a printed copy of annual report and accounts or other financial reports or circulars?

              Answer:

              The Electronic Disclosure Project is one major step towards a paperless market. We amended the Listing Rules in the following areas:

              •  electronic communication to shareholders;

              We amended Main Board Rule 2.07A and GEM Rule 16.04A enabling a company to communicate electronically with its shareholders by means of a website if the shareholder concerned has agreed (generally or to the specific corporate communication) (and that agreement has not been revoked) or has been deemed to have done so
              •  reduction in the number of hard copies.

              We reduced the number of hard copies of the documents required. For details, please refer to the HKEx's announcement of 1 August 2008 at:

              http://www.hkex.com.hk/eng/newsconsul/hkexnews/2008/080801news.htm

              Furthermore, HKEx will closely work with the Securities & Futures Commission to explore other measures in relation to electronic filing and submission, which is one of the initiatives in the Government's Economic Summit Report. One possibility would be further automation of Disclosure of Interest filings.

              FAQ Series 3, FAQ No. 137
              LR reference: Main Board Rules 2.07A / GEM Rules 16.04A
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              Listco proposes to send corporate communications to its shareholders using electronic means. For this purpose, Listco will put in place adequate arrangements that comply with Main Board Rule 2.07A and all applicable laws and regulations. It will also seek shareholder approval for amending its articles of association to allow it to use electronic means to communicate with its shareholders.

              Listco's proposed amendments to its articles of association will comply with (i) the laws of its place of incorporation and (ii) the Listing Rules except Paragraph 5 of Appendix 3 to the Main Board Rules.

              Under Paragraph 5 of Appendix 3, an issuer's articles of association must provide that a copy of its director's report or the summary financial report must be delivered or sent by post to the registered address of every member.

              Would the Exchange consider that the proposed amendment of the articles of association by Listco a breach of Paragraph 5 of Appendix 3 to the Main Board Rules?

              Answer:

              The purpose of Main Board Rule 2.07A is to facilitate issuers' greater use of electronic means to communicate with shareholders to the extent permitted under applicable laws and regulations and their own constitutional documents. For this purpose, Paragraph 5 of Appendix 3 should be read in conjunction with Rule 2.07A.

              Provided that Listco's proposal has satisfied all the requirements under Rule 2.07A and is permitted under all applicable laws and regulations, the proposed amendments to its articles of association would not be regarded as a breach of Paragraph 5 of Appendix 3.

              FAQ Series 9, FAQ No. 23
              LR reference: Main Board Rules 2.07A, 13.51(1), Appendix 3 paragraph 5 / GEM Rules 16.04A, 17.50(1), Appendix 3 paragraph 5
              Released on 14/12/2009

              Question:

              New Main Board Rule 2.07A(2A)(d) / GEM Rule 16.04A(2A)(d) require the listed issuer to notify intended recipients of corporate communications made available on its website only of the presence of the corporate communication on the website, the address of the website, the place on the website where it may be accessed and how to access the corporate communication. To whom and how should such a notification be sent?

              Answer:

              After a request for consent has been sent for the purposes of the deeming procedure, there will essentially be three classes of shareholders for the purpose of website communication.

              1. Shareholders who reply that they wish to continue to receive a hard copy do not need to be sent a separate notification about website communication as they are to be sent a hard copy.
              2. Shareholders who do not reply within the 28-day waiting period can be deemed to have consented to website communication provided all other relevant requirements have been complied with. However, they must be sent a hard copy of the notification unless they have provided the listed issuer with an electronic address for this purpose. If any shareholders reply within the 28 days opting for website communication but do not provide an email address, they will be in the same position as those who did not reply and will likewise have to be sent a hard copy of the notification.

              In cases where shareholders who reply that they wish to be advised electronically when any new corporate communication is available on the listed issuer's website and who have provided an email address for this purpose, the listed issuer will have to send them the notification by email. (Note that this group is not the same as those who may have signed up separately to receive email alerts about non-Listing-Rule related material such as promotional offers.)

              FAQ Series 8, FAQ No. 5 Issue 1
              LR reference: Main Board Rules 2.07A(2A)(d) / GEM Rules 16.04A(2A)(d)
              Released on 28/11/2008

              Question:

              How should listed issuers manage the process of obtaining consent from shareholders and keeping track of their status having regard to the 12-month ban on further deeming of consent?

              Answer:

              Good shareholders' database management by the listed issuer is the key to keeping track of the mode of communication applicable to each individual shareholder and any unexpired 28-day waiting period or 12-month ban on further deeming.

              If a listed issuer wishes to seek deemed consent upon a person becoming a shareholder, it will need to manage the fact that the 12-month period will vary from shareholder to shareholder. A listed issuer may wish to seek deemed consent from all relevant shareholders on the same date so that it will be much easier to keep track of the 12-month periods.

              A listed issuer can at any time encourage and invite shareholders to sign up to electronic communications, e.g. as part of its standard shareholder mailings. It is just that a shareholder cannot be deemed to have consented to any request for consent from the listed issuer sent for the purposes of the deeming procedure less than 12 months after a previous request made to him for the purposes of the deeming procedure in respect of the same class of corporate communications.

              FAQ Series 8, FAQ No. 1 Issue 1
              LR reference: Main Board Rules 2.07A(2A) / GEM Rules 16.04A(2A)
              Released on 28/11/2008

              Question:

              Where a shareholder disposes of all his shares in a listed issuer and ceases to be a shareholder but subsequently becomes a shareholder again with the acquisition of some shares, can the listed issuer act upon any consent previously given or deemed?

              Answer:

              No. For the sake of certainty and consistency, the shareholder will need to be treated as a new shareholder. He must be sent hard copies of all corporate communications unless and until fresh consent from him is expressly given or deemed.

              FAQ Series 8, FAQ No. 2 Issue 1
              LR reference: Main Board Rules 2.07A(2A) / GEM Rules 16.04A(2A)
              Released on 28/11/2008

              Question:

              Can a listed issuer, in its request for consent under the deeming procedure, offer electronic means of communication (such as CD or email) in addition to publication on its website?

              Answer:

              Yes. Although the deeming procedure can only be invoked to deem consent from a shareholder to website communication, the listed issuer is not precluded, when requesting consent under the deeming procedure, from using the opportunity to solicit express consent from the shareholder to other electronic means (such as receiving the corporate communication on a CD or by email). If no response is received at the end of the 28-day waiting period and provided that all the relevant conditions under the deeming procedure have been satisfied, the shareholder will be deemed to have consented to website communication.

              FAQ Series 8, FAQ No. 4 Issue 1
              LR reference: Main Board Rules 2.07A(2A) / GEM Rules 16.04A(2A)
              Released on 28/11/2008

              Question:

              Main Board Rule 2.07B/ GEM Rule 16.04B provides that an issuer that avails itself of that Rule must make adequate arrangements to ascertain in which language its shareholders wish to receive its corporate communications. The Note under Main Board Rule 2.07B/ GEM 16.04B sets out an example of what the Exchange will normally regard as an adequate arrangement.

              However, an issuer that avails itself of the deeming procedure under Main Board Rule 2.07A(2A)/ GEM Rule 16.04A(2A) may not be able to follow this example exactly, in particular paragraph (3) under the Note.

              Can an issuer deviate from the example?

              Answer:

              The Note is merely a non-exhaustive example of how to comply with the Rule. An issuer that wishes to use the deeming procedure under Main Board Rule 2.07A(2A)/ GEM 16.04A(2A) may modify the example to suit its own circumstances, so long as the arrangement is adequate for the purpose of Main Board Rule 2.07B/ GEM 16.04B.

              If an issuer is not sure whether its arrangement is adequate, the issuer should consult the Exchange.

              FAQ Series 8, FAQ No. 6. Issue 1
              LR reference: Main Board Rules 2.07A(2A), 2.07B / GEM Rules 16.04A(2A), 16.04B
              Released on 28/11/2008 (Updated on 13/3/2009)

              Question:

              What are the operational hours of the e-Submission System?

              Answer:

              The operational hours of the e-Submission System on a business day will be between 6.00 a.m. and 11.00 p.m.

              On a non-business day immediately preceding a business day, the e-Submission System will be available between 6.00 p.m. and 8.00 p.m.

              A submission for publication can be made whenever the e-Submission System is operational. However, the Listing Rules prohibit an issuer from submitting announcements and notices for publication (with certain limited exceptions) outside designated publication windows.

              The e-Submission publication windows for announcements are set out in the questions in the "Timing of Publication" section.

              FAQ Series 3, FAQ No. 3
              LR reference: Main Board Rules 2.07C(1)(a)(i) / GEM Rules 16.17(1)(a)
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              I cannot gain access to the Internet in order to publish a document via the e-Submission System. Can I send the document to HKEx by diskette instead?

              Answer:

              In normal circumstances the Listing Rules require an issuer to publish a document using the e-Submission System. Submission to HKEx via diskette (or any other means) will not satisfy an issuer's obligations under the Listing Rules.

              HKEx will only accept e-mail (or any other means as announced by the Exchange from time to time) in contingency circumstances, such as a failure of both the e-Submission System and back-up system. In these circumstances HKEx will contact all Authorised Persons to inform them of what contingency measures to take.

              In all other circumstances, an issuer must make every effort to gain access to the e-Submission System in order to publish a document. An issuer should first ensure that its own systems are not at fault and use alternative Internet connections (such as those of agents registered on the e-Submission System) if necessary. It is important for the HKEx to understand from the issuer why a document cannot be submitted electronically via the e-Submission System. HKEx will consider the reasons to determine if it should invoke contingency measures.

              For details of the contingency measures, you may refer to the Guide on Listed Company Information Dissemination and Related Trading Arrangements in the Event of Interruption to the HKExnews Website Service or the Information Dissemination System published by the Exchange on the HKEx website at:
              http://www.hkex.com.hk/eng/rulesreg/listrules/listadmin/conting_mtl.htm.

              FAQ Series 3, FAQ No. 11
              LR reference: Main Board Rules 2.07C(1)(a)(i) / GEM Rules 16.17(1)(a)
              Released on 22/3/2007 (Updated on 23/12/2011)

              Question:

              Where the day for submission for publication falls on a business day immediately preceding a day which is not a business day, there is a publication window of between 6.00 p.m. and 8.00 p.m. on the day immediately preceding the next following business day. What is the status of documents submitted during that window for publication?

              Answer:

              A document submitted for publication during this window is treated in the same way as if it had been submitted prior to 11.00 p.m. the last preceding business day. Thus:

              •  it will be published on the HKEx website immediately upon submission through the e-Submission System; and
              •  if it requires pre-vetting by HKEx, it will need to have been cleared by 7.00 p.m. on the evening of the preceding business day.

              (In the absence of any statutory holidays during the week, "preceding business day" and "next business day" referred to above would be Friday and the following Monday respectively.)

              FAQ Series 3, FAQ No. 64
              LR reference: Main Board Rules 2.07C(1)(a)(i) / GEM Rules 16.17(1)(a)
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              Are there any restrictions regarding the type of information I can submit for publication on the HKEx website?

              Answer:

              Yes. Information should only be submitted for publication on the HKEx website if it is information, communication or other material required to be published under the Exchange Listing Rules or the Takeovers Code, or otherwise as may be permitted by HKEx at its absolute discretion.

              However, if an issuer currently publishes information available via the HKEx website that is not required by the Listing Rules or Takeovers Code then it can continue to do so by following the instructions given in the answer to question 30.

              FAQ Series 3, FAQ No. 122
              LR reference: Main Board Rules 2.07C(1)(a)(i) / GEM Rules 16.17(1)(a)
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              Since the rule provides for the posting on the HKEx website and the issuer's website of the e-application form together with the e-prospectus, can an applicant simply complete the e-application form downloaded from those websites for subscription purposes?

              Answer:

              This is not recommended. Using application forms downloaded from websites for subscription purpose increases the risk of invalid applications as irregularities during downloading and reproduction may occur.

              Generally speaking, issuers tend to accept only public subscriptions that are made on completion of the standard printed applications forms provided by issuers.

              Alternatively, applicants applying under the public offer tranche may subscribe for securities under the ePO services provided by the issuers which normally involve completion of an online application form.

              FAQ Series 13, FAQ No. 12
              LR reference: Main Board Rules 2.07C(1)(b)(ii) / GEM Rules 16.17(2)(b)
              Released on 26/11/2010

              Question:

              Will my file be checked for viruses while it is being uploaded onto the e-Submission System?

              Answer:

              Yes. The e-Submission System has in-built virus detection software and will reject a submission if the document being uploaded contains a virus.

              However, you should check that a file is virus free before uploading it to the e-Submission System.

              FAQ Series 3, FAQ No. 16
              LR reference: Main Board Rules 2.07C(2) / GEM Rules 16.18(1)
              Released on 22/3/2007

              Question:

              How to check whether a document is downloadable for display and printing?

              Answer:

              MB Rule 2.07C(2) and GEM Rule 16.18(1) provide that all electronic copies of documents submitted by an issuer through HKEx-EDP to the Exchange for publication must be displayable on and printable from the HKEx website. The issuers must ensure compliance with the Rules in this respect. HKEx also operates a hotline if any member of the public detects any malfunctioning on the HKEx website.

              Enquires can be sent to the Exchange's IPO Transactions Department by post, phone, fax or email:

              Address:
              IPO Transactions Department
              The Stock Exchange of Hong Kong Limited
              Hong Kong Exchanges and Clearing Limited
              11/F One International Finance Centre
              1 Harbour View Street, Central
              Hong Kong

              General telephone number: 2522 1122
              Public Enquiry Number 2840 3895
              General fax number: 2295 0590
              Email: info@hkex.com.hk

              FAQ Series 13, FAQ No. 25
              LR reference: Main Board Rules 2.07C(2) / GEM Rules 16.18(1)
              Released on 26/11/2010

              Question:

              On what basis should I prioritise headline categories when I have chosen more than one?

              Answer:

              The issuer must make a judgement as to relative importance of the different types of information contained within the document to be published and set the priority of the headline categories accordingly.

              FAQ Series 3, FAQ No. 22
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 22/3/2007

              Question:

              Does HKEx have any guidelines for selecting headline categories?

              Answer:

              An issuer should make best efforts to choose headlines that it believes apply to the information submitted for publication.

              However, if you have any questions on the selection of headline categories you can contact a case officer in the Listing Division. Please use the link below to find the appropriate Listing Division team that is responsible for your company and also the contact number for that team.

              http://www.hkex.com.hk/eng/listing/listreq_pro/listcontact/advisor.htm

              If you wish to submit information for publication out of office hours and a Listing Division case officer is not available, you should select the headline categories that you think are most appropriate. Following publication of the information on the HKEx website you may alter the headline categories, as necessary, up to 5 calendar days following publication.

              You may refer to the Guide on Pre-vetting Requirements and Selection of Headline Categories for Announcements published by the Exchange on the HKEx website at:
              http://www.hkex.com.hk/eng/rulesreg/listrules/guidref/guide_pre_vetting_req.htm. The Guide contains a list of headline categories usually applicable to various types of announcements issued under specific Listing Rules.

              FAQ Series 3, FAQ No. 26
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              What are the implications for not including all the relevant headline categories in a submission?

              Answer:

              The Listing Rules require that an issuer select all such headlines as may be appropriate from the list of headlines set out in Appendix 24 of the Main Board Listing Rules/ Appendix 17 of the GEM Listing Rules (which is also displayed in the e-Submission System) (Listing Rule MB 2.07C(3) & GEM 16.18(2)). Consequently a failure to include all the relevant headline categories in a submission would technically constitute a breach of the Listing Rules.

              HKEx will take appropriate action as necessary if we find that headline categories have been omitted from a submission.

              FAQ Series 3, FAQ No. 27
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              Is it sufficient to select only the headline category that is most relevant to the main topic of an announcement?

              Answer:

              No. When submitting the announcement via the e-Submission System, the issuer must select all applicable headlines pursuant to the Listing Rules. If the announcement is issued pursuant to multiple Listing Rule requirements, all relevant headlines that are related to those Listing Rule requirements must be selected.

              For example, if the issuer submits an announcement in relation to a discloseable transaction, the issuer should select the headline category "Discloseable Transaction". If the transaction constitutes inside information, the issuer should also select the headline category "Inside Information".

              FAQ Series 3, FAQ No. 28
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 22/3/2007 (Updated on 2/1/2013)

              Question:

              How can an issuer continue to make "non-regulatory" information available to the public that is currently made available on the HKEx website?

              Answer:

              There may be information that an issuer currently publishes on the HKEx website that is not required by the Listing Rules or Takeovers Code. An issuer, for the purposes of transparency and for the benefit of shareholders may wish to continue to make this information publicly available. This information may or may not relate to information that has been already published under the requirements of the Listing Rules or Takeovers Code. Typical examples of such information would include: presentation material in relation to a transaction for market analysts or media and reports issued by special or ad hoc committees of issuers.

              If an issuer wishes to make non-regulatory information available to the public it should ensure that this information is beneficial and is made available for the purposes of transparency and even dissemination of information.

              An issuer should submit this information via the e-Submission System as an announcement using the "Announcements & Notices" Tier 1 Headline. The issuer should choose an appropriate Tier 2 headline for this announcement. The Tier 2 headline should match that chosen for any related regulatory information. However, an issuer should clearly differentiate the nature of the non-regulatory information being published in the Title of the submission. If the non-regulatory information to be published does not relate to any previously published regulatory information, then "Other" under the subheading "Miscellaneous" may be chosen as the Tier 2 Headline for the submission.

              The announcement should not itself include the non-regulatory information but should instead state that the relevant non-regulatory information is available on the issuer's website. The announcement should include a hyperlink to the relevant information on the issuer's website.

              Please note that if an issuer proposes to publish non-regulatory information that contains inside information, this information should be regarded as regulatory information and should be published in the normal manner according to the requirements of the Listing Rules.

              HKEx and/or its subsidiaries are not responsible for the contents or any of the information of any websites linked with HKEx's website. The inclusion of any hyperlink in a document published on the HKEx website does not imply endorsement by HKEx and/or its subsidiaries of the linked sites and HKEx and/or its subsidiaries are not liable for any loss or damage incurred or suffered arising out of, in connection with or as a result of any access to or interaction with any other websites via HKEx's website.

              FAQ Series 3, FAQ No. 30
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 22/3/2007 (Updated on 2/1/2013)

              Question:

              If I submit a preliminary results announcement for publication, would it be sufficient to select only one headline category, e.g. "Final Results"?

              Answer:

              In addition to "Final Results", all appropriate headline categories must be selected, such as dividend, closure of books, and change in directors. If the auditors have qualified or modified their audit opinion, the headline category "Qualified and/or modified audit opinion" must also be selected.

              Issuers should not include in the preliminary results announcements information of a nature that would require pre-clearance under the Listing Rules.

              FAQ Series 3, FAQ No. 77
              LR reference: Main Board Rules 2.07C(3), 13.45(3), Appendix 24 / GEM Rules 16.18, 17.49(3), Appendix 17
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              For disclosure in the Next Day Disclosure Return pursuant to Main Board Rule 13.25A / GEM Rule 17.27A, which headline category should a listed issuer use when submitting a Next Day Disclosure Return to report a buyback of shares by the listed issuer?

              Answer:

              The listed issuer should choose the new Tier 2 headline category "Share Buyback" under the new Tier 1 headline category "Next Day Disclosure Returns". Where a disclosure other than a share buyback is made in the Next Day Disclosure Return, the listed issuer should choose the new Tier 2 headline category "Others" under the new Tier 1 headline category "Next Day Disclosure Returns". A listed issuer reporting in a Next Day Disclosure Return both a share buyback and some other type of change in its issued share capital should choose both "Share Buyback" and "Others".

              FAQ Series 8, FAQ No. 7 Issue 8
              LR reference: Main Board Rules 2.07C(3), 13.25A / GEM Rules 16.18(2), 17.27A
              Released on 28/11/2008

              Question:

              For an announcement published pursuant to Main Board Rule 17.06A / GEM Rule 23.06A regarding the granting of an option under a share option scheme, which headline category should a listed issuer use when submitting the announcement for publication?

              Answer:

              The listed issuer should choose the Tier 2 headline category "Share Option Scheme" under the heading "Securities/Share Capital" under the Tier 1 headline category "Headline Categories for Announcements and Notices".

              FAQ Series 8, FAQ No. 8 Issue 8
              LR reference: Main Board Rules 2.07C(3), 17.06A / GEM Rules 16.18(2), 23.06A
              Released on 28/11/2008

              Question:

              What headline category should be used for announcements in relation to MMO?

              Answer:

              For announcements in relation to MMO, the issuer must select the headline category "Mixed Media Offer" under "New Listing (Listed Issuers/New Applicants)".

              FAQ Series 13, FAQ No. 21
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 26/11/2010

              Question:

              How should an issuer select headline categories when submitting an announcement for publication on the HKExnews website?

              Answer:

              Rule 2.07C(3) requires an issuer to select all appropriate headlines from the list of headlines set out in Appendix 24 of the Listing Rules. As a general principle, an issuer should select all headlines that are applicable to the content of the announcement. If an announcement relates to more than one subject matter or is issued to satisfy different Rule requirements, all headlines relating to the subject matters and the Rule requirements must be selected. An issuer should not select the headline(s) under "Other" unless all other headlines in Appendix 24 are not applicable to its announcement.

              Issuers may also refer to the following Exchange's guidance materials for the selection of headline categories:

              •  Guide on pre-vetting requirements and selection of headline categories for announcements available at http://www.hkex.com.hk/listing/suppmat/guide_pre_vetting_req.htm which sets out the generally applicable headline categories for various types of announcements issued under specific Listing Rules.
              •  The Exchange's letter to issuers of 25 July 2007 available at http://www.hkex.com.hk/eng/rulesreg/listrules/listletter/documents/20070725.pdf which sets out the examples of common errors made by issuers in selecting headlines for certain types of announcements and circulars.

              FAQ Series 27, FAQ No. 1
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 14/3/2014

              Question:

              New headline categories "Other — Business Update", "Other — Trading Update", "Other — Corporate Governance Related Matters", "Other — Litigation", and "Other — Miscellaneous" were introduced in April 2014.

              Please explain which types of announcements may fall under these headlines.

              Answer:

              The new headlines are introduced to give investors more information about the nature of the announcements falling under the headline category "Other". Issuers should select these new "Other" headline categories only if there are no other applicable headlines.

              The following types of announcements may fall under the new headline categories:

              (i) Other — Business Update
              •   Updates on business activities of the issuer group, for example, the signing of a business contract, a letter of intent to acquire/dispose of assets or a business cooperation agreement, public tender for acquisition/disposal, status update on a project, etc.
              (ii) Other — Trading Update
              •   Periodic updates of sales and other key performance indicators, for example, sales turnover, key performance indicators such as same store sales, new orders booked, monthly premium income for insurance companies, interim management accounts, etc.
              (iii) Other — Corporate Governance Related Matters
              •   Report on internal control review, updates of corporate governance matters, for example, change in corporate personnel, etc.
              (iv) Other — Litigation
              •   Status update on litigation, arbitration or other legal proceedings.
              (v) Other — Miscellaneous
              •   Issuers should only choose this headline if no other headlines is applicable.

              FAQ Series 27, FAQ No. 2
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 14/3/2014

              Question:

              Can investors search for announcements published before 1 April 2014 using the new headlines "Other — Business Update", "Other — Trading Update", "Other — Corporate Governance Related Matters" and "Other — Litigation"?

              Answer:

              No. These new headlines only apply to announcements published by issuers after 1 April 2014.

              Investors can use the headline "Other (before 1 April 2014)" to search for similar types of announcements published before 1 April 2014.

              FAQ Series 27, FAQ No. 3
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 14/3/2014

              Question:

              Why did the Exchange introduce six new headline categories for overseas regulatory announcements? Please give examples for the use of these new headline categories.

              Answer:

              Overseas regulatory announcements contain regulatory information released by an issuer or its subsidiary to other stock exchanges. Since overseas regulatory announcements may be published in one language only (either Chinese or English), the new headlines (in both languages) provide readers with information about the nature of the announcement.

              If an overseas regulatory announcement is to be published in one language only, the issuer should only select these new headline(s) under "Overseas Regulatory Announcement".

              The following are examples of announcements that may be published under these new headline categories.

              (i) Overseas Regulatory Announcement — Corporate Governance Related Matters
              •   Social responsibility report, internal control report and independent directors' review report, etc.
              (ii) Overseas Regulatory Announcement — Business Update
              •   Signing of sales contracts or cooperation agreements, periodic update on group reorganization, financial or capital arrangements with subsidiaries, and surplus cash management report, etc.
              (iii) Overseas Regulatory Announcement — Trading Update
              •   Financial results summary or reports of the issuer or its subsidiaries, Forms 10- K/10-Q filed with the U.S. Securities and Exchange Commission, interim management statements, and periodic updates on sales performance, etc.
              (iv) Overseas Regulatory Announcement — Board/Supervisory Board Resolutions
              •   Resolutions approved by the board of directors or the board of supervisors.
              (v) Overseas Regulatory Announcement — Issue of Securities and Related Matters
              •   Listing documents/notices/allotment results for listing of bonds or foreign listed shares (e.g. A shares of PRC issuers), overseas debt issuance program updates, periodic announcements on interest payments and credit ratings, and conversion/repurchase/cancellation of overseas listed bonds, etc.
              (vi) Overseas Regulatory Announcement — Other
              •   Issuers should only choose this headline for an overseas regulatory announcement if none of the above headlines is applicable.

              FAQ Series 27, FAQ No. 4
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 14/3/2014

              Question:

              Listco A is dually listed in Hong Kong and on a PRC stock exchange. It proposes to release its quarterly results in the PRC market in order to comply with the PRC listing rules.

              At the time of releasing its quarterly results in the PRC market, Listco A will publish the following two announcements on the HKExnews website:

              (i) an overseas regulatory announcement (in Chinese only) which contains the quarterly results released in the PRC; and
              (ii) a separate announcement (in both English and Chinese languages) about inside information which contains key financial figures extracted from the overseas regulatory announcement in (i).

              Which headline(s) should Listco A select for these two announcements?

              Answer:

              Listco A should select the headline "Overseas Regulatory Announcement — Trading Update" for the announcement (i). For the other announcement (ii), Listco A should select the headline "Quarterly Results" and also the headline "Inside Information".

              FAQ Series 27, FAQ No. 5
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 14/3/2014

              Question:

              Listco B is dually listed in Hong Kong and the UK. It proposes to release an interim management statement containing financial updates in the UK market.

              Listco B considers that the interim management statement constitutes inside information. Therefore it will publish the statement in both English and Chinese languages on the HKExnews website.

              Which headline(s) should Listco B select for this announcement?

              Answer:

              Listco B should select the headlines "Inside Information" and "Overseas Regulatory Announcement — Trading Update" for its interim management statement.

              FAQ Series 27, FAQ No. 6
              LR reference: Main Board Rules 2.07C(3), Appendix 24 / GEM Rules 16.18(2), Appendix 17
              Released on 14/3/2014

              Question:

              How should an issuer decide on the title of its announcement?

              Answer:

              The title of an announcement should give readers a quick understanding of the relevance and importance of the information disclosed in the announcement. Therefore the announcement title should be precise and meaningful. Issuers should avoid using titles that are too generic and do not describe the content of the announcement. Examples of these generic titles include "announcement", "voluntary announcement" and "other announcement".

              FAQ Series 27, FAQ No. 7
              LR reference: Main Board Rules 2.07C(3) / GEM Rules 16.18(2)
              Released on 14/3/2014

              Question:

              What are the publication windows?

              Answer:

              A publication window is a period of the day when documents submitted through the e-Submission System are published immediately on the HKEx website. Subject to certain limited types of announcements that can be published at all times during the operational hours of the e-Submission System, the current publication windows applicable to the Announcements and Notices Tier 1 Headline Category are as follows (these publication windows occur on business days unless otherwise specified):

              On a normal business day:

              •  6.00 a.m. to 8.30 a.m.
              •  12.00 noon to 12.30 p.m.
              •  4.30 p.m. to 11.00 p.m.

              On the eves of Christmas, New Year and Lunar New Year when there is no afternoon session:

              •  6.00 a.m. to 8.30 a.m.
              •  12.30 p.m. to 11.00 p.m.

              On a non-business day preceding a business day:

              •  6.00 p.m. to 8.00 p.m.

              The above times are submission deadlines for publication. A submission will be successful if approved at any time (up to and including the 59th second) prior to the deadline.

              In order to enable HKEx to perform maintenance work on its systems, submissions for publication cannot be made via the e-Submission System at times other than those specified above.

              As stated in the Exposure Conclusions document, we are continuing to explore ways to reduce the categories of announcements which require our pre-vetting. Such a reduction should also help issuers to meet the submission deadline more easily.

              Other documents, such as circulars and annual reports can be submitted during the operational hours of the e-Submission System (see question 3 under the "Access to the e-Submission System" section) and they will be published directly on the HKEx website. For these documents, we would recommend submission during trading hours so as to avoid the peak publication period.

              FAQ Series 3, FAQ No. 155
              LR reference: Main Board Rules 2.07C(4)(a) / GEM Rules 16.18(3)(a)
              Released on 22/3/2007 (Updated on 25/7/2016)

              Question:

              Which categories of announcements and notices can be published during trading hours (including lunchtime)?

              Answer:

              All notices and documents which are not announcements (e.g. Annual Reports, Listing Documents, Circulars, Exchange Traded Fund NAV statements etc) can be published both during and outside of trading hours.

              The following categories of announcements can be published during trading hours as well as outside trading hours:

              •  trading halt or suspension announcements;
              •  announcements that relate to clarification of news reports or unusual price/turnover movements (classified as "standard" or "super"); and
              •  overseas regulatory announcements;
              •  All types of announcements can be published between 12.00 noon and 12.30 p.m. on a normal business day as well as outside trading hours.

              FAQ Series 3, FAQ No. 157
              LR reference: Main Board Rules 2.07C(4)(a) / GEM Rules 16.18(3)(a)
              Released on 22/3/2007 (Updated on 2/1/2013)

              Question:

              Can any documents other than announcements be published during trading hours?

              Answer:

              Yes. Documents other than announcements (e.g. annual reports, listing documents, circulars and Exchange Traded Fund NAV statements) can be submitted and published on the HKEx website during trading hours. Only announcements (with certain exceptions as set out in the Listing Rules) submitted for publication on the HKEx website cannot be published during trading hours.

              To avoid peak publication times, which we anticipate to be between 4.30 p.m. to 11 p.m., we would recommend that documents that are not time critical (such as annual reports and circulars) be submitted electronically for publication during trading hours.

              FAQ Series 3, FAQ No. 158
              LR reference: Main Board Rules 2.07C(4)(a) / GEM Rules 16.18(3)(a)
              Released on 22/3/2007 (Updated on 25/7/2016)

              Question:

              Are there special publication periods for the submission of annual reports or circulars for publication on the website?

              Answer:

              No. There are special publication windows only for announcements. Documents such as annual reports and circulars can be submitted for publication at all times during the operational hours of e-Submission System; this includes trading hours.

              HKEx would recommend the submission of documents other than announcements for publication on the website during trading hours rather than the peak evening publication window (i.e. between 4.30 p.m. and 11 p.m.) when announcements would tend to be published.

              FAQ Series 3, FAQ No. 159
              LR reference: Main Board Rules 2.07C(4)(a) / GEM Rules 16.18(3)(a)
              Released on 22/3/2007 (Updated on 25/7/2016)

              Question:

              How does the MMO apply to CIS offerors?

              Answer:

              For CIS offerors who intend to adopt an MMO, the SFC will impose conditions in its letter of authorization similar to those in the Class Exemption Notice for CO offerors who intend to adopt an MMO (with necessary changes).

              FAQ Series 13, FAQ No. 26
              LR reference: Main Board Rules 2.07C(4)(a)
              Released on 26/11/2010

              Question:

              What announcement, notice or document types can I submit in a single language?

              Answer:

              An announcement can be submitted in a single language where permitted by the Listing Rules. The types of announcements where single language publication is usually permitted include overseas regulatory announcements and the trading reports and pre-listing reports of structured product issuers. However, overseas regulatory announcements can also be submitted in both English and Chinese.

              FAQ Series 3, FAQ No. 50
              LR reference: Main Board Rules 2.07C(4)(b) / GEM Rules 16.03
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              Can I submit an Overseas Regulatory Announcement in both English and Chinese for publication?

              Answer:

              Yes. An Overseas Regulatory Announcement can be submitted for publication in both English and Chinese and both files should be submitted simultaneously. An Overseas Regulatory Announcement can also be submitted for publication in only one language i.e. either in English or in Chinese.

              FAQ Series 3, FAQ No. 56
              LR reference: Main Board Rules 2.07C(4)(b), 13.10B / GEM Rules 16.03, 17.12
              Released on 22/3/2007

              Question:

              Will listed issuers be required to submit both English and Chinese versions of Next Day Disclosure Returns and Monthly Returns?

              Answer:

              Yes. A listed issuer must submit both an English and a Chinese version of the Next Day Disclosure Return and Monthly Return through ESS.

              FAQ Series 8, FAQ No. 20 Issue 8
              LR reference: Main Board Rules 13.25A, 13.25B; see also: 2.07C(4)(b) / GEM Rules 17.27A, 17.27B; see also: 16.03
              Released on 28/11/2008

              Question:

              Can I submit the English and Chinese language files in two separate submissions one after the other?

              Answer:

              The Listing Rules usually require that, for documents where both English and Chinese versions must be published, both language versions be submitted for publication simultaneously. However Annual Reports or Listing Documents can be published in two separate language submissions, one after the other.

              FAQ Series 3, FAQ No. 55
              LR reference: Main Board Rules 2.07C(4)(c), 2.07C(4)(d) / GEM Rules 16.18(1)(b), 16.18(1)(c)
              Released on 22/3/2007

              Question:

              Can I submit a bilingual version of a document (e.g. annual report and accounts) for publication or do I have to separate a bilingual document into a purely English and a purely Chinese language version before submitting them for publication?

              Answer:

              You can submit a bilingual document for publication and you do not need to separate a bilingual document into a purely English and a purely Chinese language version before submitting them for publication.

              However, you should submit a copy of a bilingual document under an English title on one submission and the same copy of the bilingual document under a Chinese title on a separate submission. This is to ensure that visitors to both language versions of the HKEx website can access the bilingual document.

              FAQ Series 3, FAQ No. 57
              LR reference: Main Board Rules 2.07C(4)(c), 2.07C(4)(d) / GEM Rules 16.18(1)(b), 16.18(1)(c)
              Released on 22/3/2007

              Question:

              What operational standards must an issuer adhere to for posting announcements relating to MMO on its own website?

              Answer:

              In addition to the requirements in the Class Exemption Notice requiring how access to the eprospectus must be provided from the issuer's website (e.g. 9A(3)(f),(g),(h) and 9A(10)), reference is made to No. 36 of the FAQ Series 3 document for electronic disclosure regarding certain guiding principles for layout of the issuer's website.

              FAQ Series 13, FAQ No. 23
              LR reference: Main Board Rules 2.07C(6) / GEM Rules 16.19(1)
              Released on 26/11/2010 (Updated in July 2015)

              Question:

              Can an issuer satisfy the requirement to have its own website by using the services of a third party (e.g. an agent?)

              Answer:

              Yes. An issuer can use web hosting and management services of a third party to satisfy the requirement to publish announcements, notices or other documents. The third-party website must be assigned a dedicated location on the Worldwide Web. Also, the issuer remains responsible at all times for the content that it posts on that third party website.

              FAQ Series 3, FAQ No. 34
              LR reference: Main Board Rules 2.07C(6)(a) / GEM Rules 16.19(1)
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              Can an issuer have more than one website?

              Answer:

              An issuer must nominate one website (and only one) which complies with all the requirements of the Listing Rules with regard to "issuer's own website" and the publication of documents on that website.

              An issuer may maintain other websites for other purposes.

              FAQ Series 3, FAQ No. 35
              LR reference: Main Board Rules 2.07C(6)(a) / GEM Rules 16.19(1)
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              What operational standards must an issuer adhere to in order to meet the Listing Rule requirement to post announcements on its own website?

              Answer:

              Listing Rules MB 2.07C(6)(a) and GEM 16.19(1) require issuers to publish an announcement, notice or other document on a website within certain deadlines.

              We do not specify the minimum operational standards that an issuer should apply to a website that publishes information to comply with the above rules. The demands placed upon an issuer's website by visitors will vary greatly depending upon the extent of investor and shareholder interest at any one time.

              Issuers are expected to take all "reasonable steps" to comply with the Listing Rules. What constitutes "reasonable steps" will depend on the circumstances and the extent to which the issuer can control them.

              We do not specify the web publication mechanism(s) by which an issuer may comply with the above rules. There are a wide variety of mechanisms that will allow an issuer to comply with the above rules. These mechanisms are often technically complex. Also, the types of mechanisms that are available change rapidly over time. Consequently, there is a high risk that technologically innovative solutions could be inhibited by any guidance issued by us.

              Instead, we have set out a list of principles that issuers should be mindful of when publishing information on their website to comply with the above rules.

              The underlying rationale behind these principles is to ensure that the information published on the issuer's website is easily and readily available to all in a manner that is independent from HKEx. This is to ensure at all times, there is an alternative source of information apart from the HKEx website.

              List of guiding principles

              •   Availability: the website on which an issuer publishes information to comply with these rules must be available at all times (except for downtime required for essential maintenance reasons). An issuer should take all reasonable steps to ensure the availability of its website during normal circumstances and in contingency circumstances.
              •   Ease of access: the information an issuer publishes to comply with these rules must be easily accessible to a visitor to its website. It should be clear to the visitor where the information is located and how he can locate and view the information.
              •   Security: an issuer should take all reasonable steps to ensure that the information it publishes on a website to comply with these rules is secure to prevent any unauthorized tampering with the information once it has been published.
              •   Segregation: an issuer should ensure that the information it publishes on a website to comply with these rules is clearly segregated from the information of other issuers. An issuer should also take all reasonable steps to segregate information that has been published to comply with these rules from other non-regulatory corporate information of the issuer.
              •   Control: an issuer must at all times maintain control of the information it has published to comply with these rules. An issuer must take all reasonable steps to ensure that the information it has published is not in the control of another party.
              •   Independence from HKEx publication: an issuer must ensure that the information it publishes to comply with these rules is independent from the copy of the same information published on an HKEx website. An issuer should ensure that the availability of the information on its website does not rely upon the availability of the same information on an HKEx website.

              FAQ Series 3, FAQ No. 36
              LR reference: Main Board Rules 2.07C(6)(a) / GEM Rules 16.19(1)
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              Does an issuer's own website need to be in both English and Chinese?

              Answer:

              An issuer should publish on its own website the same information that it has published on the HKEx website. Consequently, if the information published on the HKEx website is in both English and Chinese, both language versions of that information should also be made available on the issuer's own website.

              FAQ Series 3, FAQ No. 37
              LR reference: Main Board Rules 2.07C(6)(a) / GEM Rules 16.19(1)
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              Does the document published on the issuer's own website have to be the same as that submitted to HKEx for publication?

              Answer:

              Yes. The two documents must be identical. This includes the file format and contents of the document.

              FAQ Series 3, FAQ No. 38
              LR reference: Main Board Rules 2.07C(6)(a) / GEM Rules 16.19(1)
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              Does an issuer have to display on its own website the headline categories and titles of the announcement, notice or document as published on the HKEx website?

              Answer:

              No. Publication of the announcement, notice or document on an issuer's website will be sufficient to satisfy the requirements of the Listing Rules.

              FAQ Series 3, FAQ No. 39
              LR reference: Main Board Rules 2.07C(6)(a) / GEM Rules 16.19(1)
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              When does the deadline for posting a document on the issuer's own website start to run?

              Answer:

              The general deadline for publishing a document on the issuer's own website is 1 hour after submission for publication of the document through the e-Submission System. Where, however, a document is submitted after 7.00 p.m., the deadline for publication on the issuer's own website is 8.30 a.m. the following business day (see Listing Rules MB 2.07C(6)(a) and GEM 16.19(1)).

              FAQ Series 3, FAQ No. 42
              LR reference: Main Board Rules 2.07C(6)(a) / GEM Rules 16.19(1)
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              How can an issuer ensure even dissemination of information between both its own website and the HKEx website?

              Answer:

              An issuer should take reasonable steps to ensure that information has been disseminated evenly between its own website and the HKEx website.

              An issuer can gain comfort that it has taken all reasonable steps in this regard by publishing information on its website, only after:

              •   receiving an acknowledgement from the e-Submission System that its approval of a submission for publication was successful; and
              •   receiving an e-mail from HKEx confirming that its submission has been published on the HKEx website; and/or
              •   visually inspecting the HKEx website to check that its submission has been published there.

              An issuer should adopt internal procedures that incorporate such assurances.

              FAQ Series 3, FAQ No. 43
              LR reference: Main Board Rules 2.07C(6)(a) / GEM Rules 16.19(1)
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              What are the implications of HKEx's review and monitoring procedures on listed issuers' compliance with the requirement to publish a document on its own website within an hour of publication on the HKEx website (or, where the document has been submitted to HKEx after 7.00 p.m. by no later than 8.30 a.m. the next business day)?

              Answer:

              HKEx may from time to time review compliance standards for posting times of documents on issuer's own websites. Listed issuers may be asked by HKEx to provide all relevant data in this regard. Issuers should maintain a log showing the date and time of the posting of their documents on their own websites.

              FAQ Series 3, FAQ No. 44
              LR reference: Main Board Rules 2.07C(6)(a) / GEM Rules 16.19(1)
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              Is an issuer permitted to publish a document on its own website when the same document cannot be published on the HKEx website for technical reasons?

              Answer:

              HKEx has back-up systems in place to ensure that there is not a single point of failure for the HKEx website. In the extreme circumstance of double point failure and both the main and back-up HKEx systems fail, HKEx will issue details of the contingency measures that all issuers should take. It is likely that these contingency measures will require that issuers publish documents on their own website to provide an alternative source of this information. HKEx will also publish headlines and titles of announcements and documents on an electronic bulletin board.

              You may refer to the Guide on Listed Company Information Dissemination and Related Trading Arrangements in the Event of Interruption to the HKExnews Website Service or the Information Dissemination System published by the Exchange on the HKEx website at:
              http://www.hkex.com.hk/eng/rulesreg/listrules/listadmin/conting_mtl.htm.

              FAQ Series 3, FAQ No. 45
              LR reference: Main Board Rules 2.07C(6)(a) / GEM Rules 16.19(1)
              Released on 22/3/2007 (Updated on 23/12/2011)

              Question:

              What procedures should an issuer follow if it has launched a new website, or the address of its existing website has changed?

              Answer:

              HKEx maintains a list of the websites of listed companies. This list can be accessed via the hyperlinks below:

              http://www.hkexnews.hk/hyperlink/hyperlist.htm

              http://www.hkgem.com/aboutgem/links/e_hyper1.htm

              If there is any change of the issuer's website information (either a launch of new website or change of website address), the e-Submission Administrator at the issuer should change the "Website" field in its "Company Details" page within ESS accordingly. HKEx will use this information to update its lists of websites of listed companies mentioned above.

              An issuer should ensure, if it changes its website, that all the information it has previously published under Listing Rule obligations continues to remain available for at least 5 years.

              FAQ Series 3, FAQ No. 48
              LR reference: Main Board Rules 2.07C(6)(a) / GEM Rules 16.19(1)
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              The Listing Rules require an issuer to ensure that published documents remain available on its website for 5 years. Does this mean an issuer has to upload to its website all the documents that the issuer published within the 5 years previous to the implementation of this new rule?

              Answer:

              No. An issuer need only upload documents to its website that have been published after the implementation of the amended Listing Rules on 25 June 2007.

              Any document which has been uploaded to its website pursuant to a pre-existing Listing Rule (e.g. Listing Rules MB 2.07A(4); GEM 16.04A(4)) must remain on its website for the remainder of the period prescribed under that Rule.

              FAQ Series 3, FAQ No. 40
              LR reference: Main Board Rules 2.07C(6)(b) / GEM Rules 16.19(2)
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              If an issuer fails to ensure that published documents remain available on its website for 5 years, does this constitute a breach of the Listing Rules?

              Answer:

              Yes and the breach should be rectified without delay. The Listing Rules state (MB 2.07C(6)(b) & GEM 16.19(2)) that an issuer must ensure that any document published on its website pursuant to these rules remains available on a continuous basis for at least 5 years.

              FAQ Series 3, FAQ No. 41
              LR reference: Main Board Rules 2.07C(6)(b) / GEM Rules 16.19(2)
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              A listed issuer proposes to acquire a target company, which constitutes a notifiable transaction. The listed issuer has prepared a valuation of the target company using the discounted cashflow method, which is regarded as a profit forecast under Main Board Rule 14.61/ GEM Rule 19.61.

              Is the listed issuer required to disclose such valuation in its announcement and circular for the notifiable transaction and comply with Main Board Rule 14.62/ GEM Rule 19.62 and paragraph 29(2) of Appendix 1B to the Main Board Rules/ GEM Rules?

              Answer:

              Under the Listing Rules, there is no specific requirement for the listed issuer to disclose the profit forecast for the target company to be acquired. However, the listed issuer must observe the general disclosure principle under Main Board Rule 2.13/ GEM Rule 17.56. For example, where the valuation of the target company was a primary factor in forming the basis for the consideration or other material terms of the transaction, disclosure of the valuation would need to be made in the relevant announcement and circular.

              Where a notifiable transaction announcement / circular contains a profit forecast in respect of the listed issuer or a company which is/ is proposed to become, one of its subsidiaries, the listed issuer is required to comply with Main Board Rule 14.62 / GEM Rule 19.62 and paragraph 29(2) of Appendix 1B to the Main Board Rules/ GEM Rules (as the case may be).

              FAQ Series 7, FAQ No. 21
              LR reference: Main Board Rules 14.62, 14.66(2), 2.13, Appendix 1B Paragraph 29(2) / GEM Rules 19.62, 19.66(3), 17.56, Appendix 1B Paragraph 29(2)
              Released on 28/11/2008 (Updated on 30/9/2009)

              Question:

              A listed issuer proposes to acquire a revenue generating asset, which constitutes a notifiable transaction. There is a valuation of such asset prepared using the discounted cashflow method, which is regarded as a profit forecast under Main Board Rule 14.61/ GEM Rule 19.61.

              Will the listed issuer be required to comply with the formal reporting requirements under Main Board Rule 14.62/ GEM Rule 19.62 if it discloses the valuation of the revenue generating asset in its announcement issued under the notifiable transaction rules?

              Answer:

              Under Main Board Rule 14.62 / GEM Rule 19.62, the formal reporting requirements apply where the announcement contains a profit forecast in respect of the listed issuer or a company which is/ is proposed to become, one of its subsidiaries.

              In this case, while the profit forecast made in respect of the revenue generating asset may not fall within Main Board Rule 14.62 / GEM Rule 19.62, the listed issuer must ensure compliance with Main Board Rule 2.13 / GEM Rule 17.56 when its announcement contains profit forecast of the asset to be acquired, particularly where the assets are material to the listed issuer.

              The listed issuer should also note that where the proposed acquisition constitutes a major transaction or above that requires a circular, it is required to comply with the formal reporting requirements in respect of the profit forecast of the asset contained in the circular pursuant to Paragraph 29(2) of Appendix 1B to the Main Board Rules / GEM Rules.

              FAQ Series 7, FAQ No. 22
              LR reference: Main Board Rules 14.62, 14.66(2), 2.13, Appendix 1B Paragraph 29(2) / GEM Rules 19.62, 19.66(3), 17.56, Appendix 1B Paragraph 29(2)
              Released on 28/11/2008 (Updated on 30/9/2009)

              Question:

              Will the Exchange return a listing application if the listing document does not comply with the Guidance Letter HKEX-GL86-16?

              Answer:

              The Guidance Letter HKEX-GL86-16 contains:

              (a) general guidance on producing clear and concise listing documents (General Guidance);
              (b) consolidated and updated version of a number of the Exchange's guidance letters on disclosure in listing documents, mostly included under the title "Simplification Series" (Consolidated Guidance); and
              (c) online hyperlinks to: (i) sample "Summary of the Constitution of the Company and the Companies Law" sections of listing documents of applicants incorporated in Bermuda, the Cayman Islands and the PRC (Specimen Sections); and (ii) the corresponding sample constitutional documents for the applicants (Sample Constitutional Documents).

              The Exchange will not return a listing application merely because it does not follow the General Guidance, the Specimen Sections or the Sample Constitutional Documents, but will remind applicants to do so.

              Applicants which submit their listing applications after 30 April 2016 should comply with the Consolidated Guidance.

              FAQ 001-2016
              LR reference: Main Board Rules 2.13, 11.07 / GEM Rules 14.08(7), 17.56
              Released on 2/2/2016 (Updated on 13/5/2016)

              Question:

              What are the changes in the Consolidated Guidance compared to the guidance letters on disclosure in listing documents, mostly included under the title "Simplification Series"?

              Answer:

              The changes in the Consolidated Guidance are limited to:

              (a) modifying or deleting certain overly specific content guidance which is only relevant in a limited number of cases. For example, the specific content guidance for product returns and warranty, and industry standards (e.g. International Organization for Standardization (ISO)), which does not apply to all listing applicants, and has been modified and deleted, respectively. This helps to ensure that the guidance remains high level and principles-based;
              (b) removing any repetition after consolidating the various guidance letters on disclosure in listing documents, mostly included under the title "Simplification Series"; and
              (c) updating the guidance based on the Exchange's most recent experience. For example, in respect of listing applicants in the banking and securities sectors, we have updated the content guidance so that the following financial information/ ratios are to be disclosed in the Summary section of a listing document:
              •   in respect of the banking sector, net interest spread, net interest margin, capital adequacy ratio, non-performing loan ratio and loan to deposit ratio; and
              •   in respect of the securities sector, the amount of securities underwritten, average commission rate, trading volumes, average rate of return, asset under management and balances of margin financing and securities lending.

              For marked-up version of the guidance letters included in the Consolidated Guidance, see:

              http://www.hkex.com.hk/eng/rulesreg/listrules/listsptop/guidepsld/psld_index.htm

              FAQ 002-2016
              LR reference: Main Board Rules 2.13, 11.07 / GEM Rules 14.08(7), 17.56
              Released on 2/2/2016 (Updated on 26/2/2016)

              Question:

              Will the guidance letters on disclosure in listing documents, mostly included under the title "Simplification Series", not to be used and be withdrawn after the publication of Guidance Letter HKEX-GL86-16 on 2 February 2016?

              Answer:

              The following guidance letters on disclosure in listing documents, mostly included under the title "Simplification Series", have been withdrawn:

              A. HKEX-GL27-12 on "Summary and Highlights" section
              B. HKEX-GL54-13 on "Risk Factors" section
              C. HKEX-GL48-13 on "Industry Overview" section
              D. HKEX-GL49-13 on "History and Development" section
              E. HKEX-GL-50-13 on "Business" section
              F. HKEX-GL59-13 on "Financial Information" or "Management discussion and analysis on the historical financial information (MD&A)" section
              G. HKEX-GL72-14 on "Applicable laws and Regulations" section
              H. HKEX-GL62-13 on "Directors, Supervisors and Senior Management" section
              I. HKEX-GL33-12 on "Use of Proceeds" section
              J. HKEX-GL64-13 on Application Forms and "How to Apply for Hong Kong Offer Shares" section

              Applicants which submit their listing applications after 30 April 2016 should comply with the Consolidated Guidance.

              FAQ 003-2016
              LR reference: Main Board Rules 2.13, 11.07 / GEM Rules 14.08(7), 17.56
              Released on 2/2/2016 (Updated on 13/5/2016)

            • Chapter 3

              View Current PDF

              Question:

              Authorised Representatives will be required to provide their email addresses to the Exchange. Is this requirement applicable to existing Authorised Representatives?

              Answer:

              Yes, it does apply to existing Authorised Representatives.

              FAQ Series 17, FAQ No. 9
              LR reference: Main Board Rules 3.06 / GEM Rules 5.25
              Released on 19/12/2011

              Question:

              How does the board assess if the INEDs' or NEDs' commitment to the issuer's affairs is sufficient (especially for smaller issuers that have infrequent changes to their business or group structure) when normally they are not required to be involved in the management of the issuer?

              Answer:

              The Code recognises that different directors have different roles and functions within the issuer. The time commitment required from a director varies from company to company and from year to year, depending on the company's operations. NEDs' time commitment to the issuer is likely to be less than EDs' because they are not involved in the day-to-day running of the business. According to the revised Code, the issuer should determine how much time it needs from each of its directors and review whether the director is meeting that requirement.

              FAQ Series 17, FAQ No. 11
              LR reference: Main Board Rules 3.08 / GEM Rules 5.01
              Released on 19/12/2011

              Question:

              If issuers do not follow the guides named in the Note ("A Guide on Directors' Duties" issued by the Companies Registry, and the Guidelines for Directors and Guide for Independent Non-executive Directors published by the Hong Kong Institute of Directors), do they breach the Listing Rules?

              Answer:

              No. These guides are suggested as resources for directors looking for further guidance on their duties and responsibilities to an issuer.

              FAQ Series 17, FAQ No. 10
              LR reference: Main Board Rules Note to Rule 3.08 / GEM Rules Note to Rule 5.01
              Released on 19/12/2011

              Question:

              Clarify the requirement of "appropriate professional qualifications".

              Clarify the requirement of "appropriate accounting and related financial management expertise"

              Answer:

              There are two limbs to this requirement. Under the first limb, "appropriate professional qualifications" normally refers to a professional accounting qualification. For a candidate with other professional qualifications, issuers should also consider whether based on the experience and expertise of the candidate, he can fulfil the requirement under Main Board rule 3.10(2)/ GEM rule 5.05(2).

              The note to Main Board rule 3.10(2)/ GEM rule 5.05(2) sets out what we would expect such experience to be.

              FAQ Series 1, FAQ No. 2
              LR reference: Main Board Rules 3.10(2) / GEM Rules 5.05(2)
              Released on 30/3/2004

              Question:

              Is a professional qualification obtained from an overseas jurisdiction acceptable, such as a PRC or Singapore qualified accountant?

              Answer:

              Yes, a professional qualification obtained from a recognised body in an overseas jurisdiction would be acceptable.

              FAQ Series 1, FAQ No. 3
              LR reference: Main Board Rules 3.10(2) / GEM Rules 5.05(2)
              Released on 30/3/2004

              Question:

              Can a solicitor be said to have appropriate professional qualifications, or does he need to have the appropriate experience?

              Answer:

              A legal qualification is not considered to be the appropriate professional qualification even if the person has obtained some accounting knowledge in the course of his studies. A person with a legal qualification is acceptable if the person has the "appropriate accounting and related financial management expertise" required under the rules. The Exchange may question the factors the board has considered when making the decision to accept a person.

              FAQ Series 1, FAQ No. 4
              LR reference: Main Board Rules 3.10(2) / GEM Rules 5.05(2)
              Released on 30/3/2004

              Question:

              Can a person who has served on the audit committee of an issuer for a number of years be considered to have the appropriate experience required under the rules?

              Answer:

              Please refer to the note to Main Board rule 3.10(2)/ GEM rule 5.05(2) as to what the appropriate expertise means. Prima facie, we would not consider a person whose only experience has been a member of an audit committee to fulfil the criteria set out in the note to the rule.

              FAQ Series 1, FAQ No. 5
              LR reference: Main Board Rules 3.10(2) / GEM Rules 5.05(2)
              Released on 30/3/2004

              Question:

              Is experience with a non-public company acceptable as having the appropriate accounting and related financial management expertise?

              Answer:

              Generally no, but the Exchange recognises that experience and scope of duties of a candidate may demonstrate that he is capable of discharging the role required of such person as set out in Main Board rule 3.10(2)/ GEM rule 5.05(2). It is up to the board to evaluate the totality of the individual's experience and education to consider if he is acceptable.

              FAQ Series 1, FAQ No. 6
              LR reference: Main Board Rules 3.10(2) / GEM Rules 5.05(2)
              Released on 30/3/2004

              Question:

              If an existing NED meets the independence requirements, can he be re-designated as an INED so as to comply with the requirements effective 31 March 2004? Does an announcement need to be made for the re-designation?

              Answer:

              Yes, an existing NED may be re-designated as an INED, but we will consider his present or past relationship with a connected person or the issuer. This will be considered on a case-by case-basis.

              Where, in order to meet the new requirements, a director needs to comply with any relevant cooling-off period under the Rules, the relevant cooling-off period needs to have ended by the date on which his confirmation of independence is given.

              An announcement needs to be made for re-designation of a director from NED to INED for transparency.

              FAQ Series 1, FAQ No. 7
              LR reference: Main Board Rules 3.13 / GEM Rules 5.09
              Released on 30/3/2004

              Question:

              If a non-executive director of an issuer is a legal adviser (say, a partner of a law firm) but for the past 1 year such director has not provided any relevant services to the issuer, and also such director fulfils the other guidelines of Main Board rule 3.13 / GEM rule 5.09, does this mean that such non-executive director can be an independent non-executive director of the issuer?

              If he is accepted as an INED and in future he provides services to the issuer again, will he continue to be considered independent?

              Answer:

              Yes, he can act as an INED provided that he or his firm is not providing or has not provided services to parties set out in Main Board rule 3.13(3) / GEM rule 5.09(3) within 1 year before his appointment as an INED. If the firm (whether or not it is the director himself) still provides services, then he cannot act as an INED.

              Once the firm (whether or not he is directly involved) provides any services to the issuer or core connected persons again, he will immediately cease to be considered as independent.

              FAQ Series 1, FAQ No. 8
              LR reference: Main Board Rules 3.13 / GEM Rules 5.09
              Released on 30/3/2004 (Updated on 1/7/2014)

              Question:

              An existing INED is a partner of a law/CPA firm and this firm is currently providing legal/accounting services to the issuer or its subsidiaries. Is this existing INED not qualified and does the issuer need to appoint a new one?

              How is materiality of the interest determined when considering independence? Are there any specific definitions or figures (e.g. %) that can be used as reference?

              Answer:

              The individual is not qualified to act as an INED and the issuer needs to appoint a new one. However, he can still act as a non-executive director.

              Materiality must be assessed from the issuer's as well as the director's perspective. There is no specific figure — materiality needs to be determined on a case-by-case basis.

              FAQ Series 1, FAQ No. 9
              LR reference: Main Board Rules 3.13 / GEM Rules 5.09
              Released on 30/3/2004

              Question:

              Once an independent non-executive director ("INED") has submitted to the Exchange the initial written confirmation concerning his independence comprising all the information required by Main Board Rule 3.13 / GEM Rule 5.09, what information must be included in the INED's annual confirmation of independence required to be provided to the listed issuer?

              Answer:

              Each INED is required to submit to the Exchange, at the same time as the submission of Form B/H in Appendix 5 of the Main Board Rules or Form A/B in Appendix 6 of the GEM Board Rules, a written confirmation regarding his independence which must contain all the information required by Main Board Rule 3.13(a), (b) and (c) / GEM Rule 5.09(a), (b) and (c).

              Each INED must provide to the listed issuer an annual confirmation regarding his independence which must contain the information required by Main Board Rule 3.13(a) and (c)/GEM Rule 5.09 (a) and (c).

              FAQ Series 8, FAQ No. 9. Issue 17
              LR reference: Main Board Rules 3.13 / GEM Rules 5.09
              Released on 28/11/2008

              Question:

              Where a person is appointed a director or supervisor by more than one listed issuer, is he required to submit a DU Form or an Undertaking Form for an existing director (as defined in FAQ 56 below) for each listed issuer appointing him?

              Answer:

              Yes. The director or supervisor must submit a DU Form or an Undertaking Form (in the case of an existing director) for each listed issuer appointing him.

              FAQ Series 8, FAQ No. 52. Issue 17
              LR reference: Main Board Rules Form B/H/I in Appendix 5, 3.20A / GEM Rules Form A/B/C in Appendix 6, 5.12A
              Released on 28/11/2008

              Question:

              Can the certification of the signature of a director or supervisor in an Undertaking Form or a new DU Form be done by a Notary Public or Commissioner for Oaths rather than by a director or secretary of the listed issuer?

              Answer:

              The Exchange will accept a certification of the signature of the director or supervisor in his Undertaking Form or new DU Form by a Notary Public or Commissioner for Oaths rather than by the company secretary or another director. However, such certification is not required under the Listing Rules.

              FAQ Series 8, FAQ No. 53. Issue 17
              LR reference: Main Board Rules Form B/H/I in Appendix 5, 3.20A / GEM Rules Form A/B/C in Appendix 6, 5.12A
              Released on 28/11/2008

              Question:

              Does the Exchange accept faxed copies of the executed Undertaking Forms or DU Forms?

              Answer:

              No. The Exchange only accepts the signed original of the executed Undertaking Forms and DU Forms.

              FAQ Series 8, FAQ No. 54. Issue 17
              LR reference: Main Board Rules Form B/H/I in Appendix 5, 3.20A / GEM Rules Form A/B/C in Appendix 6, 5.12A
              Released on 28/11/2008

              Question:

              Can a non-executive director who is a connected person of the issuer be a member of the Audit Committee?

              Answer:

              Although the rules do not specifically prohibit this, we consider that members of the audit committee should be independent of connected persons.

              FAQ Series 1, FAQ No. 10
              LR reference: Main Board Rules 3.21 / GEM Rules 5.28
              Released on 30/3/2004

              Question:

              Can the qualified accountant (also executive director) be appointed as the audit committee's secretary?

              Answer:

              We consider that the secretary of the audit committee should not be a person who is involved in the financial reporting function of the issuer.

              FAQ Series 1, FAQ No. 11
              LR reference: Main Board Rules 3.21 / GEM Rules 5.28
              Released on 30/3/2004

              Question:

              Are board resolutions sufficient for amending the terms of reference of an issuer's audit and remuneration committees? Or are shareholder resolutions required?

              Answer:

              The board should decide on and amend the terms of reference of the audit and remuneration committees (and indeed of all other board committees). Shareholder approval is not required.

              FAQ Series 21, FAQ No. 5
              LR reference: Main Board Rules 3.22 and 3.26 / GEM Rules 5.29 and 5.35
              Released on 27/3/2013

              Question:

              Can the issuer's staff and executive directors be appointed as members of the remuneration committee as long as the committee is chaired by an INED and the majority of its members are INEDs?

              Answer:

              Yes. The Rules do not restrict issuers from appointing their staff or executive directors to act as members of the remuneration committee, as long as a majority of the remuneration committee are INEDs and it is chaired by an INED.

              FAQ Series 17, FAQ No. 12
              LR reference: Main Board Rules 3.25 / GEM Rules 5.34
              Released on 19/12/2011

              Question:

              If a person acted as the company secretary of Issuer A from 1990 to 2009, then became the company secretary of Issuer B in 2010, when would he have to comply with the 15-hour training requirement?

              Answer:

              The person should comply with the new Rule for the financial year beginning on or after 1 January 2017, as his experience as the company secretary of Issuer A should be taken into consideration.

              FAQ Series 17, FAQ No. 2
              LR reference: Main Board Rules 3.29 / GEM Rules 5.15
              Released on 19/12/2011

              Question:

              Are there any Exchange accredited training courses for the purpose of this Rule?

              Answer:

              No. Company secretaries should attend training relevant to their duties and responsibilities that they consider appropriate.

              The Hong Kong Institute of Chartered Secretaries provides ECPD courses for company secretaries which would satisfy the requirements of this Rule.

              FAQ Series 17, FAQ No. 13
              LR reference: Main Board Rules 3.29 / GEM Rules 5.15
              Released on 19/12/2011

              Question:

              Does an accountant or lawyer acting as an issuer's company secretary fulfil the requirement to attend relevant professional training each year by attending CPD courses on subjects such as litigation and accounting standards?

              Answer:

              We intend that the training be broad rather than restrictive. Where legal and accounting courses are relevant to a company secretary's role and duties, they should count towards the 15-hour training requirement.

              FAQ Series 17, FAQ No. 13A
              LR reference: Main Board Rules 3.29 / GEM Rules 5.15
              Released on 19/12/2011

              Question:

              If a person is the company secretary of an issuer that is dual-listed on the Hong Kong and Shanghai stock exchanges and attends training courses relating to PRC listing requirements and regulations (to comply with Shanghai Stock Exchange requirements), do those courses count towards the 15-hour training requirement?

              Answer:

              As the company secretary of a Hong Kong listed company, this person should also undergo training on Hong Kong rules and regulations. However, the Exchange does not prescribe specific types of courses that a company secretary should attend, as long as they are relevant to his professional duties. If the training courses are of a general nature (e.g. a course on corporate governance), and not specifically on any PRC rules and regulations, then they may count towards the 15-hour training requirement.

              FAQ Series 17, FAQ No. 13B
              LR reference: Main Board Rules 3.29 / GEM Rules 5.15
              Released on 19/12/2011

              Question:

              Would the seminars organised by the Exchange be considered acceptable training for directors and company secretaries?

              Answer:

              Yes, they would normally count towards directors' and company secretaries' training.

              FAQ Series 17, FAQ No. 13C
              LR reference: Main Board Rules 3.29, Appendix 14 (Code Provision A.6.5 and Paragraph I(i)) / GEM Rules 5.15, Appendix 15 (Code Provision A.6.5 and Paragraph I(i))
              Released on 19/12/2011

            • Chapter 3A

              View Current PDF

              Question:

              What is the date of the sponsor's formal appointment referred to in the Listing Rules?

              Answer:

              The date of the sponsor's formal appointment shall be the date of the engagement letter, provided that if the Exchange considers that a sponsor has not notified the Exchange in writing of its appointment as soon as practicable as required under Main Board Rule 3A.02A(1)/ GEM Rule 6A.02A(1), it may treat the date of the notification as the date of the sponsor's formal appointment when determining whether the two month requirement under Main Board Rule 3A.02B(1)/ GEM Rule 6A.02B(1) has been met. The Exchange normally expects notification within five business days from the date of the engagement letter.

              FAQ Series 24, FAQ No. 5
              LR reference: Main Board Rules 3A.02A(1), 3A.02B(1) / GEM Rules 6A.02A(1), 6A.02B(1)
              Released on 26/7/2013 (Updated on 7/11/2013)

              Question:

              For listing applications submitted on or after 1 October 2013, a sponsor must notify the Exchange in writing of its appointment as soon as practicable.

              If a sponsor is appointed before 1 October 2013, say 1 August 2013, should the sponsor notify the Exchange in writing of its appointment as soon as practicable under Main Board Rule 3A.02A(1)/ GEM Rule 6A.02A(1) even though these rule changes are not effective until 1 October 2013? And if the answer is affirmative, whether the terms of engagement should comply with the requirements under Main Board Rule 3A.05/ GEM Rule 6A.05?

              Answer:

              Effective 1 October 2013, sponsors are obliged by paragraph 17.11(b) of the Code of Conduct and Main Board Rule 3A.02A/ GEM Rule 6A.02A to advise the Exchange as soon as practicable of their appointment regardless of whether a listing application has been submitted.

              If a sponsor is already appointed or will be appointed before the effective date of the above (i.e. 1 October 2013), it should still submit notification of its appointment to the Exchange as soon as practicable to facilitate processing of the new applicant's listing application when that application is submitted.

              As a means of notification, a sponsor needs to provide a copy of its engagement letter to the Exchange.

              Effective 1 October 2013, a sponsor's terms of engagement in relation to a listing application must comply with the requirements of paragraph 17.11(b) of the Code of Conduct and Main Board Rule 3A.05/ GEM Rule 6A.05. In relation to the above notification prior to 1 October 2013, and where a sponsor has already been appointed with terms of appointment that do not comply with these requirements, revised terms that comply with these requirements must be agreed not later than the date the sponsor notifies the Exchange of its appointment.

              See also Question 5 of FAQ Series 24.

              FAQ Series 24, FAQ No. 7
              LR reference: Main Board Rules 3A.02A(1), 3A.05 / GEM Rules 6A.02A(1), 6A.05
              Released on 26/7/2013 (Updated on 7/11/2013)

              Question:

              If a sponsor notified the Exchange of its appointment prior to 1 October 2013 and ceases to act for the new applicant on or after 1 October 2013, is it required to inform the Exchange in writing, as soon as practicable, of its reasons for ceasing to act ?

              Answer:

              Yes. Where a sponsor ceases to act for a new applicant on or after 1 October 2013, the Exchange expects the relevant sponsor to submit its reasons for ceasing to act as soon as practicable.

              FAQ Series 24, FAQ No. 8
              LR reference: Main Board Rules 3A.02A(2) / GEM Rules 6A.02A(2)
              Released on 26/7/2013 (Updated on 7/11/2013)

              Question:

              If a listing application submitted on or before 30 September 2013 (the "Original Application") lapses and is re-submitted on or after 1 October 2013 (the "Re-Submission"), is the sponsor required to submit notification to the Exchange of its appointment at least two months before the Re-Submission?

              Answer:

              The Exchange will not apply the two-month requirement under Main Board Rule 3A.02B(1)/ GEM Rule 6A.02B(1) with regard to the Re-Submission if:

              1. The Re-Submission is filed within three months after the Original Application has lapsed (See Note below);
              2. There is no change in sponsors (including the addition or removal of a sponsor); and the sponsor notifies the Exchange of its appointment in writing under Main Board Rule 3A.02A(1)/GEM Rule 6A.02A(1) with an engagement letter that complies with paragraph 17.11(b) of the Code of Conduct and Main Board Rule 3A.05/GEM Rule 6A.05 as soon as practicable and in any event no later than the Re-submission.

              (Note : Under Guidance Letter HKEx-GL7-09, a re-filed application submitted within three months of a lapsed application by an applicant is regarded as a renewal/continuance of its original application.)

              FAQ Series 24, FAQ No. 10
              LR reference: Main Board Rules 3A.02A(1), 3A.02B(1), 3A.05 / GEM Rules 6A.02A(1), 6A.02B(1), 6A.05
              Released on 26/7/2013 (Updated on 7/11/2013)

              Question:

              When should a sponsor notify the Exchange of its appointment?

              Answer:

              A sponsor is required to submit notification of their appointment at least two months before the listing application is submitted.

              FAQ Series 24, FAQ No. 6
              LR reference: Main Board Rules 3A.02B(1) / GEM Rules 6A.02B(1)
              Released on 26/7/2013

              Question:

              Under the Listing Rules, where more than one sponsor is appointed in respect of a listing application, the listing application can only be submitted not less than two months from the date the last sponsor is formally appointed. Does this requirement apply to a listing application submitted before 1 October 2013?

              Answer:

              If a listing application is submitted prior to 1 October 2013, the requirement does not apply.

              See also Question 10 of Series 24.

              FAQ Series 24, FAQ No. 9
              LR reference: Main Board Rules 3A.02B(2) / GEM Rules 6A.02B(2)
              Released on 26/7/2013 (Updated on 7/11/2013)

              Question:

              In the case of an announcement to be published by an IPO applicant, why is a sponsor required to provide a confirmation that the announcement has been cleared by HKEx (where such clearance is required under the Listing Rules) or that the document is required to be published by the IPO applicant (where such clearance is not so required)?

              Answer:

              Under its undertaking pursuant to Listing Rules MB 3A.03 or GEM 6A.03, the sponsor must use reasonable endeavours to ensure that all information provided to HKEx during the listing application process is true in all material respects and does not omit any material information.

              The purpose of the undertaking is to help ensure that the sponsor is aware of its responsibility under the Listing Rules with regard to the announcement.

              FAQ Series 3, FAQ No. 104
              LR reference: Main Board Rules 3A.03 / GEM Rules 6A.03
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              Will the Exchange accept a new listing application for vetting if the sponsor's statement relating to independence is not submitted together with the advance booking form for listing?

              Answer:

              The sponsor must make a statement relating to independence to the Exchange no later than the date on which any documents in connection with the listing application are first submitted to the Exchange.

              The Exchange will not accept the listing application for vetting unless the sponsor's statement relating to independence is submitted together with the advance booking form for listing and other documents in connection with the listing application.

              FAQ Series 8, FAQ No. 13. Issue 4
              LR reference: Main Board Rules 3A.07, Appendix 17 to the Rules / GEM Rules 6A.07, Appendix 7K to the Rules
              Released on 28/11/2008 (Updated on 3/9/2013)

              Question:

              What should the sponsor do if there is a change in circumstances rendering the sponsor no longer independent after filing the listing application?

              Answer:

              Where a sponsor or the new applicant becomes aware of a change in the circumstances set out in the statement of independence under Appendix 17 to the Rules/ Appendix 7K to the GEM Rules during the period the sponsor is engaged by the new applicant, the sponsor and the new applicant must notify the Exchange as soon as possible.

              FAQ Series 8, FAQ No. 14. Issue 4
              LR reference: Main Board Rule 3A.09, Appendix 17 to the Rules / GEM Rule 6A.09, Appendix 7K to the Rules
              Released on 28/11/2008 (Updated on 3/9/2013)

              Question:

              What is the role of the Sponsor in relation to Mineral Companies?

              Answer:

              The obligations of sponsors are set out in Chapter 3A of the Listing Rules. For companies that fall within Chapter 18, Rule 18.27 requires that sponsors ensure that the Competent Person and/or Competent Evaluator satisfies the requirements of a Competent Person and/or a Competent Evaluator in Chapter 18, including whether the Competent Person and/or Competent Evaluator is independent, professionally qualified, and a member of an RPO.

              Reference should be made to Paragraphs 5 and 14 of Practice Note 21 (Due Diligence by Sponsors in respect of Initial Listing Applications) which sets out the typical due diligence inquiries a sponsor should undertake for the expert sections of the listing document.

              FAQ Series 12, FAQ No. 23
              LR reference: Main Board Rules Chapter 3A, Rule 18.27, Practice Note 21 / GEM Rules Chapter 6A, Rule 18A.27, Practice Note 2
              Released on 26/5/2010

            • Chapter 4

              View Current PDF

              Question:

              Under Rule 4.04 and 4.06, the Exchange has a discretion to accept an accountants' report on an acquired company for a shorter period than 3 financial years immediately preceding the acquisition. Under what circumstances will the Stock Exchange exercise this discretion? Will a shorter accounting period be acceptable where the listing applicant can satisfy the market capitalisation /revenue test under 8.05?

              Answer:

              The circumstances under which the Exchange will exercise this discretion are determined on a case-by-case basis.

              In the case of a new listing, if the applicant can satisfy the requirements, and is listed under the market capitalisation / revenue test and has financial information for 3 financial years, then such information should be disclosed in the prospectus. If the business of the applicant has existed for less than 3 years, the financial information for that shorter period will be acceptable.

              Similarly, for a transaction (which is not an initial public offering), if the target company has been in existence for a period of less than 3 years, the accountants' report should cover the period since the commencement of business or incorporation of the target company.

              FAQ Series 1, FAQ No. 15
              LR reference: Main Board Rules 4.04, 4.06, 8.05
              Released on 30/3/2004

              Question:

              How should an issuer present its ageing analysis of accounts receivable and accounts payable?

              Answer:

              A note has been added to the relevant Rules which states: "The ageing analysis should normally be presented on the basis of the date of the relevant invoice or demand note and categorised into time-bands based on analysis used by an issuer's management to monitor the issuer's financial position. The basis on which the ageing analysis is presented should be disclosed."

              For issuers in industries that do not issue invoices to their customers, there may be sales and purchase contracts entered into between the company and its customers which set out the agreed payment schedule. In such cases, the issuer should present the ageing analysis based on the payment schedule set out in the sales and purchase contracts.

              FAQ Series 31, FAQ No. 7
              LR reference: Main Board Rules 4.05(2)(a) and (b), Note 2 to Rule 4.05(2), paragraph 4(2)(a) and (b) of Appendix 16, Note 4.2 of Appendix 16 / GEM Rules 7.04(2)(a) and (b), Note 2 to Rule 7.04(2), Rules 18.50B(2)(a) and (b), Note to Rule 18.50B(2)
              Released on 6/2/2015

              Question:

              In a VSD, Listco proposes to sell its interest in a company acquired two years ago. Can Listco include, in the circular, the company's financial information from the acquisition date?

              Answer:

              The circular should contain the company's financial information for at least three financial years.

              FAQ Series 11, FAQ No. 5
              LR reference: Main Board Rules 14.68(2)(a)(i), 4.06(1)(a) note / GEM Rules 19.68(2)(a)(i), 7.05(1)(a) note
              Released on 20/5/2010

              Question:

              Given the new and revised Hong Kong Standards on Auditing ("HKSAs") on auditor reporting (the "Auditor Reporting Standards") issued by the HKICPA on 31 August 2015 are effective for audits of financial statements for periods ending on or after 15 December 2016, will the Exchange update the audit terminology used in the Rules with reference to the new and revised Auditor Reporting Standards?

              Answer:

              Yes. The Exchange is aware that the words "qualified" auditors' reports and "qualification" used in the current Rules are out of date audit terminology. The table below summarises the terminologies used in the current Rules and HKSAs:

                Terminology used
              Meanings Current Rules HKSAs

              Matters that do affect the audit opinion:
               -  qualified opinion
               -  adverse opinion
               -  disclaimer of opinion

              Qualified /
              Qualification
              Modified
              opinion

              Matters that do affect the audit opinion:
               -  qualified opinion
               -  adverse opinion
               -  disclaimer of opinion

              AND/OR

              Matters that do not affect the audit opinion:
               -  emphasis of matter
               -  material uncertainty related to going concern

              Modified /
              Modification
              No specific
              equivalent term

              The Exchange will update the audit terminology used in the Rules with reference to the new and revised Auditor Reporting Standards. We intend to consult the market on proposed Rule amendments in this regard in due course.

              In the meantime, issuers are reminded that their audit committee should have in-depth conversations with their auditors at an early stage (e.g. about key audit matters, going concern issues and other significant events or transactions that occurred during the reporting period). Doing so may help to minimise the risk of last minute surprises and avoid delays in releasing their annual results (see paragraph 51 of the Exchange's Financial Statements Review Report 2015, which is available on the HKEX website at: http://www.hkex.com.hk/eng/rulesreg/listrules/guidref/Documents/frm-15.pdf).

              FAQ 001-2017
              LR reference: Main Board Rules 4.18, 4.19, 14.67(6)(a)(i), 14.86, Practice Note 3 Paragraph 5, Appendix 1A Paragraph 35, Appendix 1C Paragraph 42(2), Appendix 1E Paragraph 35, Appendix 16 Paragraphs 45(7) and 46(8), Appendix 24 / GEM Rules 7.22, 7.23, 18.50(8), 18.51, 18.64, 18.76, 18.78(5), 19.67(6)(a)(i), 19.86, Appendix 1A Paragraph 35, Appendix 1C Paragraph 42(2), Appendix 17
              Released on 6/1/2017

              Question:

              What are the disclosure requirements under Section 436 of the New Ordinance for a Hong Kong incorporated issuer publishing its:

              (a) annual / interim results announcement;
              (b) interim report, quarterly results announcement / financial report, circulars or listing documents?

              Answer:

              (a) Section 436(3) of the New Ordinance requires the issuer to include a statement indicating that the statement of comprehensive income for a full financial year and/or the statement of financial position at a financial year end (the "Statements") presented in the account are not statutory financial statements under the New Ordinance. The issuer must also disclose whether (i) an auditor's report had been prepared; and (ii) the auditors gave a qualified or modified audit opinion on the Statements.
              (b) The issuer must also comply with the above disclosure requirements if the financial reports, circulars or listing documents contain the Statements.

              For details, please refer to Accounting Bulletin 6 "Guidance on the Requirements of Section 436 of the Hong Kong Companies Ordinance Cap.622" issued by Hong Kong Institute of Certified Public Accountants at: http://app1.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeII/ab6.pdf

              FAQ Series 31, FAQ No. 13
              LR reference: Main Board Rules 13.48, 13.49(1), 13.49(6), 14.66 to 14.69, 11.03 & 11.04, 11.16 to 11.19, 14.61 & 14.62, 4.25 to 4.29 / GEM Rules 18.49, 18.53, 18.66, 18.78, 18.79, 19.66 to 19.69, 14.03 & 14.06, 14.29 to 14.31, 19.61 & 19.62, 7.27 to 7.31
              Released on 11/9/2015

              Question:

              A listed issuer proposes to place new shares to independent third parties for cash consideration, details of which will be disclosed by way of an announcement as required under Main Board Rule 13.28 / GEM Rule 17.30.

              Where the listed issuer provides information about the impact of the proposed placing on its financial position, is it required to comply with Main Board Rule 4.29 / GEM Rule 7.31 if the announcement contains the following information?

              (a) The adjusted net asset value of the listed issuer group calculated based on the net proceeds from the proposed placing and its latest published consolidated net asset value.
              (b) A qualitative explanation of the effect of the proposed placing on its financial position (for example, the proposed placing would increase the net asset value of the listed issuer group).

              Answer:

              Main Board Rule 4.29 / GEM Rule 7.31 sets out the standards of preparation and assurance associated with any disclosure of pro forma financial information (whether mandatory or voluntary) in any documents issued by the listed issuer under the Listing Rules. This requirement would therefore apply to announcements of the listed issuer.

              In the present case, the "adjusted net asset value" described in scenario (a) is regarded as pro forma financial information subject to Main Board Rule 4.29 / GEM Rule 7.31.

              In scenario (b), while a qualitative explanation of the effect of the proposed placing on the listed issuer financial position is not subject to Main Board Rule 4.29 / GEM Rule 7.31, the listed issuer must ensure that information contained in the announcement is accurate and complete in all material respects and not misleading or deceptive under Main Board Rule 2.13 / GEM Rule 17.56.

              FAQ Series 7, FAQ No. 68
              LR reference: Main Board Rules 4.29 / GEM Rules 7.31
              Released on 28/11/2008

              Question:

              What is the effective date of the Rule amendments in Main Board Rules Chapter 4 and GEM Rules Chapter 7?

              Answer:

              The amendments to Main Board Rules Chapter 4 and GEM Rules Chapter 7 in relation to disclosure of financial information in the accountants' report will be applicable for accountants' reports in listing documents and circulars relating to listing applications, reverse takeovers, major transactions and very substantial acquisitions where the latest period reported on in the accountants' report ends on or after 31 December 2015.

              Example: A listing applicant must comply with the revised Main Board Rules Chapter 4 (GEM Rules Chapter 7) in its prospectus if it contains a track record period ending on or after 31 December 2015.

              FAQ Series 31, FAQ No. 3
              LR reference: Main Board Rules Chapter 4 / GEM Rules Chapter 7
              Released on 6/2/2015

              Question:

              Can an issuer/a listing applicant adopt the Rule amendments in relation to Main Board Rules Chapter 4 (GEM Rules Chapter 7) earlier than the effective date?

              Answer:

              Early adoption of the Rule amendments is permitted.

              Example: A listing applicant with the latest period reported on in the accountants' report ending on 31 March 2015 in its prospectus can adopt the revised Main Board Rules Chapter 4 (GEM Rules Chapter 7).

              FAQ Series 31, FAQ No. 4
              LR reference: Main Board Rules Chapter 4 / GEM Rules Chapter 7
              Released on 6/2/2015

            • Chapter 5

              View Current PDF

              Question:

              How is the acquisition cost determined if an acquisition is made after the latest consolidated audited accounts?

              Answer:

              The acquisition cost should be determined based on the appropriate accounting treatment used by the acquiror in preparing the financial statements.

              FAQ Series 15, FAQ No. 2
              LR reference: Main Board Rule 5.01(1) / GEM Rule 8.01(1)
              Released on 20/10/2011

              Question:

              How should an applicant ascertain the carrying amount of a property interest?

              Answer:

              The carrying amount of a property interest must be ascertainable from the books and records of the applicant and consolidated into its balance sheet. Disclosure of a breakdown of property interests in the listing document is not required.

              The carrying amount of a property interest used to calculate the percentages under which a property valuation is not required should be the amount reported in the consolidated balance sheet of the applicant. It should not be the effective value based on the applicant's percentage holding in the subsidiary (or the entity that is consolidated into the balance sheet). For example, an 80% owned subsidiary of an applicant holds a property interest with a carrying amount of $200 million. The carrying amount of $200 million should be used instead of $160 million.

              FAQ Series 15, FAQ No. 3
              LR reference: Main Board Rule 5.01(1) / GEM Rule 8.01(1)
              Released on 20/10/2011

              Question:

              Can an applicant engage in both property activities and non-property activities?

              Answer:

              An applicant can engage in both property activities and non-property activities. An applicant should consider each property's use. If a property is for letting or sale, then it would be categorised into property activity. So even where an applicant's core business is not property development or investment, its property interest may still be categorised into property activity.

              FAQ Series 15, FAQ No. 4
              LR reference: Main Board Rule 5.01(2) / GEM Rule 8.01(2)
              Released on 20/10/2011

              Question:

              Does "holding (directly or indirectly)" means holding by the applicant or its subsidiaries, or does it also include holding by entities that the applicant has no control of, such as associated companies or jointly controlled entities?

              Answer:

              "Holding (directly or indirectly)" includes property interests that are recognised in the consolidated balance sheet of the applicant. Whether a property interest held by a jointly controlled entity is recognised in the consolidated balance sheet of the applicant depends on the accounting treatment adopted by the applicant.

              FAQ Series 15, FAQ No. 5
              LR reference: Main Board Rule 5.01(2) / GEM Rule 8.01(2)
              Released on 20/10/2011

              Question:

              Should retail outlets occupied by an applicant for its operations be categorised into a property activity or a non-property activity?

              Answer:

              Retail outlets occupied by an applicant for its operations should be categorised into non-property activity.

              FAQ Series 15, FAQ No. 6
              LR reference: Main Board Rule 5.01(2) / GEM Rule 8.01(2)
              Released on 20/10/2011

              Question:

              How should an applicant identify properties up to the 10% limit in Main Board Rule 5.01A(1)/GEM Rule 8.01A? If there are two properties with similar carrying amounts crossing the 10% limit at the same time, which property should be valued?

              Answer:

              Generally, an applicant should identify the carrying amount of each property interest and add up from the lowest values until the 10% limit is reached. Property valuations will not be required for property interests comprising the lowest 10%. Property valuations will be required for the remaining property interests. Full text of valuation reports will be required to be disclosed in the listing document except where summary disclosure is allowed (see Main Board Rule 5.01B/GEM Rule 8.01B).

              Where two properties have similar carrying amounts that would cross the 10% limit, we would leave it to the applicant and its advisers to determine taking into account the general disclosure obligation. For example, an applicant may have 15 properties representing 10.12% of its total assets. The largest and second largest of these 15 properties are a property in Mongolia representing 0.97% of its total assets and a Hong Kong property representing 0.85% of its total assets. The total amount of non-valued properties would be less than the 10% limit if either one of these two properties (each with an amount below 1% threshold) is valued.

              An applicant may value the 0.85% Hong Kong property instead of the 0.97% Mongolian property on the basis that it would be unduly burdensome.

              FAQ Series 15, FAQ No. 7
              LR reference: Main Board Rule 5.01A(1) / GEM Rule 8.01A
              Released on 20/10/2011

              Question:

              What is the timing reference point for the statement "except for the property interests in the valuations reports, no single property interest that forms part of its non-property activities has a carrying amount of 15% or more of total assets"?

              Answer:

              The timing reference point for the statement is the listing document date.

              FAQ Series 15, FAQ No. 8
              LR reference: Main Board Rule 5.01B(b)(ii) / GEM Rule 8.01B(b)(ii)
              Released on 20/10/2011

              Question:

              Please clarify whether an issuer must comply with Main Board Rule 5.02A(e)/GEM Rule 8.02A(e) and Main Board Rule 5.02B(ii)/GEM Rule 8.02B(ii) as well as the current Rule that requires a valuation for an acquisition or disposal of a company whose assets consist solely or mainly of property and where any of the percentage ratios of the transaction is or is above 25%.

              Answer:

              The property valuation requirement is triggered when an issuer acquires or disposes of a company whose assets consist solely or mainly of property and where any of the percentage ratios of the transaction is or is above 25% under Main Board Rule 5.02/GEM Rule 8.02.

              An issuer should then identify each property interest in the company being acquired or disposed of and consider whether the carrying amount is below 1% of the issuer's total assets. Valuation is not required if a property interest is below 1% of the issuer's total assets. The total carrying amount of property interests not valued must not exceed 10% of the issuer's total assets.

              FAQ Series 15, FAQ No. 9
              LR reference: Main Board Rule 5.02 / GEM Rule 8.02
              Released on 20/10/2011

              Question:

              Please clarify how to determine when information under Main Board Rule 5.10/GEM Rule 8.36 should be disclosed.

              Answer:

              An applicant must disclose information on its material property interests. The information must be meaningful for investors to make an informed decision regarding the company. We expect applicants and sponsors to consider materiality taking into account all the relevant facts and circumstances and disclose property valuations and/or relevant information for material property interests.

              There is no definition of materiality in the Listing Rules. In considering whether a property interest is material or not, applicants and sponsors may consider:

              (a) whether the property interest (individually or in aggregate) is used for a reportable segment of the applicant. If so, whether it contributes a significant portion of revenue to the applicant;
              (b) whether there are any encumbrances on the property or use of the property that may, at any time, directly or indirectly impact the operations of the applicant's reportable segment;
              (c) whether there are any defects relating to the property or its operations that may have major impact on the applicant's business or operations, for example, breach of environmental regulations or title defects; and
              (d) whether there is re-development potential for the property that may impact the applicant's financial position.

              These factors are only for guidance and are not an exhaustive list. Applicants and sponsors should carefully consider how the information could influence investors' decision. Materiality judgement can only be properly made taking in account all the facts and circumstances of the applicant.

              FAQ Series 15, FAQ No. 10
              LR reference: Main Board Rule 5.10 / GEM Rule 8.36
              Released on 20/10/2011

              Question:

              Is an applicant/issuer only required to disclose valuation information relating to its property interests under Chapter 5 of the Main Board Rules/Chapter 8 of the GEM Rules in the listing document/circular?

              Answer:

              No. Under the general disclosure obligation in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32) and the Listing Rules (for applicant, see Main Board Rule 11.07/GEM Rule 14.08(7); for issuer, see Main Board Rule 14.63(2)(a)/GEM Rule 19.63(2)(a)), a listing document/circular must contain sufficient particulars and information necessary for an investor to make an informed decision.

              FAQ Series 15, FAQ No. 1
              LR reference: Main Board Rules Chapter 5 / GEM Rules Chapter 8
              Released on 20/10/2011 (Updated on 1/4/2015)

            • Chapter 6


              View Current PDF

              Question:

              The Financial Institutions (Resolution) Ordinance (Cap.628)("FIRO") vests in the three sectoral resolution authorities (being the Monetary Authority, the SFC or the Insurance Authority) with a range of powers to enable orderly resolution of a non-viable, systemically important financial institution for the purpose of maintaining financial stability, while seeking to protect public funds.

              In particular, Part 9 of the FIRO empowers a resolution authority to temporarily defer certain entities' disclosure obligations under section 307B of the SFO in certain circumstances (including that the disclosure would cause or contribute to the non-viability of the entity or its group company or impede the ability of the resolution authority to achieve orderly resolution), and in that case, the entities' disclosure obligations under the Rules will also be deferred automatically.

              Where an issuer's disclosure obligations are deferred under the FIRO, will dealings in securities of such issuer be suspended?

              Answer:

              There is no automatic suspension of dealings in securities of such issuer, but the FIRO provides that the resolution authority may direct the Exchange to suspend, or not to suspend, dealings in securities of an issuer despite its disclosure obligations have been deferred under the FIRO.

              The resolution authority must consult the SFC (if the SFC is not the resolution authority) before its exercise of any powers to defer disclosure obligations or suspend, or not suspend, dealings to enable the SFC's views to be ascertained (including e.g. on the effects of deferral, suspension or non-suspension on the market, and financial stability).

              Any decision to exercise such powers would not be taken lightly by a resolution authority given their potential risks and ramifications for the stability and effective functioning of the financial system. Ultimately, the extent to which the resolution authority would use any of these powers on failure of an institution would depend upon its assessment of the risks posed to the orderly resolution, its balancing of the resolution objectives in the context of securing its financial stability objectives as set out in the FIRO and the operational mechanics (to be developed by the resolution authorities) for the implementation of the FIRO stabilization options.

              FAQ Series N/A, FAQ No. 005-2017
              LR reference: Main Board Rule 6.01 / GEM Rule 9.01
              Released on 20/10/2017

              Question:

              Part 9 of the FIRO, as currently drafted, does not cover suspension of dealings in structured products listed under Chapter 15A of the Main Board Listing Rules that are cash settled only.

              What will happen to dealings in the cash-settled structured products of an issuer that is subject to Part 9 of the FIRO in the three scenarios below?

              (a) Prior to the application of a stabilization option under the FIRO, where the relevant issuer also has securities as defined under the FIRO (e.g. shares) listed on the Exchange;
              (b) Prior to the application of a stabilization option under the FIRO, where the relevant issuer does not have any securities as defined under the FIRO (e.g. shares) listed on the Exchange (i.e. the issuer issues cash-settled structured products only); or
              (c) When and if a "bail-in" under the FIRO is in effect.

              Answer:

              (a) Where the relevant resolution authority has served a direction under the FIRO on the Exchange to suspend, or not to suspend, the issuer's securities as defined under the FIRO (e.g. shares), the Exchange shall exercise its power under Main Board Rule 6.01 to suspend dealings, or refrain from directing a suspension of dealings, in the issuer's cash-settled structured products in the same way.
              (b) The relevant resolution authority shall inform the Exchange when the issuer's disclosure obligations have been deferred under the FIRO, and request the Exchange to suspend, or not to suspend, dealings in the issuer's cash-settled structured products.

              The Exchange shall exercise its power under Main Board Rule 6.01 to suspend dealings, or refrain from directing a suspension of dealings, upon receipt of the resolution authority's request.
              (c) The relevant resolution authority shall inform the Exchange when and if a "bail-in" under the FIRO is in effect and the issuer's disclosure obligations are suspended by force of law pursuant to section 153 of the FIRO.

              The Exchange shall exercise its power under Main Board Rule 6.01 to suspend dealings upon receipt of the notice.
              FAQ Series N/A, FAQ No. 007-2017
              LR reference: Main Board Rule 6.01
              Released on 20/10/2017

              Question:

              Has there been any change in the procedure for requesting a trading halt or suspension?

              Answer:

              The procedure for requesting a trading halt or suspension has not changed as such. As before, it will be necessary to liaise with the Listing Division of the HKEx and make a written request stating the specific reasons for requesting a trading halt or suspension. If appropriate, the Listing Division of the HKEx will arrange for trading in the issuer's securities to be halted or suspended.

              The change is with regard to the way in which the trading halt or suspension is notified to the market. Under the pre-existing procedure, a trading halt or suspension is first notified to the market by means of a short notice prepared by HKEx which is published on the HKEx website. Under the new information dissemination model, the market will be notified by means of a trading halt or suspension announcement which is prepared by the issuer and submitted through the e-Submission System for publication on the HKEx website.

              Where the announcement has already been submitted by the issuer for publication, HKEx will publish this announcement immediately via the HKEx website following a trading halt or suspension. If the issuer has not submitted the announcement for publication before the trading halt or suspension, the issuer must do so as soon as possible after the trading halt or suspension has been effected.

              The announcement must also be published on the issuer's own website (if any), but does not have to be published in the newspapers.

              FAQ Series 3, FAQ No. 139
              LR reference: Main Board Rules 6.02, 6.03 / GEM Rules 9.06, 9.07, 9.08
              Released on 22/3/2007 (Updated on 2/1/2013)

              Question:

              What is the trading halt/ suspension policy applicable to Main Board and GEM issuers in respect of publication of announcements containing inside information and/or notifiable transactions?

              Answer:

              Trading in the securities of an issuer may be halted or suspended due to publication failure (i.e. to publish an announcement on HKEx websites) where the subject matter of the announcement is information discloseable under Listing Rules MB 13.09/ GEM 17.10 or relates to a notifiable transaction and trading halt or suspension is required under Listing Rules MB 14.37/ GEM 19.37. This is consistent with the principle set out in Chapter 6 of Main Board Rules/ Chapter 9 of GEM Rules on trading halts and suspensions, i.e. that halt or suspension is only required where the HKEx considers it necessary for the protection of the investor or the maintenance of an orderly market.

              Where an obligation to issue an announcement containing inside information has arisen for an issuer, it should publish the announcement during the next available publication window. For example, where the issuer has signed an agreement in relation to a notifiable transaction that is inside information after trading hours on a normal business day, and an announcement is published on the HKEx website by 8.30 a.m. of the next business day (i.e. either during the publication windows from 4.30 p.m. to 11.00 p.m. of that business day, or between 6.00 a.m. to 8.30 a.m. of the next business day), no trading halt or suspension would be necessary. Similarly, where an agreement is signed after the morning trading session and an announcement is published on the HKEx website between 12.00 noon to 12.30 p.m. of the same business day, no trading halt or suspension is necessary. In both circumstances where an announcement cannot be published before the next trading session, a halt or suspension in the trading of the issuer's securities would be required until commencement of the trading session (morning or afternoon) after the publication of the announcement. For example, where the announcement is published during the 12.00 noon to 12.30 p.m. publication window of the next business day, the issuer may apply for resumption of trading in its securities at 1.00 p.m.

              Where an issuer's obligation to publish an announcement relating to inside information is triggered during trading hours (for example, where confidentiality cannot be maintained and an obligation to publish an announcement on inside information arises under Listing Rule MB 13.09/ GEM 17.10 or in the circumstances described in Listing Rules MB 14.37 / GEM 19.37), the issuer should request a halt or suspension in trading of its securities, and publish an announcement as soon as possible during the next publication window. Resumption in trading of the issuer's securities may take place during the commencement of the next trading session after the publication of the announcement.

              A resumption announcement should clearly set out that an application will be made for resumption in the trading of securities and the expected time of resumption (i.e. at the commencement of the next trading session after the publication of the announcement).

              Issuers are reminded of their obligations to submit an announcement for clearance by the Exchange before publication where the subject matter of the announcement requires pre-vetting under the Listing Rules. Please refer to the Guide on Pre-vetting requirements and Selection of Headline Categories for Announcements at http://www.hkex.com.hk/eng/rulesreg/listrules/listguid/listpp/eppguid/epp.htm which sets out categories of announcements requiring pre-vetting.

              Issuers are also reminded that they should manage their affairs, particularly with regard to the signing of agreements, to ensure that there will be continuous and informed trading of their securities save in exceptional circumstances. It follows that, as far as practicable, issuers should seek to ensure that complex and lengthy announcements are disseminated as soon as possible during either the lunchtime publication window or outside trading hours to allow investors adequate time to consider the content of such disclosures.

              FAQ Series 3, FAQ No. 178
              LR reference: Main Board Rules Chapter 6, 13.09, 13.10A, 14.37 / GEM Rules Chapter 9, 17.10, 17.11A, 19.37
              Released on 22/3/2007 (Updated on 25/7/2016)

              Question:

              What is the trading suspension arrangement for issuers with A shares and H shares listed on SSE / SZSE and SEHK?

              Answer:

              There will be no change in the general policy for trading suspension of A+H issuers as a result of the implementation of Shanghai and Shenzhen Connect:

              (a) Suspension arrangement
              (i) Suspension pending release of inside or material information or clarification to address false market concern

              Where an A+H issuer has any inside information1 or material information2 or where there is concern about the possible development of a false market3, the issuer's A and H shares will be suspended in both markets to prevent potential or actual market disorder.

              Note
              1: See SEHK Listing Rule 13.09
              2: See SSE listing rules 2.3 and 2.10 / SZSE listing rule 2.7
              3: See SEHK Listing Rule 13.10
              (ii) Suspension due to other reasons (i.e. other than those mentioned in (i) above)

              In other specific circumstances where trading suspension is required in one market, and not the other, under the respective home market rules, the current practice will continue to apply. They include:

              Reasons for suspension SSE / SZSE SEHK
              Non-routine suspension
              Insufficient public float Suspend after the public float falls below the minimum requirement4 for 20 consecutive days Suspend when the public float falls below the minimum requirement4 and there is a lack of open market in the listed securities
              Delay in publication of annual results Suspend when the issuer fails to publish the annual report by the deadline (which is 4 months from the year end date) Suspend when the issuer fails to publish the results announcement by the deadline (which is 3 months from the year end date)
              Failure to meet continued listing criteria Listing may be suspended if the issuer fails to meet financial requirements after it is put under delisting risk warning:
              •   Net loss for the latest 3 consecutive years; or
              •   Net liability in the latest 2 consecutive years; or
              •   Revenue less than RMB10 million for the latest 2 consecutive years; or
              •   Auditors issued a disclaimer opinion or adverse opinion on its financial statements for the latest 2 consecutive years
              Suspend if the issuer fails to maintain sufficient assets or operations for listing
              Material asset restructuring5,7
              (a) An issuer announces that it may undertake a possible material asset restructuring
              (a) Suspend for not more than three months (unless an extension is permitted) when the possible material asset restructuring is in contemplation
              (a) No suspension where the announcement contains inside information concerning the possible material asset restructuring
              (b) The issuer convenes a board meeting and announces details of its material asset restructuring proposal
              (b) Suspend for not more than 10 days when the announcement is subject to post-vetting by SSE / SZSE
              (b) No suspension after the announcement of the proposed transaction.6
              (c) The issuer publishes an announcement upon the receipt of the CSRC's notice in relation to the vetting of the issuer's material asset restructuring proposal
              (c) Suspend during the vetting period
              (c) No suspension
              Non-public issuance of new shares7 Suspend for not more than 10 days (unless an extension is permitted) when an issuer announces that it may undertake a possible issuance of new shares No suspension where the announcement contains inside information concerning the possible issuance of new shares
              Other material matters7 Suspend for not more than 10 days when an issuer announces that it is contemplating material matters (e.g. change in control, material contract, acquisition or disposal subject to shareholder approval, external investment) No suspension where the announcement contains inside information concerning the possible material matters
              Routine suspension
              Rights issue Suspend during the acceptance period No suspension
              Delay in publication of quarterly results Suspend for 1 day if the issuer fails to publish quarterly report by the due date No suspension
              (There is no requirement under the SEHK Listing Rules for Main Board issuers to publish quarterly results.)
              Issuers under delisting risk warnings Suspend for 1 day if the issuer is put under the delisting risk warning (*ST) or other kinds of special treatment (ST) under the SSE / SZSE rules No suspension

              Note
              4: Under the SSE/SZSE listing rules, an issuer shall maintain a public of at least 25% of the total issued share capital (or 10% if the issuer's share capital exceeds RMB400 million).

              Under SEHK Listing Rules, an issuer shall maintain a public of at least 25% of the total issued share capital (or a lower percentage if wavier was previously granted by SEHK).
              5: See the "Measures for the Administration of the Material Asset Restructurings of Listed Companies" issued by the CSRC
              6: Issuers are reminded that if the proposed transaction constitutes a very substantial disposal, very substantial acquisition or reverse takeover under the SEHK Listing Rules, the issuer should submit the draft announcement for the transaction to SEHK for pre-vetting.
              7: See the "Guidelines on trading suspension and resumption for listed companies in contemplation of material matters" 《上市公司籌劃重大事項停復牌業務指引》 and the "Disclosure memorandum for Main Board no.9 - Listed companies' trading suspension and resumption" 《主板信息披露業務備忘錄第9 號——上市公司停復牌業務》 issued by SSE and SZSE respectively
              (b) Communications with exchanges

              A+H issuers are reminded that they must notify both SEHK and SSE / SZSE as soon as possible after they become aware of any matter that may require a trading suspension of their shares on SEHK and/or SSE / SZSE. The issuers should, to the extent practicable, make early contact with SEHK and SSE / SZSE to allow sufficient time for each exchange to deal with the matter before the markets open.
              (c) Disclosure in announcements

              Where trading is to be suspended in one market only (see paragraph (a)(ii) above), timely disclosure of the suspension details (including the time of suspension and the reason for the suspension) in the other market is necessary to ensure that shares in the other market can continue to be traded in an orderly manner.

              FAQ Series 29, FAQ No. 5
              LR reference: Main Board Rules Chapter 6
              Released on 14/11/2014 (Updated on 04/11/2016)

              Question:

              Once suspended, will trading resumption of an issuer's A and H shares take place at the same time?

              Answer:

              (a) Resumption arrangement
              (i) Normally, if an issuer's A and H shares are suspended due to inside or material information or false market concern, trading in the shares will resume in both markets at the same time after the issuer has published an appropriate announcement through SEHK and SSE / SZSE.
              (ii) Nevertheless, as mentioned in paragraph (a)(ii) under question 5, there may be specific circumstances where trading suspension is required in one market, and not the other, under the respective home market rules. In those circumstances, trading in the issuer's shares may resume in one market when it has satisfied the requirements of that market, but remain suspended in the other market under its rules.
              (b) Communication with exchanges

              The suspended issuer should keep both SEHK and SSE / SZSE informed of its developments and should allow sufficient time for the exchanges to decide whether and when trading can be resumed.
              (c) Disclosure in announcements

              Where trading is to be resumed in one market only (see paragraph (a)(ii) above), the issuer should publish an announcement setting out the reasons for the continued suspension of its shares in the other market.

              FAQ Series 29, FAQ No. 6
              LR reference: Main Board Rule Chapter 6
              Released on 14/11/2014 (Updated on 04/11/2016)

            • Chapter 7

              View Current PDF

              Question:

              Six months ago, Listco conducted a rights issue of one rights share for every existing share (the "Previous Rights Issue"). It now proposes another rights issue of one rights share for every two existing shares.

              Listco had obtained independent shareholders' approval for the Previous Rights Issue according to Rule 7.19(6). Does it need to seek independent shareholders' approval for the proposed rights issue?

              Answer:

              Yes. This is because the proposed rights issue would increase Listco's issued share capital by more than 50% when aggregated with the Previous Rights Issue.

              FAQ Series 20, FAQ No. 27
              LR reference: Main Board Rules 7.19(6), 7.23(5) / GEM Rules 10.29, 10.39
              Released on 28/2/2013

              Question:

              Will there be any change in what is meant in the Rules by "fully paid" and "partly paid" shares for Hong Kong-incorporated issuers after the New Companies Ordinance becomes effective?

              Answer:

              When the New Companies Ordinance becomes effective, "fully paid" will mean that the shareholder to whom shares are issued has paid the full consideration which was agreed to be paid for those shares, i.e., the issue price (and not that the shareholder has paid the full nominal value of those shares, as is the case under the existing Companies Ordinance). "Partly paid" will mean that the full issue price has not been paid.

              FAQ Series 26, FAQ No. 7
              LR reference: Main Board Rules 7.28, 8.11, 8.13, 10.06 (1)(a)(i); App 1A (paras 15(2)(d), 23(1) and 26); App 1B (paras 22(1) and 24); App 1C (para 34); App 1E (paras 23(1), 26 and 49(2)(d)); App 1F (paras 18(1) and 20); App 2A (para 4(3)); App 3 (para 1(2)); App 5 Forms / GEM Rules 10.45, 11.25, 11.27, 13.07(1); App 1A (paras 23(1) and 26); App 1B (paras 22(1) and 24); App 1C (para 34); App 2A (para 4(3)); App 3 (para 1(2)); App 5 Forms
              Released on 21/2/2014

              Question:

              Are there new PRC requirements for Eligible SEHK Issuers to offer or distribute securities to Southbound Shareholders in the above corporate actions?

              Answer:

              (a) Rights issues and open offers

              Yes. The China Securities and Regulatory Commission (CSRC) has issued the Announcement [2016] No. 21 "Filing Requirements for Hong Kong Listed Issuers Making Rights Issues to Mainland Shareholders through Mainland-Hong Kong Stock Connect". The document sets out the requirements for Eligible SEHK Issuers offering securities to their Southbound Shareholders in rights issues / open offers (see also question 3 below).

              Issuers should also note that under Shanghai and Shenzhen Connect, China Securities Depository and Clearing Corporation Limited (ChinaClear) will provide nominee services for Southbound Shareholders to (i) sell their nil-paid rights on SEHK; and/or (ii) subscribe for their entitlement securities under the rights issues / open offers in accordance with relevant laws and regulations. However, it will not support excess applications by Southbound Shareholders through Shanghai and Shenzhen Connect1.

              Note 1: See Article 23 of ChinaClear's Implementing Rules for Registration, Depository and Clearing Services under Mainland-Hong Kong Stock Connect (ChinaClear Stock Connect Implementing Rules) 中國證券登記結算有限責任公司《內地與香港股票市場交易互聯互通機制登記、存管、結算業務實施細則》
              (b) Bonus issues, scrip dividend schemes and distributions in specie

              No rules or guidance has been published by the CSRC.

              FAQ Series 29, FAQ No. 2
              LR reference: Main Board Rules Chapter 7, 13.36(2)(a) Note 1
              Released on 14/11/2014 (Updated on 04/11/2016)

            • Chapter 8

              View Current PDF

              Question:

              What are the listing requirements for HDR issuers? How do they compare with the requirements for issuers of ordinary shares?

              Answer:

              The listing requirements for HDR issuers are essentially the same as for issuers of shares, ie Chapter 8 of the Listing Rules applies to issuers of HDRs as well as to issuers of shares.

              HDR issuers have to comply with certain additional requirements set out in the new Chapter 19B of the Listing Rules. These additional requirements concern the contents of the deposit agreement and other DR-specific matters.

              FAQ Series 6, FAQ No. B2
              LR reference: Main Board Rules 8.01, 19B.01
              Released on 9/5/2008

              Question:

              Under Rule 4.04 and 4.06, the Exchange has a discretion to accept an accountants' report on an acquired company for a shorter period than 3 financial years immediately preceding the acquisition. Under what circumstances will the Stock Exchange exercise this discretion? Will a shorter accounting period be acceptable where the listing applicant can satisfy the market capitalisation /revenue test under Rule 8.05?

              Answer:

              The circumstances under which the Exchange will exercise this discretion are determined on a case-by-case basis.

              In the case of a new listing, if the applicant can satisfy the requirements, and is listed under the market capitalisation / revenue test and has financial information for 3 financial years, then such information should be disclosed in the prospectus. If the business of the applicant has existed for less than 3 years, the financial information for that shorter period will be acceptable.

              Similarly, for a transaction (which is not an initial public offering), if the target company has been in existence for a period of less than 3 years, the accountants' report should cover the period since the commencement of business or incorporation of the target company.

              FAQ Series 1, FAQ No. 15
              LR reference: Main Board Rules 4.04, 4.06, 8.05
              Released on 30/3/2004

              Question:

              Please clarify the meaning of "ownership continuity and control" under Main Board Rule 8.05 and GEM Rule 11.12A(2).

              Answer:

              This refers to continuous ownership and control of the voting rights attaching to the shares for the latest financial year of the trading record period up until the time immediately before the offering and/or placing becomes unconditional by: (i) a controlling shareholder as defined under the Listing Rules, or; (ii) where there is no controlling shareholder, the single largest shareholder. The Exchange will consider the facts and circumstances and grant a waiver from strict compliance in appropriate cases.

              FAQ Series 1, FAQ No. 16
              LR reference: Main Board Rule 8.05 / GEM Rules 11.12
              Released on 30/3/2004 (Updated on 11/11/2016)

              Question:

              Under Rule 8.05, incidental income (not arising out of the principal business) and results of associated companies should not be accounted for in arriving at the profit figure. How will the results of a jointly controlled entity which has been accounted for by the proportional consolidation method under International Auditing Standards be treated?

              Answer:

              Normally, results of jointly controlled entities will be excluded for the purposes of Rule 8.05, unless the issuer can demonstrate positive control over the entities.

              FAQ Series 1, FAQ No. 17
              LR reference: Main Board Rule 8.05
              Released on 30/3/2004

              Question:

              What relevant experience must management demonstrate to be considered eligible for listing under Listing Rule 18.04?

              Answer:

              To obtain the benefit of the waiver in rule 18.04, directors and senior managers taken together must have sufficient experience relevant to the exploration for and/or extraction activity that the Mineral Company is pursuing. Individuals relied on must have a minimum of five years relevant industry experience. Details of that experience must be disclosed in the listing document.

              FAQ Series 12, FAQ No. 6
              LR reference: Main Board Rule 18.04, 8.05 / GEM Rules 18A.04, 11.12A
              Released on 26/5/2010

              Question:

              What relevant experience must management demonstrate to be considered eligible for listing under Listing Rule 18.04?

              Answer:

              To obtain the benefit of the waiver in rule 18.04, directors and senior managers taken together must have sufficient experience relevant to the exploration for and/or extraction activity that the Mineral Company is pursuing. Individuals relied on must have a minimum of five years relevant industry experience. Details of that experience must be disclosed in the listing documents.

              It is expected that a Mineral Company should have a spread of experience in various aspects amongst the board members and the senior management relevant to the mining business, including exploration, construction, mining, processing and marketing.

              FAQ Series 20, FAQ No. 25
              LR reference: Main Board Rule 18.04, 8.05 / GEM Rules 18A.04, 11.12A
              Released on 28/2/2013

              Question:

              For a company with market capitalisation of over HK$10 billion, will the Exchange grant a waiver so that the public float is reduced to 15%? Can this 15% include any shares not listed in HK?

              Answer:

              Main Board Rule 8.08 (GEM Rule 11.23(7)) states that, at the time of listing, at least 25% of the issued share capital must be held by the public, and at least 15% must be listed on the Exchange. Therefore where a waiver is granted to reduce the public float to 15%, all the shares must be listed on the Exchange. However, if the issuer can demonstrate that a sufficient number of shares listed on the Exchange will be in the hands of the public, the Exchange may consider alternative arrangements on a case-by-case basis.

              FAQ Series 1, FAQ No. 19
              LR reference: Main Board Rule 8.08 / GEM Rule 11.23(7)
              Released on 30/3/2004

              Question:

              Please clarify what the issuer's total issued share capital refers to for the purpose of calculating public float under Rule 8.08(1)(b)?

              Answer:

              For the purpose of calculating public float under Main Board Rule 8.08(1)(b), the total issued share capital of an issuer (i.e. denominator) refers to all classes of shares in issue including shares listed on the Exchange and other regulated exchanges and other unlisted shares.

              FAQ Series 1, FAQ No. 20
              LR reference: Main Board Rule 8.08(1)(b) / GEM Rules 11.23(7)
              Released on 30/3/2004 (Updated on 30/9/2009)

              Question:

              The requirement for a minimum spread of securities holders at the time of listing will not be applicable to a bonus issue of a new class of securities involving options, warrants or similar rights to subscribe or purchase shares. Such exemption does not apply where there are circumstances to indicate that the shares of the listed issuer may be concentrated in the hands of a few shareholders. What are the circumstances where the Exchange considers that there may be a high concentration of shareholding?

              Answer:

              The Exchange would make reference to announcements on high concentrations of shareholding made by listed issuers pursuant to Main Board Rule 13.34(a) / GEM Rule 17.36 or public information, for example, press releases issued by the SFC in this connection during the 5 years preceding the date of the announcement on the proposed bonus issue.

              FAQ Series 8, FAQ No. 15 Issue 6
              LR reference: Main Board Rules 8.08(2), 8.08(3) / GEM Rules 11.23(3)(b)(ii), 11.23(8)
              Released on 28/11/2008

              Question:

              How is market capitalisation calculated for an issuer transferring to the Main Board, for the purpose of satisfying the Rule 8.09A market capitalisation requirement?

              Answer:

              Strictly speaking, market capitalisation will be calculated using the share price on the date of listing on the Main Board.

              In practice, the Exchange will require the issuer to submit a market cap computation based on share price on the latest practicable date which is usually a few days before the Main Board listing date.

              FAQ Series 5, FAQ No. 21
              LR reference: Main Board Rule 9A.02, 8.09A / GEM Rules 9.24
              Released on 2/5/2008

              Question:

              Will there be any change in what is meant in the Rules by "fully paid" and "partly paid" shares for Hong Kong-incorporated issuers after the New Companies Ordinance becomes effective?

              Answer:

              When the New Companies Ordinance becomes effective, "fully paid" will mean that the shareholder to whom shares are issued has paid the full consideration which was agreed to be paid for those shares, i.e., the issue price (and not that the shareholder has paid the full nominal value of those shares, as is the case under the existing Companies Ordinance). "Partly paid" will mean that the full issue price has not been paid.

              FAQ Series 26, FAQ No. 7
              LR reference: Main Board Rules 7.28, 8.11, 8.13, 10.06 (1)(a)(i); App 1A (paras 15(2)(d), 23(1) and 26); App 1B (paras 22(1) and 24); App 1C (para 34); App 1E (paras 23(1), 26 and 49(2)(d)); App 1F (paras 18(1) and 20); App 2A (para 4(3)); App 3 (para 1(2)); App 5 Forms / GEM Rules 10.45, 11.25, 11.27, 13.07(1); App 1A (paras 23(1) and 26); App 1B (paras 22(1) and 24); App 1C (para 34); App 2A (para 4(3)); App 3 (para 1(2)); App 5 Forms
              Released on 21/2/2014

              Question:

              Listco has appointed Trustee A the trustee of its employee share scheme established for a wide scope of participants including Listco's directors and certain employees who are not connected persons. Since the interests of Listco's directors in the scheme are together less than 30%, Trustee A is not an "associate" of the directors under Rule 14A.12(1)(b) and therefore not a connected person of Listco.

              (a) Is Trustee A a "close associate" of the directors under Rule 1.01?
              (b) Will the shares held by Company A on behalf of the beneficiaries of the scheme be regarded as being "in public hands"?
              (c) Trustee A, acting as the trustee of the scheme, holds more than 10% of Listco's total issued shares. Under the scheme, it is not allowed to exercise the voting rights attaching to shares. Is Trustee A a substantial shareholder of Listco?

              Answer:

              (a) Yes. The exclusion for the definition of "associate" under Rule 14A.12(1)(b) does not apply to the definition of "close associate" under Rule 1.01.
              (b) No, because Trustee A is a close associate of Listco's directors and therefore a core connected person for the purpose of Rule 8.24.
              (c) No. Trustee A does not fall under the definition of "substantial shareholder" under Rule 1.01.

              FAQ Series 28, FAQ No. 4A
              LR reference: Main Board Rule 1.01, 8.24, 14A.12(1)(b) / GEM Rules 1.01, 11.23(11) Notes 2 and 3, 20.10(1)(b)
              Released on 1/7/2014

            • Chapter 9

              View Current PDF

              Question:

              How long would it take to effect a HDR listing in Hong Kong?

              Answer:

              The procedures for applications for listing are set out in Chapter 9 of the Listing Rules. The Listing Rules apply as much to HDR issuers as they do to issuers of shares. Consequently, the time taken to effect a listing of HDRs should be similar to that taken to effect a listing of shares.

              Any specific questions such as those concerning the issuer's place of incorporation or specific waivers may be dealt with by way of a preliminary hearing prior to filing of a Form A1.

              FAQ Series 6, FAQ No. B7
              LR reference: Main Board Rules 9.03
              Released on 9/5/2008 (Updated on 3/9/2013)

              Question:

              What are the "other relevant documents"/ "other documents" referred to in the Listing Rules that should be submitted and included in the CD -ROMs at the same time of filing a listing application?

              Answer:

              Besides the Application Proof, "other documents" are documents referred in items 3 to 7 of Attachment IM/ IG in Guidance Letter HKEx-GL55-13, where applicable.

              FAQ Series 24, FAQ No. 3
              LR reference: Main Board Rules 9.03(3), 9.11(1), Guidance Letter HKEx-GL55-13 / GEM Rules 12.09(1), 12.22(1), Guidance Letter HKEx-GL55-13
              Released on 26/7/2013

              Question:

              When the Exchange considers that a listing application is ready to be presented to the Listing Committee/ GEM Listing Approval Group for consideration, how will the sponsor be informed?

              Answer:

              When a listing application is ready to be presented to the Listing Committee/ GEM Listing Approval Group for consideration, the sponsor will receive a "Notice to hearing" letter from the Exchange whereby the sponsor and the applicant should timely submit all relevant documents as required under the Listing Rules to enable the Exchange to process listing applications efficiently.

              FAQ Series 24, FAQ No. 19
              LR reference: Main Board Rules 9.03(2), 9.11(17c), 9.11(18) / GEM Rules 12.12, 12.23(6)
              Released on 26/7/2013

              Question:

              For Returned Applications, when will the eight weeks moratorium start?

              Answer:

              The eight weeks moratorium starts from the date of the return letter.

              FAQ Series 24, FAQ No. 26
              LR reference: Main Board Rules 9.03(3) / GEM Rules 12.09(3)
              Released on 26/7/2013

              Question:

              For Returned Applications, will the initial listing fee be refunded?

              Answer:

              Where the Exchange returns a listing application to an applicant before it issues its first comment letter, the initial listing fee will be refunded.

              Where the Exchange has issued its first comment letter to the sponsor, the initial listing fee will be forfeited.

              FAQ Series 24, FAQ No. 13
              LR reference: Main Board Rules Note 2 to Rule 9.03(1)(b) / GEM Rules Note to Rule 12.14(4)
              Released on 26/7/2013

              Question:

              If there are complaints/ allegations in media reports made against an applicant after its Application Proof/ PHIP is published on the Exchange's website, can the applicant respond to the complaints/ allegations?

              Answer:

              An applicant at its own discretion can publish a statement on the Exchange's website stating that no reliance should be placed on any media reports relating to its published Application Proof/ PHIP as permitted under the Listing Rules. This statement does not need to be pre-vet but a copy should be submitted to the Exchange before its publication.

              A template of the statement has been included in Guidance Letter HKEx-GL57-13. However, other statements that do not comply with the Listing Rules will require the Exchange's pre-vetting and approval before its publication.

              FAQ Series 24, FAQ No. 17
              LR reference: Main Board Rules 9.08(2), Guidance Letter HKEx-GL57-13 / GEM Rules 12.10(2), Guidance Letter HKEx-GL57-13
              Released on 26/7/2013

              Question:

              If an applicant submitted a listing application on or before 30 September 2013 (the "Original Application") and re-submits a new application on or after 1 October 2013, what documentary requirements is the applicant required to comply with under the new sponsor regulation which became effective on 1 October 2013?

              Answer:

              This depends on whether the applicant re-submits within three months after the Original Application has lapsed (see Note below).

              If an applicant re-submits a new application more than three months after the Original Application has lapsed, the applicant is required to comply fully with the documentary requirements under the Listing Rules and GL55-13 effective on 1 October 2013.

              If an applicant re-submits a new application within three months after the Original Application has lapsed, the applicant is required to comply with the following documentary requirements:

              (i) the documentary requirements under the Listing Rules and checklists in effect at the time of its original application (subject to Guidance Letter HKEx-GL7-09, which provides that all the Application Documents previously submitted to the Exchange will remain valid and applicable, unless there have been material changes in them). The Listing Rules and checklists in effect before 1 October 2013 can be found in the following websites:

              Main Board-
              http://www.hkex.com.hk/eng/rulesreg/listrules/listguid/iporq/mbrule_pv.htm

              GEM-
              http://www.hkex.com.hk/eng/rulesreg/listrules/listguid/iporq/gemrule_pv.htm

              Checklists
              http://www.hkex.com.hk/eng/rulesreg/listrules/listipo/guidelines_bfoct.htm
              (ii) the following documents to be provided to the Exchange upon re-submission of the listing application (Rule references below are to the Listing Rules effective on 1 October 2013):
              • a sponsor's undertaking and statement of independence (Main Board: Rule 9.11(1)/ Appendix 17; GEM: Rule 12.23(2)/ Appendix 7K);
              • a written confirmation signed by each director/supervisor that the information in the Application Proof is accurate and complete in all material respects and is not misleading or deceptive (Main Board: 9.11(3a); GEM: 12.23(2a));
              • a confirmation from the Reporting Accountants that no significant adjustment is expected to be made to the draft Accountants' Report (Guidance Letter HKEx-GL58-13); and
              • a confirmation from each of the experts (excluding the Reporting Accountants) that no material change is expected to be made to the relevant expert opinion (Guidance Letter HKEx-GL60-13); and
              (iii) a sponsor's declaration (Main Board: Rule 9.11(32)/ Appendix 19; GEM: Rule 12.24(1)/ Appendix 7G) to be provided on or before the listing document date (if the listing application is re-submitted after the listing document date, on or before the business day immediately before dealings in the shares commence).

              (Note: Under Guidance Letter HKEx-GL7-09, a re-filed application submitted within three months of a lapsed application by an applicant is regarded as a renewal/continuance of its original application.)

              FAQ Series 24, FAQ No. 3A
              LR reference: Main Board Rules 9.10A, 9.11 Guidance Letter HKEx-GL55-13 / GEM Rules 12.22 to 12.26 Guidance Letter HKEx-GL55-13
              Released on 7/11/2013

              Question:

              Why is it necessary for each director/supervisor of a new applicant to submit two undertakings to the Exchange regarding the accuracy of his personal details?

              Answer:

              The first undertaking (see Main Board Rule 9.11(3b) / GEM Rule 12.23(2b)) is intended to cover the listing application stage and to help maintain the level of accuracy and completeness of the information regarding directors/ supervisors in the hearing proof of the listing document that will be tabled to the Listing Committee for consideration. This practice takes into account that the second undertaking, in the form set out in Form B/H/I in Appendix 5 of the Main Board Rules or Form A/B/C in Appendix 6 of the GEM Rules, will be required to be filed only after the final listing document is issued to the public and before the listing date.

              FAQ Series 8, FAQ No. 16 Issue 17
              LR reference: Main Board Rules 9.11(3b), 9.11(38), Form B/H/I in Appendix 5 / GEM Rules 12.23(2b), 12.26(9), Form A/B/C in Appendix 6
              Released on 28/11/2008 (Updated on 3/9/2013)

              Question:

              A director of a listing applicant is subject to an investigation, hearing, proceeding or judicial proceeding in respect of which disclosure is prohibited by law.

              How does the director ensure that the listing document complies with the requirement in Appendix 1A Paragraph 41(1) regarding disclosure of all "other information which shareholders should be aware pertaining to the ability or integrity of such director"?

              Answer:

              The director should assess whether the relevant investigation, hearing, proceeding or judicial proceeding relates to his ability or integrity.

              If yes, the director is encouraged to seek the consent from the relevant regulator or authority to confidentially disclose details of the investigation, hearing, proceeding or judicial proceeding to the Exchange for assessment of his suitability.

              If the director is unable to obtain the relevant consent, or the Exchange determines (following confidential disclosure by the director) that the investigation, hearing, proceeding or judicial proceeding gives rise to material concerns regarding his ability or integrity, the listing document will not be able to comply with Appendix 1A Paragraph 41(1) and he should resign from the listing applicant.

              Note, if the director's position in the listing applicant is so material that his resignation will result in the listing applicant not being able to comply with the Listing Rules (e.g. the management continuity requirement), the listing applicant should not submit its listing application to the Exchange until the investigation, hearing, proceeding or judicial proceeding has been resolved.

              FAQ Series 1, FAQ No. 20A
              LR reference: Main Board Rules 9.11(38), Appendix 1A Paragraph 41(1), Appendix 5 Form B/H/I Paragraph 2 / GEM Rules 12.26(9), Appendix 1A Paragraph 41(1), Appendix 6 Form A/B/C Paragraph 2
              Released on 8/5/2015

              Question:

              If a listing application is subject to the old Listing Rules because it was submitted before 1 October 2013, where can the relevant Listing Rules and Guidance Letters be found?

              Answer:

              After 1 October 2013, all applicable Listing Rules and Guidance Letters relating to administrative or filing procedures applicable prior to 1 October 2013 can be viewed from the following websites.

              Main Board — http://www.hkex.com.hk/eng/rulesreg/listrules/listguid/iporq/mbrule_pv.htm

              GEM — http://www.hkex.com.hk/eng/rulesreg/listrules/listguid/iporq/gemrule_pv.htm

              FAQ Series 24, FAQ No. 11
              LR reference: Main Board Rules Chapter 9 / GEM Rules Chapter 12
              Released on 26/7/2013 (Updated on 30/9/2013)

              Question:

              What is the Exchange's policy on pre-IPO enquires?

              Answer:

              The Exchange will only consider pre-IPO enquires which are novel and specific. Sponsors cannot shift their responsibility to ensure that an Application Proof is substantially complete to the Exchange or the Commission by abusing the pre-IPO enquiry process. The pre-IPO enquiry process should not be taken as a means to get a listing document pre-vetted before an application is submitted.

              Any such enquiries will not be considered. Sponsors and advisors are advised to follow the guidance in the relevant Listing Decisions and Guidance Letters issued by the Exchange from time to time. Pre-IPO enquires on a no-name basis will also not be considered.

              FAQ Series 24, FAQ No. 14
              LR reference: Main Board Rules Chapter 9 / GEM Rules Chapter 12
              Released on 26/7/2013

              Question:

              How long would it take for a listing application to be presented to the Listing Committee/ GEM Listing Approval Group for consideration?

              Answer:

              Assuming that the Exchange issued two rounds of comments and the sponsor responded within five business days for each round of comment, it would normally take about 40 business days to present an application to the Listing Committee/ GEM Listing Approval Group for its consideration. This timeframe may be shortened depending on the quality of the Application Proof and the sponsor's responses to the regulators' comments.

              Applicants may submit a timetable on the basis it would take around 25 business days from the date of the listing application to the Listing Committee/ GEM Listing Approval Group hearing.

              In the case of an applicant which is a mineral company under Chapter 18 of the Listing Rules/ Chapter 18A of the GEM Listing Rules, in addition to the quality of the Application Proof and the sponsor's responses to the regulators' comments, the timeframe will also depend on the quality of the Competent Person's Report. The independent consultants on the panel to assist the Exchange in the review of the Competent Person's Reports have agreed to endeavour to meet the streamlined process timetable as described above but there may be cases where some delay may occur (e.g. due to the quality of the Competent Person's Report).

              FAQ Series 24, FAQ No. 20
              LR reference: Main Board Rules Chapter 9 / GEM Rules Chapter 12
              Released on 26/7/2013

              Question:

              Where an applicant wants to file a listing application under Guidance Letter HKEx-GL6-09A, can it file the application before the end of the stub period to be included in a final listing document?

              Answer:

              An applicant can file a listing application before the end of the stub period to be included in the final listing document, but only after its three-year trading record period (two-year trading record period for GEM applicants) has ended and subject to the conditions under Guidance Letter HKEx-GL6-09A.

              FAQ Series 24, FAQ No. 29
              LR reference: Main Board Rules Chapter 9, Guidance Letter HKEx-GL6-09A / GEM Rules Chapter 12, Guidance Letter HKEx-GL6-09A
              Released on 3/9/2013

              Question:

              Whether the amount of sponsor's fees is required to be disclosed in a listing document?

              Answer:

              The total amount of sponsor fees paid and payable should be disclosed in the listing document according to the Commission's Consultation Conclusions on the regulation of IPO sponsors.

              FAQ Series 24, FAQ No. 30
              LR reference: Main Board Rules Chapter 9, Guidance Letter HKEx-GL56-13 / GEM Rules Chapter 12, Guidance Letter HKEx-GL56-13
              Released on 3/9/2013

            • Chapter 9A

              View Current PDF

              Question:

              Is shareholders' approval required for transfer of listing?

              Answer:

              The Listing Rules do not impose a shareholders' approval requirement for transfer of listing, but there may be such a requirement under the issuer's constitutive documents, or under applicable company law in the jurisdiction of incorporation of the transfer applicant.

              FAQ Series 5, FAQ No. 16
              LR reference: Main Board Rule 9A.02 / GEM Rule 9.24
              Released on 2/5/2008

              Question:

              Will a transfer applicant have to be released from all financial assistance provided by core connected persons before transferring to the Main Board?

              Answer:

              Normally the Main Board requirement for financial independence will be strictly applied as in a Main Board IPO application.

              However, the Exchange is aware that release of financial assistance from core connected persons may be disruptive to the GEM company's normal business and may not be in the interest of shareholders as a whole.

              Transfer applicants should note that the revised GEM Listing Rules require GEM IPO listing applicants to comply with the same independence requirement as Main Board IPO listing applicants.

              FAQ Series 5, FAQ No. 18
              LR reference: Main Board Rules 9A.02, Appendix 1A Paragraph 27A / GEM Rules 9.24, Appendix 1A Paragraph 27A
              Released on 2/5/2008 (Updated on 1/7/2014)

              Question:

              How is market capitalisation calculated for an issuer transferring to the Main Board, for the purpose of satisfying the Rule 8.09A market capitalisation requirement?

              Answer:

              Strictly speaking, market capitalisation will be calculated using the share price on the date of listing on the Main Board.

              In practice, the Exchange will require the issuer to submit a market cap computation based on share price on the latest practicable date which is usually a few days before the Main Board listing date.

              FAQ Series 5, FAQ No. 21
              LR reference: Main Board Rules 9A.02, 8.09A / GEM Rule 9.24
              Released on 2/5/2008

              Question:

              When measuring for the duration of listing on GEM, will the Exchange measure from the first date of listing on GEM to (1) the date of the application for a transfer, or (2) intended date of listing on the Main Board?

              Answer:

              A GEM issuer applying for transfer must have been listed on GEM for a minimum period of one year and has also published its first full-year audited financial statements subsequent to its first date of listing, when it files the formal application (i.e. Form J in Appendix 5 of the Main Board Listing Rules) to transfer to the Main Board.

              FAQ Series 5, FAQ No. 17
              LR reference: Main Board Rule 9A.02(2)
              Released on 2/5/2008

              Question:

              Please use an example to illustrate the earliest possible transfer application date.

              Answer:

              If a GEM issuer has a December financial year end and it is listed on GEM during 2008, it will have fulfilled the requirement of rule 9A.02(2) when the annual report for the financial year 2009 has been published and distributed to its shareholders, which is expected to be within the first three months of 2010.

              FAQ Series 5, FAQ No. 19
              LR reference: Main Board Rule 9A.02(2)
              Released on 2/5/2008

              Question:

              What will constitute a "serious breach" that may hinder a transfer application?

              Answer:

              What constitutes a serious breach depends on the facts and circumstances. The Exchange will normally have regard to (among others) the following factors:

              •   the nature of the breach, including the impact on the orderliness and reputation of the market and any prejudice or risk of prejudice to investors (for example, cases involving a failure to obtain prior shareholder approval for connected transactions or a failure to make disclosure under Rule 13.09(1) or 13.09(2)(a)1);
              •   the duration and frequency of the breach;
              •   whether the breach revealed serious or systemic weaknesses in the listed company's procedures;
              •   the extent to which the breach departs from current market practice; and
              •   evidence that the breach was deliberate or reckless.

              FAQ Series 5, FAQ No. 20
              LR reference: Main Board Rule 9A.02(3)
              Released on 2/5/2008 (Updated on 2/1/2013)

              Question:

              How can an issuer find out if it can fulfill the "good behaviour" requirement before filing a transfer application from the Division, i.e. that it has not been the subject of any disciplinary investigation in relation to a serious breach or potential serious breach in the past 12 months before the transfer application?

              Answer:

              Prior to making a formal transfer application, a GEM issuer, who otherwise meets the transfer requirements, may contact the Listing Division to obtain their written confirmation on whether the GEM issuer has been the subject of any disciplinary investigation by the Exchange in relation to a serious breach or potential serious breach of any GEM Listing Rules or Exchange Listing Rules in the past 12 months.

              Based on the information available to the Exchange up to the date of the confirmation letter, the Listing Division will confirm whether the transfer applicant has been the subject of any disciplinary investigation by the Exchange in relation to a serious breach or potential serious breach of any GEM Listing Rules or Exchange Listing Rules in the past 12 months from the date of the confirmation letter. The Exchange may alter its view set out in the confirmation letter should additional information arise subsequent to the issuance of the confirmation letter. Where such information comes to light within two months of the confirmation letter the Exchange will, normally, write to notify the GEM issuer of the change in circumstances. Please note that the Exchange is not obliged to provide further notification.

              The transfer applicant should note that in order to qualify for the transfer of listing of its securities from GEM to the Main Board, it must not be the subject of any disciplinary investigation by the Exchange in relation to a serious breach or potential serious breach of any GEM Listing Rules or Exchange Listing Rules during the 12 months preceding the transfer application and until the commencement of dealings in its securities.

              FAQ Series 5, FAQ No. 22
              LR reference: Main Board Rule 9A.02(3)
              Released on 2/5/2008

              Question:

              Can fund-raising be conducted during the transfer process from GEM to the Main Board?

              Answer:

              The Exchange does not intend to impose any general prohibition on fund-raising at or close to the time of transfer provided all relevant provisions of the Listing Rules are fulfilled for both corporate actions.

              We note that, in practice, there may be additional execution complexities and/or potential conflicts with the time tables for running multiple corporate actions concurrently, and issuers should plan carefully in this regard.

              FAQ Series 5, FAQ No. 23
              LR reference: Main Board Rule 9A.03
              Released on 2/5/2008

              Question:

              Are the GEM transfer applications subject to the Listing Rule changes to complement the Commission's new sponsor regulation?

              Answer:

              The Listing Rule changes to complement the Commission's new sponsor regulation do not apply to GEM transfer applications because there is no requirement for a sponsor or listing document.

              FAQ Series 24, FAQ No. 12
              LR reference: Main Board Rule 9A.03(2)
              Released on 26/7/2013

              Question:

              What about transfer of infrastructure, investment and Mineral Companies from GEM to Main Board? What are the additional requirements?

              Answer:

              The general principle is that the GEM transferee will have to satisfy all the disclosure requirements applicable to such companies as if in a fresh IPO application for the Main Board, because such information may not have been provided whilst listed on GEM.

              For relevant Listing Rules requirements, please see chapters 18, 21 and Rule 8.05B as applicable. The additional information must be circulated to the shareholders in writing.

              FAQ Series 5, FAQ No. 24
              LR reference: Main Board Rule 9A.04 / GEM Rules N/A
              Released on 2/5/2008 (Updated on 2/7/2010)

              Question:

              Will a transfer applicant be required to comply only with the listing requirements set out in the checklist?

              Answer:

              A transfer applicant is required to comply with all applicable Main Board listing requirements. The checklist is provided as an aid only and does not form part of the Listing Rules. It is the transfer applicant's responsibility to satisfy the Exchange as to fulfillment of all applicable requirements.

              FAQ Series 5, FAQ No. 25
              LR reference: Main Board Rule 9A.06(3)
              Released on 2/5/2008

              Question:

              Will the initial transfer announcement as required by GEM Rule 9.26 and the main transfer announcement as required by Main Board Rule 9A.08 be pre-vetted by the Division?

              Answer:

              The initial announcement will be relatively simple and informing the market of the transfer application only. There is no requirement in the Listing Rules that this announcement will have to be pre-vetted by the Exchange.

              The second announcement is expected to contain substantive details about the transfer and a draft of this must be submitted to the Exchange at the time of submission of the transfer application. This announcement should be cleared by the Exchange before it is published.

              FAQ Series 5, FAQ No. 26
              LR reference: Main Board Rule 9A.08 / GEM Rule 9.26
              Released on 2/5/2008

              Question:

              Will trading halt or suspension be required pending the announcement or at any time during the transfer process?

              Answer:

              GEM transfer applicants are required to observe the trading halt or suspension policy and the general disclosure obligations under the GEM Rules as long as they are still listed on the GEM Board.

              A GEM transfer applicant must assess whether the information relating to the transfer process would require disclosure under Rule 17.10, having considered its particular circumstances. A trading halt or suspension would be necessary in any of the circumstances described in Rules 17.11A(1) to (3) where an announcement cannot be made.

              FAQ Series 5, FAQ No. 27
              LR reference: Main Board Rule 9A.08 / GEM Rule 9.26
              Released on 2/5/2008 (Updated on 2/1/2013)

              Question:

              How should an existing director / supervisor of an issuer seeking to transfer from GEM to the Main Board complete paragraph 2 of Part 1 of Form B/H/I in Appendix 5?

              Answer:

              For the purpose of paragraph 2 of Part 1 of Forms B/H/I, a GEM transfer issuer is regarded as a listed issuer. Existing directors and supervisors of a GEM transfer issuer must state in the relevant Forms B/H/I that their personal details have been set out in the transfer announcement made under Main Board Rule 9A.08, i.e. the date of the GEM transfer announcement should be inserted in the space provided.

              Every GEM transfer issuer must:

              •   disclose the biographical information of each existing director or supervisor in the GEM transfer announcement in the same manner as required under Main Board rule 13.51(2); and
              •   submit Form B/H/I to the Exchange immediately after the GEM transfer announcement is published.

              FAQ Series 8, FAQ No. 59. Issue 17
              LR reference: Main Board Rules Form B/H/I in Appendix 5, 9A.08, 9A.09(12), 13.51(2)
              Released on 28/11/2008 (Updated on 13/3/2009)

              Question:

              What are the procedures for migration to the Main Board of GEM-listed warrants, options or convertible instruments?

              Answer:

              Where GEM-listed equity securities are migrated to the Main Board, any GEM-listed warrants, options or convertible instruments will normally be transferred simultaneously to the Main Board. The Exchange will apply the spirit of Main Board Listing Rules 15.05 and 16.02 under which, barring exceptional circumstances, these instruments can be listed on the Main Board only if the underlying securities are listed there or on another recognized market. Where this will cause practical problems, the Exchange may exercise its discretion to allow the warrants or convertible instrument to remain listed on GEM until expiry.

              FAQ Series 5, FAQ No. 28
              LR reference: Main Board Rules 9A.1011
              Released on 2/5/2008

              Question:

              If there is an issue of new shares at the time of or shortly before the transfer of listing, will there be any parallel trading arrangements (i.e. with existing shares traded on GEM and newly issued shares traded on the Main Board)?

              Answer:

              The company should seek guidance from the Listing Division in such circumstances. In general, where listed either on GEM or the Main Board, its securities will not be traded on both platforms at the same time. There should be a clear-cut date for cessation of trading on GEM and commencement of trading on the Main Board and there will not be parallel trading on both boards.

              Separately, issuers should note that the Exchange has issued a press release dated 22 April 2008 that parallel trading will be abolished from 2 November 2008.

              FAQ Series 5, FAQ No. 29
              LR reference: Main Board Rule 9A.11
              Released on 2/5/2008

              Question:

              If shareholders' approvals have been obtained for continuing connected transactions within a certain period, and the transfer from GEM to Main Board occur during the period, would shareholders' approval be needed again for the Main Board?

              Answer:

              The GEM issuer should seek guidance from the Listing Division in such circumstances. In generally, where there has not been any change of facts or circumstances since the original shareholders' approval was granted, there is no need to refresh or obtain again the same shareholders' approval at a meeting merely because of the transfer to the Main Board. The effect of the shareholders' approval shall continue for the purpose of continuing obligations until its original expiry date since grant.

              FAQ Series 5, FAQ No. 30
              LR reference: Main Board Rule 9A.12(2)
              Released on 2/5/2008

              Question:

              Does the new streamlined transfer process replace the previous de-listing/re-listing regime?

              Answer:

              Although the de-listing/re-listing regime will not be formally abolished, the Exchange will encourage issuers to use the new streamlined regime. As there will be substantial savings in time and cost, instances of using the previous mode of transfer are expected to be rare.

              FAQ Series 5, FAQ No. 14
              LR reference: Main Board Rules Chapter 9A general / GEM Rule 9.24
              Released on 2/5/2008

              Question:

              Can a new Main Board stock code be chosen/ bought?

              Answer:

              Yes, the Exchange will apply the same principles as in a standard IPO process, with special and normal pool numbers.

              FAQ Series 5, FAQ No. 15
              LR reference: Main Board Rules Chapter 9A general / GEM Rule 9.24
              Released on 2/5/2008

              Question:

              Will there be a listing ceremony for transferring to the Main Board from GEM?

              Answer:

              A listing ceremony can be arranged on the issuer's request as cases of a new Main Board IPO.

              FAQ Series 5, FAQ No. 34
              LR reference: Main Board Chapter 9A / GEM Rules N/A
              Released on 2/5/2008

            • Chapter 10

              View Current PDF

              Question:

              Will there be any change in what is meant in the Rules by "fully paid" and "partly paid" shares for Hong Kong-incorporated issuers after the New Companies Ordinance becomes effective?

              Answer:

              When the New Companies Ordinance becomes effective, "fully paid" will mean that the shareholder to whom shares are issued has paid the full consideration which was agreed to be paid for those shares, i.e., the issue price (and not that the shareholder has paid the full nominal value of those shares, as is the case under the existing Companies Ordinance). "Partly paid" will mean that the full issue price has not been paid.

              FAQ Series 26, FAQ No. 7
              LR reference: Main Board Rules 7.28, 8.11, 8.13, 10.06 (1)(a)(i); App 1A (paras 15(2)(d), 23(1) and 26); App 1B (paras 22(1) and 24); App 1C (para 34); App 1E (paras 23(1), 26 and 49(2)(d)); App 1F (paras 18(1) and 20); App 2A (para 4(3)); App 3 (para 1(2)); App 5 Forms / GEM Rules 10.45, 11.25, 11.27, 13.07(1); App 1A (paras 23(1) and 26); App 1B (paras 22(1) and 24); App 1C (para 34); App 2A (para 4(3)); App 3 (para 1(2)); App 5 Forms
              Released on 21/2/2014

              Question:

              A listed issuer will send an Explanatory Statement to its shareholders for seeking their approval of a general mandate for share repurchases at the forthcoming annual general meeting.

              Main Board Rule 10.06(1)(b) / Note 2 to GEM Rule 13.08 requires the listed issuer to confirm, among other things, that neither the Explanatory Statement issued under the Rule or the proposed share repurchase has any "unusual features". What does the term "unusual features" mean?

              Answer:

              Main Board Rules 10.05 and 10.06 / GEM Rules 13.03 to 13.14 set out the restrictions and notification requirements on share repurchases by listed issuers, including the specific disclosure requirements for an Explanatory Statement. The listed issuer's directors should determine whether the Explanatory Statement or the proposed share repurchase has unusual features having regard to the specific requirements under the Rules, the listed issuer's own circumstances, and features of share repurchase proposals which by virtue of their very frequent occurrence can be regarded as common or usual features of such proposals. The listed issuer should consult the Exchange in advance if it is in any doubt as to whether or not any matters are unusual.

              FAQ Series 8, FAQ No. 17 Issue 7
              LR reference: Main Board Rules 10.06(1)(b) / GEM Rules 13.08 Note 2
              Released on 28/11/2008

              Question:

              Will there be restrictions on disposal or issuance of shares during the transfer process?

              Answer:

              The Exchange has not imposed any general prohibition on these activities except where these would lead to market disruption or unfairness.

              Issuers should note that the moratoria on disposal of existing shares (10.07(1)(a)-(b) and issue of new shares (10.08) will be disapplied under Rule 10.07(4) and 10.08(5).

              FAQ Series 5, FAQ No. 31
              LR reference: Main Board Rules 10.07, 10.08
              Released on 2/5/2008

              Question:

              If the controlling shareholder of a newly listed issuer pledges his shares in the issuer as security for a bank loan in the manner described in Note 2 to the Rule, can the bank dispose of the pledged shares during the first 6 months after listing of the issuer?

              Answer:

              Yes. Under Note 3 to Rule 10.07, the controlling shareholder must undertake to the issuer and the Exchange that he would notify the issuer immediately upon receipt of any indications from the bank about disposal of the pledged shares. The issuer must publish an announcement to disclose the matter as soon as possible after it has been notified by the controlling shareholder.

              FAQ Series 20, FAQ No. 28
              LR reference: Main Board Rules 10.07(1), Notes 2 and 3 to 10.07 / GEM Rules 13.16A, 13.18, 13.19
              Released on 28/2/2013

              Question:

              Please elaborate on the moratorium on new share issues by a listing transfer applicant.

              Answer:

              A GEM-listed company is restricted under GEM Listing Rule 17.29 from issuing new securities within 6 months of listing. As there is a one full financial year waiting period before a GEM company can apply for transfer, this 6-month moratorium will invariably have expired by the time it qualifies for a Main Board listing. After being successfully transferred, Rule 10.08(5) disapplies the equivalent moratorium. This means that after transferring to the Main Board, the company is free to issue new securities immediately.

              FAQ Series 5, FAQ No. 32
              LR reference: Main Board Rules 10.08(5) / GEM Rules 17.29
              Released on 2/5/2008

            • Chapter 11

              View Current PDF

              Question:

              What are the disclosure requirements under Section 436 of the New Ordinance for a Hong Kong incorporated issuer publishing its:

              (a) annual / interim results announcement;
              (b) interim report, quarterly results announcement / financial report, circulars or listing documents?

              Answer:

              (a) Section 436(3) of the New Ordinance requires the issuer to include a statement indicating that the statement of comprehensive income for a full financial year and/or the statement of financial position at a financial year end (the "Statements") presented in the account are not statutory financial statements under the New Ordinance. The issuer must also disclose whether (i) an auditor's report had been prepared; and (ii) the auditors gave a qualified or modified audit opinion on the Statements.
              (b) The issuer must also comply with the above disclosure requirements if the financial reports, circulars or listing documents contain the Statements.

              For details, please refer to Accounting Bulletin 6 "Guidance on the Requirements of Section 436 of the Hong Kong Companies Ordinance Cap.622" issued by Hong Kong Institute of Certified Public Accountants at: http://app1.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeII/ab6.pdf

              FAQ Series 31, FAQ No. 13
              LR reference: Main Board Rules 13.48, 13.49(1), 13.49(6), 14.66 to 14.69, 11.03 & 11.04, 11.16 to 11.19, 14.61 & 14.62, 4.25 to 4.29 / GEM Rules 18.49, 18.53, 18.66, 18.78, 18.79, 19.66 to 19.69, 14.03 & 14.06, 14.29 to 14.31, 19.61 & 19.62, 7.27 to 7.31
              Released on 11/9/2015

              Question:

              Will the Exchange return a listing application if the listing document does not comply with the Guidance Letter HKEX-GL86-16?

              Answer:

              The Guidance Letter HKEX-GL86-16 contains:

              (a) general guidance on producing clear and concise listing documents (General Guidance);
              (b) consolidated and updated version of a number of the Exchange's guidance letters on disclosure in listing documents, mostly included under the title "Simplification Series" (Consolidated Guidance); and
              (c) online hyperlinks to: (i) sample "Summary of the Constitution of the Company and the Companies Law" sections of listing documents of applicants incorporated in Bermuda, the Cayman Islands and the PRC (Specimen Sections); and (ii) the corresponding sample constitutional documents for the applicants (Sample Constitutional Documents).

              The Exchange will not return a listing application merely because it does not follow the General Guidance, the Specimen Sections or the Sample Constitutional Documents, but will remind applicants to do so.

              Applicants which submit their listing applications after 30 April 2016 should comply with the Consolidated Guidance.

              FAQ 001-2016
              LR reference: Main Board Rules 2.13, 11.07 / GEM Rules 14.08(7), 17.56
              Released on 2/2/2016 (Updated on 13/5/2016)

              Question:

              What are the changes in the Consolidated Guidance compared to the guidance letters on disclosure in listing documents, mostly included under the title "Simplification Series"?

              Answer:

              The changes in the Consolidated Guidance are limited to:

              (a) modifying or deleting certain overly specific content guidance which is only relevant in a limited number of cases. For example, the specific content guidance for product returns and warranty, and industry standards (e.g. International Organization for Standardization (ISO)), which does not apply to all listing applicants, and has been modified and deleted, respectively. This helps to ensure that the guidance remains high level and principles-based;
              (b) removing any repetition after consolidating the various guidance letters on disclosure in listing documents, mostly included under the title "Simplification Series"; and
              (c) updating the guidance based on the Exchange's most recent experience. For example, in respect of listing applicants in the banking and securities sectors, we have updated the content guidance so that the following financial information/ ratios are to be disclosed in the Summary section of a listing document:
              •   in respect of the banking sector, net interest spread, net interest margin, capital adequacy ratio, non-performing loan ratio and loan to deposit ratio; and
              •   in respect of the securities sector, the amount of securities underwritten, average commission rate, trading volumes, average rate of return, asset under management and balances of margin financing and securities lending.

              For marked-up version of the guidance letters included in the Consolidated Guidance, see:

              http://www.hkex.com.hk/eng/rulesreg/listrules/listsptop/guidepsld/psld_index.htm

              FAQ 002-2016
              LR reference: Main Board Rules 2.13, 11.07 / GEM Rules 14.08(7), 17.56
              Released on 2/2/2016 (Updated on 26/2/2016)

              Question:

              Will the guidance letters on disclosure in listing documents, mostly included under the title "Simplification Series", not to be used and be withdrawn after the publication of Guidance Letter HKEX-GL86-16 on 2 February 2016?

              Answer:

              The following guidance letters on disclosure in listing documents, mostly included under the title "Simplification Series", have been withdrawn:

              A. HKEX-GL27-12 on "Summary and Highlights" section
              B. HKEX-GL54-13 on "Risk Factors" section
              C. HKEX-GL48-13 on "Industry Overview" section
              D. HKEX-GL49-13 on "History and Development" section
              E. HKEX-GL-50-13 on "Business" section
              F. HKEX-GL59-13 on "Financial Information" or "Management discussion and analysis on the historical financial information (MD&A)" section
              G. HKEX-GL72-14 on "Applicable laws and Regulations" section
              H. HKEX-GL62-13 on "Directors, Supervisors and Senior Management" section
              I. HKEX-GL33-12 on "Use of Proceeds" section
              J. HKEX-GL64-13 on Application Forms and "How to Apply for Hong Kong Offer Shares" section

              Applicants which submit their listing applications after 30 April 2016 should comply with the Consolidated Guidance.

              FAQ 003-2016
              LR reference: Main Board Rules 2.13, 11.07 / GEM Rules 14.08(7), 17.56
              Released on 2/2/2016 (Updated on 13/5/2016)

              Question:

              Is it necessary to revise the printed application forms for shares/ debentures/authorised CISs upon issue of an addendum or replacement e-prospectus?

              Answer:

              If there is a change to the prospectus warranting the issue of an addendum or replacing e-prospectus, it is a question of law whether the original printed application forms for the relevant securities accompanying the original prospectus would continue to be valid.

              In this connection, Offerors are advised to seek to professional advice as to:

              (a) the need to revise the original application forms and/or;
              (b) how to deal with completed application forms submitted to the Offerors under the terms of the prospectus. This may include considerations of extending the offer period and/or granting a right of withdraw to applicants who have submitted in applications based on the information in the original prospectus; and
              (c) the need for putting in place appropriate arrangements to ensure that the issue and marketing of securities is conducted in a fair and orderly manner.

              FAQ Series 13, FAQ No. 24
              LR reference: Main Board Rules 11.13 / GEM Rules 14.24
              Released on 26/11/2010

              Question:

              Will valuations of Natural Resource assets (i.e. Reserves) based on discounted cash flows (DCF) be regarded as profit forecasts under Rule 14.61?

              Answer:

              Where a new applicant Mineral Company or listed issuer provides a valuation of Natural Resource assets (i.e. Reserves) based on DCF, the Exchange will not regard the DCF as a profit forecast requiring review by an independent accountant. However, issuers must disclose all relevant assumptions and the reason why a particular valuation method is chosen.

              FAQ Series 12, FAQ No. 21
              LR reference: Main Board Rules 14.61, 11.17, 18.34, Appendix 1A(34)(2), Appendix 1B(29)(2) / GEM Rules 19.61, 14.29, 18A.34
              Released on 26/5/2010

              Question:

              Under Guidance Letters HKEx-GL27-12 and HKEx-GL41-12, a new applicant is required to disclose in its listing document:

              •  an update on its operations and financial position since the latest audited financial period/ year, including but not limited to qualitative or quantitative information with commentary on its latest financial performance and profitability, and significant non-recurrent items in income statements; and
              •  qualitative or quantitative disclosure with commentary on how the adverse changes affect the financial, operational and/ or trading position after the track record period.

              Whether a new applicant, as part of the disclosure required under Guidance Letters HKEx-GL27-12 and HKEx-GL41-12, can disclose its unaudited net profits/ losses before or after tax after the track record period in its listing document?

              Answer:

              To provide investors with more updated information, the Exchange normally expects a qualitative or quantitative disclosure with commentary on the new applicant's updated financial information after the track record period be disclosed in the listing document. This is especially when the new applicant shows a deteriorating trend in its revenue or profit. In this regard, the Exchange has previously accepted qualitative or quantitative disclosure with commentary on financial information/ operating data such as revenue, gross profit/ loss, gross profit/ loss margin, average selling price and sale volume. However, disclosure of such information will also depend on the facts and circumstances of each case and new applicants are advised to early consult the Exchange.

              Where a new applicant discloses its unaudited net profit/ loss figure or financial figures which can explicitly or implicitly result in an investor ascertaining the applicant's estimated level of profits/ losses since the latest audited period end (e.g. disclosure of both revenue figure and net profit margin percentage), this will constitute a profit forecast/ estimate under the Listing Rules and should be subject to relevant rule requirements:

              •  Main Board Rule 11.17/GEM Rule 14.29 — The profit forecast/ estimate should be reviewed and reported on by the reporting accountants and the sponsor, and their reports must be set out in the listing documents.
              •  Main Board Rule 11.18/GEM Rule 14.30 — Any profit forecast/ estimate appearing in a listing document should cover a period which (i) is coterminous with the new applicant's financial year end; or (ii) ends at a half year-end (or a quarter year-end in the case of a GEM applicant). In the latter case, the new applicant must undertake that the interim report (or quarterly report as the case may be) for that period will be audited.

              If a new applicant discloses its unaudited net profits/ losses before or after tax after the track record period covering a period other than a six or 12-month period (or quarter period in the case of GEM applicant) set out in Main Board Rule 11.18/GEM Rule 14.30, e.g. for a four-month period, it must apply for a waiver from the Exchange.

              The Exchange will consider the waiver application and may, based on the applicant's facts and circumstances, impose conditions including but not limited to the following:

              (i) the applicant must have the profit forecast/ estimate reviewed and reported on by (a) the reporting accountants under Hong Kong Standard on Investment Circular Reporting Engagements 500 "Reporting on Profit Forecasts, Statements of Sufficiency of Working Capital and Statements of Indebtedness"; and (b) the sponsor, which is in line with the requirements under Main Board Rule 11.17/ GEM Rule 14.29 (Updated in October 2014);
              (ii) the applicant must publish an audited report on the relevant financial period of the profit forecast/ estimate as disclosed in the listing document after the applicant's listing; and
              (iii) the applicant must disclose details of the waiver application in its listing document.

              If the new applicant's unaudited financial information after the track record period is already published in a jurisdiction outside Hong Kong, the applicant can refer to Listing Decisions HKEx-LD54-4 (where the applicant itself is listed on another exchange) or HKEx-LD54-5 (where the applicant's subsidiary is listed on another exchange) for detailed guidance. These Listing Decisions require, amongst others, that the published unaudited interim financial information be included in the listing document of the new applicant together with a review report by an independent auditor in accordance with International/Hong Kong Standards on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" or International/Hong Kong Standard on Review Engagements 2400 "Engagements to Review Financial Statements".

              If you have any questions on the above, please early consult the Listing Division.

              FAQ Series 23, FAQ No. 1
              LR reference: Main Board Rules 11.17, 11.18 / GEM Rules 14.29 14.30 / Listing Decision HKEx-LD50-1, HKEx-LD54-4, HKEx-LD54-5 / Guidance Letter HKEx-GL1-06, HKEx-GL27-12, HKEx-GL41-12
              Released on 21/6/2013 (Updated on 17/10/2014)

            • Chapter 12

              View Current PDF

              Question:

              Where there are revisions to an Application Proof, is an applicant required to publish the subsequent proofs of listing documents on the Exchange's website?

              Answer:

              An applicant is only required to publish its Application Proof, which is the draft listing document submitted with a listing application form, on the Exchange's website. Unless the listing application lapses, no other proofs are required to be published on the Exchange's website except for the applicant's PHIP or the final document. (see also Question 4 of Series 24 regarding the transitional arrangements)

              FAQ Series 24, FAQ No. 1
              LR reference: Main Board Rules 12.01A / GEM Rules 16.01A
              Released on 26/7/2013

              Question:

              Will IPO allotment results continue to be published in newspapers?

              Answer:

              Main Board Listing Rule 12.08 (GEM Listing Rule 16.13) requires issuers to publish "an announcement of the results of the offer" and "the basis of allotment of the securities". This information should be published on the HKEx website via the e-Submission System. There is no longer a requirement in the Main Board or GEM Listing Rules to publish the information required by Listing Rule 12.08 (GEM Listing Rule 16.13) in full as a paid advertisement in newspapers except where the issuer does not maintain its own website.

              The information described by Listing Rule 12.08 (GEM Listing Rule 16.13) does not extend to publication of a full list of the allotment of securities to each and every applicant ("full IPO allotment results"). As a matter of market practice, to help ensure that the commencement of trading will take place in an orderly fashion, some issuers choose to publish a full list of successful applicants in newspapers. Other applicants choose to make use of internet or telephone based systems to provide an avenue for communication of the outcome of applications.

              Implementation of Electronic Disclosure will not change the options available to applicants and we expect some applicants will opt for publication of a full IPO allotment result announcement in the newspapers.

              FAQ Series 3, FAQ No. 65
              LR reference: Main Board Rules 12.08 / GEM Rules 16.13
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              What is a Mixed Media Offer or MMO?

              Answer:

              Mixed Media Offer or MMO is an offer process where an issuer or a collective investment scheme (CIS) issuer distributes paper application forms for public offers of certain securities* so long as the prospectus is available on the HKEx website or the issuer/CIS issuer's websites.

              The Class Exemption Notice (attached as Appendix B to the Conclusion Paper, and Appendix 1 to the Guidance Letter HKEx-GL81-15) sets out the conditions an offeror must comply with in a Mixed Media Offer. The SFC will impose similar conditions on CIS issuers who intend to conduct a Mixed Media Offer with regards to interests in SFC-authorised CISs that are / or will be listed on the Exchange.

              *"Securities" refer to shares of or debentures in a company and SFC-authorised CISs.

              FAQ Series 13, FAQ No. 1
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010 (Updated in July 2015)

              Question:

              Who may conduct an MMO?

              Answer:

              Any offeror intending to conduct a public offer of:

              (a) shares of a company (including an investment company under Chapter 21 of the Main Board Rules) listed or to be listed on the Exchange;
              (b) debentures of a company listed or to be listed on the Exchange, and
              (c) interests in CISs listed or to be listed on the Exchange and authorised by the SFC under section 104 of the Securities and Futures Ordinance (SFO).

              FAQ Series 13, FAQ No. 2
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010

              Question:

              What existing practice does the MMO aim to change?

              Answer:

              The market has developed a practice of printing large quantities of printed prospectuses copies for distribution at points where printed application forms are distributed, even though e-prospectuses are available online. Many of these copies are not taken up and end up as trash.

              Under an MMO option, an offeror who complies with the conditions of the Class Exemption Notice (see FAQ No. 16 to 20 of FAQ series 13), or obtains a waiver from the SFC, may distribute printed application forms even though each application form is not accompanied by a printed prospectus.

              FAQ Series 13, FAQ No. 3
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010

              Question:

              How to ensure investors who have no access to the internet can access the prospectus before they apply for subscription under an MMO?

              Answer:

              Question 7 of FAQ series 13 sets out where investors can get a copy of the printed prospectus.

              Investors will continue to obtain a free copy of the printed prospectus from specified locations (e.g. at designated branches of receiving banks or the principal place of business of the sponsors) upon request. Also, at least three copies of the printed prospectus will be available for inspection at every location where the paper application forms are distributed.

              FAQ Series 13, FAQ No. 4
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010 (Updated in July 2015)

              Question:

              What is the difference between MMO and ePO?

              Answer:

              Both the MMO and ePO Guidelines aim to facilitate wider use and acceptance of electronic listing documents. The MMO proposal aims to facilitate distribution of electronic listing documents whilst applications continue to be accepted in paper form. The ePO Guidelines published by the SFC in April 2003 aim to facilitate electronic submission of applications during a public offer but do not deal with whether the prospectus is otherwise required to be distributed in printed or electronic form.

              Under the ePO Guidelines, the internet (or other electronic means) is used to display or provide access to prospectuses, application forms and/or to collect applications or application instructions from the public (applicants) during an initial public offering or a follow-on public offering.

              The MMO involves allowing a printed application form for the relevant securities to be issued without being accompanied by printed prospectus if certain conditions are met.

              MMO and ePO complement each other and are not mutually exclusive.

              FAQ Series 13, FAQ No. 5
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010

              Question:

              (a) How and when an investor may request a printed prospectus?
              (b) How quickly will a printed prospectus be made available to an investor upon request?
              (c) What is the quality of such printed prospectus?

              Answer:

              (a) Any member of the public may, during the offer period during normal business hours, obtain a printed prospectus, free of charge, at any location specified in the announcements notifying the public of the adoption of an MMO.
              (b) A printed prospectus must be made available to a member of the public upon request within four business hours.
              (c) The printed prospectus that is provided may be a stapled copy from a photocopy machine which is in black and white, grey-scale or colour. Where it is a black and white or grey-scale prospectus, the sponsor must be satisfied that it provides equivalent information to investors as a colour prospectus.

              FAQ Series 13, FAQ No. 6
              LR reference: Main Board Rule 12.11A / GEM Rule 16.04D
              Released on 26/11/2010 (Updated in July 2015)

              Question:

              Can investors still get a copy of printed prospectus?

              Answer:

              Yes, investors can collect a copy of printed prospectus free of charge upon request. Copies will be available at:

              (a) the depository counter of Hong Kong Securities Clearing Company Limited;
              (b) the offices of the company's Hong Kong share registrar, sponsor or co-ordinator offices; and
              (c) certain designated branches of the receiving or placing banks. Further, at least three printed prospectuses will be available "for inspection" at every location where printed application forms are available.

              These locations will be stated in the prospectus and announcements to inform the market of the proposed Mixed Media Offer as well as the application forms.

              We expect issuers and their sponsors/listing agents to assess the possible demand for printed prospectuses, including locations at which they are most frequently and likely to be collected. Companies should put in place appropriate procedures to enable them to gauge demand, for instance, a pre-order or booking system where investors can register their request for a copy of the printed prospectus.

              Consistent with existing practice, it is the responsibility of the companies' sponsors to comply with the Exchange Listing Rules and the CFA Code of Conduct by ensuring that there are sufficient copies of prospectuses available to the public to satisfy public demand.

              FAQ Series 13, FAQ No. 7
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010 (Updated in July 2015)

              Question:

              Where can the investors find out about the website addresses where they can get access to a copy of electronic prospectus?

              Answer:

              The application form and the issuer's announcement (made during the five-business day period before the start of the offer period) will set out details of where investors can access the electronic prospectus on the HKEx website and another website (usually its own website).

              FAQ Series 13, FAQ No. 8
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010 (Updated in July 2015)

              Question:

              Can investors rely on information on the company's (issuer's) website when deciding whether to invest in the company's shares?

              Answer:

              No, investors should ensure they only rely on information contained in the prospectus.

              The issuer's website may contain information outside prospectus. However, we would expect companies to clearly delineate between prospectus information and non-prospectus information. Web pages containing the electronic prospectus must not contain any promotional information about the issuer and the offer.

              FAQ Series 13, FAQ No. 9
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010

              Question:

              Is the printed prospectus identical to the electronic prospectus?

              Answer:

              Yes, the electronic prospectus must be identical to the printed prospectus other than colour (see Question 6(c) of FAQ Series 13 on production of black and white, grey-scale or colour copies). It should not be password protected and should be reasonably tamper-resistant.

              FAQ Series 13, FAQ No. 10
              LR reference: Main Board Rule 12.11A / GEM Rule 16.04D
              Released on 26/11/2010 (Updated in July 2015)

              Question:

              Why does the MMO not provide for a mechanism by which a request for obtaining printed prospectuses should be made?

              Answer:

              It is the offeror's responsibility, after taking appropriate advice from its sponsor/listing agent to assess the possible demand for printed prospectuses, including locations at which they are most frequently and likely to be collected.

              It is up to the offerors and their sponsors how or what procedures/mechanism they wish to implement to best determine the likely demand for their printed prospectuses.

              Please see responses to Question 7 of FAQ series 13.

              We do not consider it appropriate for the regulators to impose any requirements on how an investor must make a request for a printed prospectus, say by setting requirements for the time and mode for making such request, will only increase the barrier for obtaining a printed prospectus. This may not work to the benefit of prospective investors.

              Accordingly, the MMO envisages that an investor who wishes to get a printed prospectus is only required to go to the specified locations, e.g. designated branches of receiving banks, for a printed prospectus.

              FAQ Series 13, FAQ No. 11
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010

              Question:

              If the electronic prospectus is not available on the issuer's website but is still available on HKEx's website, must the MMO be suspended?

              Answer:

              The offeror need not suspend the Mixed Media Offer if the electronic prospectus is only available on the HKEx website but not the issuer's website. It need only suspend the Mixed Media Offer if the prospectus is not available on both the HKEx website and the issuer's website for 4 consecutive hours or more.

              If during the offer period, the electronic prospectus is not available on the issuer's website, the offeror need not suspend the Mixed Media Offer if,

              (a) the electronic prospectus is available on the HKEx website between 6:00 am to 12:00 midnight from Monday to Friday, except public holidays; and
              (b) if the prospectus is also not available on the HKEx website, the period of the electronic prospectus being unavailable on both the websites is less than 4 hours.

              In the event the electronic prospectus is not available on both the HKEx and the company's websites for 4 consecutive hours or more between the hours of 6 am to 12 midnight Mondays to Fridays (except public holidays), the offeror can continue the offer process provided that it can comply with the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (CO) requirement that when an offeror issues a printed application form, it must issue the application form with a printed prospectus.

              FAQ Series 13, FAQ No. 13
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010 (Updated in July 2015)

              Question:

              How should the offeror deal with the suspension of Mixed Media Offer during the offer period?

              Answer:

              When an offeror need to suspend a Mixed Media Offer during the offer period, it must publish a suspension announcement on the HKEx website as soon as possible. The offeror is encouraged to consult the SEHK and/or the SFC as soon as possible on how best to conduct the remaining offer process. The offer can only carry on if it can comply with the CO requirement that when an offeror issue a printed application form, it must issue the application form with a printed prospectus.

              FAQ Series 13, FAQ No. 14
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010 (Updated in July 2015)

              Question:

              Where are the conditions set out in the Class Exemption Notice?

              Answer:

              The class exemption is effected by Section 9A of the Companies (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Cap.32L) (Class Exemption Notice) which came into effect on 1 February 2011. A copy of the Class Exemption Notice is set out in Appendix B to the Conclusions Paper and Appendix 1 to Guidance Letter HKEx-GL81-15.

              FAQ Series 13, FAQ No. 16
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010 (Updated in July 2015)

              Question:

              Does an offeror need to apply to the SFC or the Exchange to conduct an MMO?

              Answer:

              No, but a CO offeror must comply with the conditions in the Class Exemption Notice.

              A CIS offeror may inform the SFC of its intent to conduct an MMO and conduct the MMO by complying with similar conditions imposed by the SFC in its letter of authorisation.

              FAQ Series 13, FAQ No. 17
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010

              Question:

              Can the issuer's website contain information other than prospectus information?

              Answer:

              An issuer's website may contain information other than prospectus information, including promotional information about the issuer or the public offer. The issuer's website should clearly delineate in its website what information on its website is contained in the prospectus and what is not.

              Please refer to the responses to Question 9 of FAQ series 13.

              FAQ Series 13, FAQ No. 18
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010

              Question:

              How is the notice requirement satisfied when the e-prospectus is accessed from the company's (issuer's) website?

              Answer:

              The notice should be given just before access to the prospectus is granted. For instance, a plain clear "pop up" notice on a separate webpage of the issuer's website stating that the relevant securities are offered solely on the information in the e-prospectus accessible by a click on the webpage satisfies this requirement.

              There are other ways to display the notice. In case of doubt, early consultation with the SFC or the Exchange is recommended.

              FAQ Series 13, FAQ No. 19
              LR reference: Main Board Rules 12.11A / GEM Rules 16.04D
              Released on 26/11/2010

              Question:

              How many printed prospectus copies must be made available to the public to satisfy the public demand requirement?

              Answer:

              The SFC and the Exchange do not set any the minimum number of copies of printed prospectus that must be made available to satisfy public demand.

              The CO and CIS offerors and their sponsors or listing agent should make a best estimate of the demand for printed form prospectus based on the facts and circumstances of the case.

              As a best practice recommendation, issuers and sponsors can consider stating in the notification announcement (made during the five-business day period before the start of the offer period) of an MMO details about how a member of the public may pre-register with the sponsor to obtain a printed prospectus during the offer period (e.g. by way of a hotline service) and where a copy may be obtained.

              FAQ Series 13, FAQ No. 20
              LR reference: Main Board Rule 12.11A / GEM Rule 16.04D
              Released on 26/11/2010 (Updated in July 2015)

              Question:

              Must announcements relating to the implementation and/or suspension of an MMO be vetted by the Exchange?

              Answer:

              No.

              FAQ Series 13, FAQ No. 22
              LR reference: Main Board Rules 12.11A(1), 25.19B(1) / GEM Rules 16.04D, 29.21B
              Released on 26/11/2010

            • Chapter 13

              View Current PDF

              Question:

              Included in the Headline Categories are:

              •   Clarification of News or Reports — Standard or Super,
              •   Clarification of News or Reports — Qualified
              •   Unusual Price/Turnover Movements — Standard or Super
              •   Unusual Price/Turnover Movements — Qualified

              What does "standard", "super" and "qualified" mean?

              Answer:

              1. "Standard" announcements are:
              (a) announcements made at the request of the HKEx under Listing Rules MB 13.10(2) / GEM 17.11(2) in response to unusual movements in price or trading volume or the possible development of a false market in its securities, and in the announcement the issuer only provides negative confirmations required under Listing Rules MB 13.10(2) / GEM 17.11(2). The wording of these announcements should follow Note 1 to Listing Rules MB 13.10(2) / GEM 17.11(2); and
              (b) announcements made in response to media news and reports, announcements made to deny media news or reports, i.e. straight denial.

              For example, an issuer issues a denial in response to news articles simply stating that the rumour is untrue and has no substance. There would be no other information in the announcement.
              2. "Super" announcements are announcements which are similar to the standard announcements except for modifications made:
              (a) announcements made at the request of the HKEx under Listing Rules MB 13.10 / GEM 17.11 in response to unusual movements in price or trading volume or the possible development of a false market in its securities, and in the announcement the issuer only refers to its previously published information; and
              (b) announcements made in response to media news and reports, where the issuer clarifies that only its previously published information should be relied on.

              For example, an issuer issues a denial in response to certain news articles on a transaction or material business development. The issuer denies the content of the articles and states that there is no material development and refers to previously published information such as a circular or announcement of the issuer.
              3. "Qualified" announcements are:
              (a) announcements made at the request of the HKEx under Listing Rules MB 13.10(1) / GEM 17.11(1) in response to unusual movements in price or trading volume, disclosing information under the issuer's general disclosure obligation to which such movements are or may be attributable. These announcements may also, in certain circumstances, be issued pursuant to both Listing Rules MB 13.10(1) / GEM 17.11(1) and Listing Rules MB 13.09 / GEM 17.10 where they contain information necessary to avoid a false market or inside information which needs to be disclosed under the Inside Information Provisions; and
              (b) announcements made in response to media news and reports, where the information underlying the media news or report is inside information, indicating that the media news or reports is largely accurate and requiring disclosure under Listing Rules MB 13.09 / GEM 17.10.

              FAQ Series 3, FAQ No. 31
              LR reference: Main Board Rules 13.09, 13.10 / GEM Rules 17.10, 17.11
              Released on 22/3/2007 (Updated on 2/1/2013)

              Question:

              What are the procedures issuers should follow prior to the morning pre-opening trading session or the afternoon trading session in reviewing the publication status of its announcement and considering whether notifying the HKEx that a trading suspension may be required?

              Answer:

              The assessment of whether a trading halt or suspension will be required is based on the trading halt or suspension policy having regard to the two factors: nature of announcement and publication of the announcement on the HKEx website.

              Trading halt or suspension arising from publication failures will be required where the subject matter of the announcement is information necessary to avoid a false market in the issuer's securities or is inside information which needs to be disclosed under the Inside Information Provisions (Listing Rules MB 13.09 / GEM 17.10) or relates to a notifiable transaction and a trading halt or suspension is required under Listing Rules MB 14.37 / GEM 19.37. For pre-vetted announcements, this determination will be agreed with the Listing Division of the HKEx before clearance of the announcement. For post-vetted announcement, the issuer will make the assessment. In either case this assessment should be also generally reflected in the headline categories selected by the issuers.

              An issuer should take reasonable steps to gain comfort that publication of its announcement on the HKEx website has been successful. Such steps may include noting receipt of e-mail confirmation from HKEx and checking the HKEx website directly.

              Where, for whatever reason the publication of the announcement on the HKEx website is delayed (by reference to the trading halt or suspension policy above), the issuer should contact the Listing Division of the HKEx immediately and where appropriate, request a trading halt or suspension.

              FAQ Series 3, FAQ No. 144
              LR reference: Main Board Rules 13.09, 13.10A, 14.37 / GEM Rules 17.10, 17.11A, 19.37
              Released on 22/3/2007 (Updated on 2/1/2013)

              Question:

              What is the trading halt/ suspension policy applicable to Main Board and GEM issuers in respect of publication of announcements containing inside information and/or notifiable transactions?

              Answer:

              Trading in the securities of an issuer may be halted or suspended due to publication failure (i.e. to publish an announcement on HKEx websites) where the subject matter of the announcement is information discloseable under Listing Rules MB 13.09/ GEM 17.10 or relates to a notifiable transaction and trading halt or suspension is required under Listing Rules MB 14.37/ GEM 19.37. This is consistent with the principle set out in Chapter 6 of Main Board Rules/ Chapter 9 of GEM Rules on trading halts and suspensions, i.e. that halt or suspension is only required where the HKEx considers it necessary for the protection of the investor or the maintenance of an orderly market.

              Where an obligation to issue an announcement containing inside information has arisen for an issuer, it should publish the announcement during the next available publication window. For example, where the issuer has signed an agreement in relation to a notifiable transaction that is inside information after trading hours on a normal business day, and an announcement is published on the HKEx website by 8.30 a.m. of the next business day (i.e. either during the publication windows from 4.30 p.m. to 11.00 p.m. of that business day, or between 6.00 a.m. to 8.30 a.m. of the next business day), no trading halt or suspension would be necessary. Similarly, where an agreement is signed after the morning trading session and an announcement is published on the HKEx website between 12.00 noon to 12.30 p.m. of the same business day, no trading halt or suspension is necessary. In both circumstances where an announcement cannot be published before the next trading session, a halt or suspension in the trading of the issuer's securities would be required until commencement of the trading session (morning or afternoon) after the publication of the announcement. For example, where the announcement is published during the 12.00 noon to 12.30 p.m. publication window of the next business day, the issuer may apply for resumption of trading in its securities at 1.00 p.m.

              Where an issuer's obligation to publish an announcement relating to inside information is triggered during trading hours (for example, where confidentiality cannot be maintained and an obligation to publish an announcement on inside information arises under Listing Rule MB 13.09/ GEM 17.10 or in the circumstances described in Listing Rules MB 14.37 / GEM 19.37), the issuer should request a halt or suspension in trading of its securities, and publish an announcement as soon as possible during the next publication window. Resumption in trading of the issuer's securities may take place during the commencement of the next trading session after the publication of the announcement.

              A resumption announcement should clearly set out that an application will be made for resumption in the trading of securities and the expected time of resumption (i.e. at the commencement of the next trading session after the publication of the announcement).

              Issuers are reminded of their obligations to submit an announcement for clearance by the Exchange before publication where the subject matter of the announcement requires pre-vetting under the Listing Rules. Please refer to the Guide on Pre-vetting requirements and Selection of Headline Categories for Announcements at http://www.hkex.com.hk/eng/rulesreg/listrules/guidref/guide_pre_vetting_req.htm which sets out categories of announcements requiring pre-vetting.

              Issuers are also reminded that they should manage their affairs, particularly with regard to the signing of agreements, to ensure that there will be continuous and informed trading of their securities save in exceptional circumstances. It follows that, as far as practicable, issuers should seek to ensure that complex and lengthy announcements are disseminated as soon as possible during either the lunchtime publication window or outside trading hours to allow investors adequate time to consider the content of such disclosures.

              FAQ Series 3, FAQ No. 178
              LR reference: Main Board Rules Chapter 6, 13.09, 13.10A, 14.37 / GEM Rules Chapter 9, 17.10, 17.11A, 19.37
              Released on 22/3/2007 (Updated on 25/7/2016)

              Question:

              What is a "false market"?

              Answer:

              The term "false market" refers to a situation where there is material misinformation or materially incomplete information in the market which is compromising proper price discovery. This may arise, for example, where:

              (a) an issuer has made a false or misleading announcement;
              (b) there is other false or misleading information, including a false rumour, circulating in the market;
              (c) an issuer has inside information that needs to be disclosed under the Inside Information Provisions but it has not announced the information (e.g. the issuer signed a material contract during trading hours but has not announced the information); or
              (d) a segment of the market is trading on the basis of inside information that is not available to the market as a whole.

              Where a media or analyst report appears to contain information from a credible source (whether that information is accurate or not) and:

              (a) there is a material change in the market price or trading volume of the issuer's securities which appears to be referrable to the report (in the sense that it is not readily explicable by any other event or circumstance); or
              (b) if the market is not trading at the time but the report is of a character that when the market starts trading, it is likely to have a material effect on the market price or trading volume of the issuer's securities,
              the issuer must announce information necessary to avoid a false market in its listed securities.

              FAQ Series 22, FAQ No. 1
              LR reference: Main Board Rules 13.09(1), 13.10, 37.47(b); Paragraph 3 of Practice Note 11; Paragraph 2(1)(b) of Appendices 7C, 7D, 7E and 7H; Paragraph 24 of Appendix 7C; Paragraph 26 of Appendix 7H / GEM Rules 17.10(1), 17.11, 30.40(b), 31.04(2) and 31.05
              Released on 30/4/2013

              Question:

              Does an issuer need to "consult" the Exchange before announcing the information necessary to avoid a false market in its securities?

              Answer:

              No, it can proceed to disclose the information which requires disclosure under these provisions.

              However, it must contact the Exchange as soon as reasonably practicable if it believes that there is likely to be a false market in its listed securities (see the note to these provisions).

              FAQ Series 22, FAQ No. 2
              LR reference: Main Board Rules 13.09(1), 37.47(b); Paragraph 2(1)(b) of Appendices 7C, 7D, 7E and 7H / GEM Rules 17.10(1), 30.40(b) and 31.04(2)
              Released on 30/4/2013

              Question:

              Listco Z is a PRC issuer whose H shares are listed on the Main Board. It proposes to issue new A shares in the PRC and apply for a listing on a PRC stock exchange.

              Listco Z will issue a prospectus in connection with the issue of A shares pursuant to the laws and regulation in the PRC and the requirements of the PRC stock exchange. In this regard, Listco Z will publish an announcement under the Main Board Rule 13.09(2)(a) / GEM Rule 17.10(2)(a) to promptly disclose information which is identified as inside information during preparation of the A share prospectus or as a consequence of other development. Will Listco Z still need to publish the A-share prospectus on the HKEx website for the purposes of the Listing Rules?

              Answer:

              In addition to the disclosure obligation under Main Board Rule 13.09(2)(a) / GEM Rule 17.10(2)(a), Listco Z should also comply with Main Board Rule 13.10B / GEM Rule 17.12 to release the A-share prospectus to the market in Hong Kong through the HKEx website (in the form of an "overseas regulatory announcement") at the same time as it is released in other market(s).

              FAQ Series 7, FAQ No. 69
              LR reference: Main Board Rules 13.09(2), 13.10B / GEM Rules 17.10(2), 17.12
              Released on 28/11/2008 (Updated on 2/1/2013)

              Question:

              What is the meaning of the term "such enquiry with respect to the issuer as may be reasonable in the circumstances"? What sort of enquiry is an issuer required to make in response to the Exchange's enquiries?

              When will an issuer be expected to contact its controlling shareholders when they are not directors or officers of the issuer?

              Answer:

              The facts and circumstances giving rise to each enquiry are different. Therefore, what enquiry is reasonable depends on the circumstances, and there are no hard and fast rules. The test is one of reasonableness.

              To facilitate compliance, it is crucial that an issuer implements and maintains adequate and effective internal control systems and procedures to ensure material information concerning the issuer and its business would be promptly identified, assessed and escalated to the Board for consideration and action from a Rule compliance perspective. This would require a timely and structured flow to the Board of information arising from the development or occurrence of events and circumstances so that the Board can decide whether disclosure is necessary.

              An issuer is generally not expected to contact (a) its controlling shareholders when they are not directors or officers of the issuer, or (b) counterparties to a transaction, except if there is information available to the issuer suggesting that the subject matter of the enquiry is related to the controlling shareholders or the counterparties to a transaction. For example, the issuer is aware of its controlling shareholder's plan to dispose of its interest in the issuer, and there is an unusual increase in the trading volume of the issuer's shares. Another example is where there are press articles suggesting that the counterparty to a disclosed transaction may not be able to complete the transaction as a result of difficulties in obtaining financing.

              FAQ Series 22, FAQ No. 3
              LR reference: Main Board Rules 13.10(2); Paragraph 24(2) of Appendix 7C; Paragraph 26(2) of Appendix 7H / GEM Rules 17.11(2) and 31.05(2)
              Released on 30/4/2013

              Question:

              An issuer has inside information which is exempted from disclosure under one or more of the safe harbours in the Inside Information Provisions. If there are market rumours which are unrelated to this information, but have resulted in unusual trading movements, does the issuer need to publish a standard announcement?

              If the standard announcement states that there is no inside information that needs to be disclosed under the Inside Information Provisions, but the issuer subsequently discloses the information, say a month later, will this result in market uncertainty?

              Answer:

              Whether an announcement is required to be issued under these provisions depends on the facts and circumstances of the matter. It is only if and when requested by the Exchange that an announcement needs to be issued.

              Information that is exempted from disclosure under the Inside Information Provisions does not fall within the term "any inside information that needs to be disclosed under Part XIVA of the Securities and Futures Ordinance" contained in the standard announcement. Therefore, a standard announcement issued under those circumstances will not be inaccurate.

              To avoid market uncertainty arising from the subsequent disclosure of the inside information previously exempted from disclosure, the issuer can clarify in the disclosure announcement that the information was exempted from disclosure when the standard announcement was issued.

              FAQ Series 22, FAQ No. 4
              LR reference: Main Board Rules 13.10(2), Paragraph 24(2) of Appendix 7C, Paragraph 26(2) of Appendix 7H / GEM Rules 17.11(2) and 31.05(2)
              Released on 30/4/2013

              Question:

              Can I submit an Overseas Regulatory Announcement in both English and Chinese for publication?

              Answer:

              Yes. An Overseas Regulatory Announcement can be submitted for publication in both English and Chinese and both files should be submitted simultaneously. An Overseas Regulatory Announcement can also be submitted for publication in only one language i.e. either in English or in Chinese.

              FAQ Series 3, FAQ No. 56
              LR reference: Main Board Rules 2.07C(4)(b), 13.10B / GEM Rules 16.03, 17.12
              Released on 22/3/2007

              Question:

              Clarify whether the interest earned or the total advance should be the numerator for the consideration test for the purpose of Main Board rules 13.13, 13.14 and 13.16 (GEM rules 17.15, 17.16 and 17.18).

              Answer:

              For the purpose of the total assets test and consideration test, the numerator should be the total advances (not the interest earned) plus any monetary advantage accruing to the entity or affiliated company.

              FAQ Series 1, FAQ No. 22
              LR reference: Main Board Rules 13.13, 13.14, 13.16 / GEM Rules 17.15, 17.16, 17.18
              Released on 30/3/2004 (updated on 30/9/2009)

              Question:

              An issuer has previously made an announcement on an advance to an entity or affiliated company in accordance with the pre-existing Practice Note 19 to the Main Board Rules or the new Main Board rule 13.13 (GEM rule 17.15). Does it have to make another announcement due to a change in market capitalisation?

              Answer:

              Provided that there is no increase in the advance previously disclosed, the issuer is not required to make another announcement as a result of a change in market capitalisation.

              If there have been further increases in the advance, the issuer will have to comply with the general disclosure obligation based on the market capitalisation as at the date of making additional advance to an entity or affiliated company.

              FAQ Series 1, FAQ No. 23
              LR reference: Main Board Rules 13.13, 13.16 / GEM Rules 17.15, 17.18
              Released on 30/3/2004 (updated on 30/9/2009)

              Question:

              Clarify when the general disclosure obligation under Main Board rule 13.14 / GEM rule 17.16 will be triggered for advances to an entity or affiliated company that have been announced in accordance with Main Board rule 13.13 / GEM rule 17.15.

              Answer:

              Where there is any further increase in the advance previously announced in accordance with Main Board rule 13.13 / GEM rule 17.15, the issuer has to adopt the following 2-stage approach:

              •   Firstly, the issuer must re-assess whether the increased balance has triggered the 8% threshold with reference to the latest financial figures and market capitalisation. If not, the issuer is not required to make another announcement.
              •   If it has, the issuer must consider whether the increment since the last announcement was made exceeds the 3% threshold for any of the size tests. If the 3% threshold is exceeded, the issuer will have to comply with the further disclosure requirement under Main Board rule 13.14/ GEM rule 17.16.

              FAQ Series 1, FAQ No. 25
              LR reference: Main Board Rules 13.14 / GEM Rules 17.16
              Released on 30/3/2004 (updated on 30/9/2009)

              Question:

              For disclosure in the Next Day Disclosure Return pursuant to Main Board Rule 13.25A / GEM Rule 17.27A, which headline category should a listed issuer use when submitting a Next Day Disclosure Return to report a buyback of shares by the listed issuer?

              Answer:

              The listed issuer should choose the new Tier 2 headline category "Share Buyback" under the new Tier 1 headline category "Next Day Disclosure Returns". Where a disclosure other than a share buyback is made in the Next Day Disclosure Return, the listed issuer should choose the new Tier 2 headline category "Others" under the new Tier 1 headline category "Next Day Disclosure Returns". A listed issuer reporting in a Next Day Disclosure Return both a share buyback and some other type of change in its issued share capital should choose both "Share Buyback" and "Others".

              FAQ Series 8, FAQ No. 7. Issue 8
              LR reference: Main Board Rules 2.07C(3), 13.25A / GEM Rules 16.18(2), 17.27A
              Released on 28/11/2008

              Question:

              When should Monthly Returns and Next Day Disclosure Returns be submitted?

              Answer:

              Monthly Returns can be submitted at any time during the operational hours of Electronic Submission System ("ESS"), that is: (i) on any business day: from 6:00 a.m. to 11:00 p.m.; and (ii) on a non-business day immediately before a business day: from 6:00 p.m. to 8:00 p.m.. The deadline for their submission is 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session on the fifth business day after the end of the calendar month.

              Next Day Disclosure Returns must be submitted by "not later than 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session" (i.e. by 8:30 a.m.) on the business day after the relevant event. They can also be submitted at any time during the operational hours of ESS, subject to compliance with Main Board Rule 13.09 / GEM Rule 17.10.

              Where the event that triggers submission of the Next Day Disclosure Return is also subject to Main Board Rule 13.09 / GEM Rule 17.10, and the issuer cannot publish the announcement under Main Board Rule 13.09 / GEM Rule 17.10, a trading halt or suspension would be required. However, the issuer still must submit the Next Day Disclosure Return by the 8:30 a.m. deadline under Main Board Rule 13.25A/ GEM Rule 17.27A. Where a trading halt or suspension may be required, the issuer should contact the Exchange before submitting the Next Day Disclosure Return.

              FAQ Series 8, FAQ No. 18. Issue 8
              LR reference: Main Board Rules 13.25A, 13.25B, 13.09 / GEM Rules 17.27A, 17.27B, 17.10
              Released on 28/11/2008 (Updated on 2/1/2013)

              Question:

              How exactly does one submit a Monthly Return and Next Day Disclosure Return?

              Answer:

              Listed issuers can download from the ESS website a template in MS Word format of each of the various Monthly Returns and Next Day Disclosure Returns for completion offline. The completed form, in either PDF or MS Word format, should then be submitted via ESS as an attachment.

              FAQ Series 8, FAQ No. 19. Issue 8
              LR reference: Main Board Rules 13.25A, 13.25B / GEM Rules 17.27A, 17.27B
              Released on 28/11/2008

              Question:

              Will listed issuers be required to submit both English and Chinese versions of Next Day Disclosure Returns and Monthly Returns?

              Answer:

              Yes. A listed issuer must submit both an English and a Chinese version of the Next Day Disclosure Return and Monthly Return through ESS.

              FAQ Series 8, FAQ No. 20. Issue 8
              LR reference: Main Board Rules 13.25A, 13.25B see also: 2.07C(4)(b) / GEM Rules 17.27A, 17.27B see also: 16.03
              Released on 28/11/2008

              Question:

              Can a listed issuer submit its Monthly Returns or Next Day Disclosure Returns by means other than ESS, such as email, fax or mail?

              Answer:

              No. A listed issuer must submit its Monthly Returns and Next Day Disclosure Returns through ESS.

              FAQ Series 8, FAQ No. 21. Issue 8
              LR reference: Main Board Rules 13.25A, 13.25B / GEM Rules 17.27A, 17.27B
              Released on 28/11/2008

              Question:

              In 2007, Listco A issued some convertible bonds which might potentially result in substantial dilution of the issued share capital of Listco A. The Exchange had imposed a condition to the granting of listing approval of the underlying shares (the "Condition") that Listco A must publish a monthly announcement in relation to any conversion of the convertible bonds and a further announcement in certain specific circumstances (collectively, the "Conversion Announcements").

              As Listco A will be required to make disclosure relating to changes in issued share capital (including any conversion of the convertible bonds) in its Next Day Disclosure Return and Monthly Return according to Main Board Rules 13.25A and 13.25B or GEM Rules 17.27A and 17.27B, will Listco A still need to issue the Conversion Announcements?

              Answer:

              Provided that Listco A has complied with the disclosure requirements under Main Board Rules 13.25A and 13.25B or GEM Rules 17.27A and 17.27B, it will be regarded as having fulfilled the Condition and separate Conversion Announcements will no longer be required.

              FAQ Series 8, FAQ No. 23. Issue 8
              LR reference: Main Board Rules 13.25A, 13.25B / GEM Rules 17.27A, 17.27B
              Released on 28/11/2008

              Question:

              The issuer publishes a Next Day Disclosure Return upon a repurchase or redemption of shares in January. The repurchased or redeemed shares are cancelled in February. Must the issuer publish a Next Day Disclosure Return upon cancellation of the shares?

              Answer:

              On a share repurchase or redemption, the issuer must submit and publish a Next Day Disclosure Return by "not later than 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session" (i.e. by 8:30 a.m.) on the business day after the repurchase or redemption, even if the shares have not yet been cancelled. It is not necessary to publish another Next Day Disclosure Return when the shares are cancelled.

              However, the opening balance of the subsequent Next Day Disclosure Return will be the closing balance of the last Next Day Disclosure Return or Monthly Return (whichever is later) and any cancellation of shares since then should be included in the opening balance of the subsequent Next Day Disclosure Return as separate lines (together with the date(s) of cancellation). These cancelled shares should also be taken into account in arriving at the closing balance of that subsequent Next Day Disclosure Return.

              FAQ Series 8, FAQ No. 24. Issue 8
              LR reference: Main Board Rules 13.25A(2)(a)(vii) / GEM Rules 17.27A(2)(a)(vii)
              Released on 28/11/2008 (Updated on 11/3/2011)

              Question:

              Before 1 January 2009, there were four types of Monthly Return forms, namely, Form-1 for listed companies, Form-2 for debt securities, Form-3 for derivatives warrants and equity linked instruments and Form-4 for unit trusts/mutual funds (including exchange traded funds).

              What is the situation from 1 January 2009 onwards?

              Answer:

              Form 1 will be replaced by the new Monthly Return for Equity Issuers. Forms 2 and 3 will be abolished as the new regime will not apply to issuers of structured products and debt. Form 4 will be replaced by the new "Monthly Return for Collective Investment Scheme listed under Chapter 20 of the Exchange Listing Rules (other than listed open-ended Collective Investment Scheme) on Movements in Units" and new "Monthly Return On Movement of Open-ended Collective Investment Scheme listed under Chapter 20 of the Exchange Listing Rules" (as the case may be).

              FAQ Series 8, FAQ No. 25. Issue 8
              LR reference: Main Board Rules 13.25B / GEM Rules 17.27B
              Released on 28/11/2008

              Question:

              Is section I of the Monthly Return (Movement in Authorised Share Capital) applicable to PRC issuers which do not have authorised share capital? Are they required to disclose movements in domestic shares/ A shares in section II of their Monthly Return (Movements in Issued Share Capital)?

              Answer:

              Section I of the Monthly Return is not applicable to PRC issuers.

              Each issuer is required to disclose in its Monthly Return the movement in its equity securities, debt securities and any other securitised instruments during the month. PRC issuers are therefore required to disclose the movements in their H shares as well as any other classes of shares (e.g. domestic shares and A shares) in section II.

              FAQ Series 8, FAQ No. 26. Issue 8
              LR reference: Main Board Rules 13.25B / GEM Rules 17.27B
              Released on 28/11/2008 (Updated on 13/3/2009)

              Question:

              Will listed issuers still be required to submit the Monthly Returns each month even if there are no changes of the reported figures from the previous month?

              Answer:

              Yes, a listed issuer must submit a Monthly Return even if there have not been any changes since the previous Monthly Return.

              FAQ Series 8, FAQ No. 27. Issue 8
              LR reference: Main Board Rules 13.25B / GEM Rules 17.27B
              Released on 28/11/2008

              Question:

              A listed issuer proposes to enter into an agreement with an independent third party under which the independent third party will provide advisory services to the issuer and the consideration will be satisfied by issuing new shares of the issuer to the third party. Is such issue subject to the disclosure requirements under Main Board Rule 13.28 / GEM Rule 17.30?

              Answer:

              The requirements under Main Board Rule 13.28 / GEM Rule 17.30 only apply to an issue of securities for cash.

              In the circumstances described, if the proposed issue of new shares constitutes inside information which requires disclosure under the Inside Information Provisions, the listed issuer must also simultaneously announce the information under Main Board Rule 13.09(2)(a) / GEM Rule 17.10(2)(a).

              FAQ Series 7, FAQ No. 70
              LR reference: Main Board Rules 13.28 / GEM Rules 17.30
              Released on 28/11/2008 (Updated on 2/1/2013)

              Question:

              A listed issuer has adopted a share option scheme pursuant to Chapter 17 of the Main Board Rules / Chapter 23 of the GEM Rules.

              Is the listed issuer required to comply with Main Board Rule 13.28 / GEM Rule 17.30 in the following circumstances:

              (i) the granting of an option by the listed issuer under the share option scheme; and
              (ii) a person exercising the option granted to him under the share option scheme?

              Answer:

              Main Board Rule 13.28 / GEM Rule 17.30 sets out specific disclosure requirements for fund raising exercises of listed issuers through issues of securities. Whilst the policy intent of the Rule is not to apply to any grant of options or issue of securities pursuant to a share option scheme which complies with Chapter 17 of the Main Board Rules / Chapter 23 of the GEM Rules, the actual wording might be interpreted otherwise. We will address this ambiguity in the Rules at the next opportunity.

              In the circumstances described, the listed issuer should observe the announcement requirement under Main Board Rule 17.06A / GEM Rule 23.06A and the disclosure obligations under Main Board Rules 13.25A and 13.25B / GEM Rules 17.27A and 17.27B.

              FAQ Series 8, FAQ No. 28. Issue 9
              LR reference: Main Board Rules 13.28, 17.06A; see also: 13.25A, 13.25B / GEM Rules 17.30, 23.06A; see also 17.27A, 17.27B
              Released on 28/11/2008

              Question:

              A listed issuer proposes a placing of warrants for cash consideration under a general mandate. The listed issuer will issue an announcement for such proposed placing pursuant to Main Board Rule 13.28 / GEM Rule 17.30. The warrants carry rights to subscribe new shares in the listed issuer. Is the listed issuer required to comply with Main Board Rule 13.28 / GEM Rule 17.30 upon exercise of the warrants where the listed issuer will receive subscription monies for the new shares?

              Answer:

              The disclosure obligation under Main Board Rule 13.28 / GEM Rule 17.30 arises at the time when the listed issuer agrees to issue securities for cash. In the present case, the listed issuer must comply with the Rule as soon as it enters into the agreement for placing the warrants. The Rule does not apply upon exercise of the subscription rights of the warrants by the warrant holders. Nevertheless, the listed issuer is reminded of the disclosure obligations under Main Board Rules 13.25A and 13.25B / GEM Rules 17.27A and 17.27B.

              FAQ Series 8, FAQ No. 29. Issue 9
              LR reference: Main Board Rules 13.28; see also: 13.25A, 13.25B / GEM Rules 17.30; see also: 17.27A, 17.27B
              Released on 28/11/2008

              Question:

              How should issuers whose shares have no nominal value comply with the disclosure requirements for nominal values under the Rules?

              Answer:

              These issuers should disclose in the relevant announcements or annual reports that their shares have no nominal value.

              FAQ Series 26, FAQ No. 1
              LR reference: Main Board Rules 13.28(2), App 16 (para 11(3)) / GEM Rules 17.30(2), 18.32(3)
              Released on 21/2/2014

              Question:

              A listed issuer proposes a placing of new shares for cash consideration using its general mandate.

              Main Board Rule 13.28(12) / GEM Rule 17.30(12) requires the listed issuer to disclose details of the general mandate in the announcement. What are the details that need to be disclosed?

              Answer:

              The information to be disclosed by the listed issuer under this Rule should demonstrate that the general mandate is sufficient to cover the number of new shares to be issued under the placing. It should contain information such as: (i) the date of the general meeting approving the general mandate; (ii) the number of shares that the listed issuer is authorised to allot or issue under such general mandate; and (iii) the unutilised portion of the general mandate immediately prior to the proposed placing.

              FAQ Series 8, FAQ No. 30. Issue 9
              LR reference: Main Board Rules 13.28(12) / GEM Rules 17.30(12)
              Released on 28/11/2008

              Question:

              If a listed issuer proposes to place new shares under a general mandate at a discount of 20% or more to the benchmarked price, can it satisfy Main Board Rule 13.29 / GEM Rule 17.30A by incorporating the information required under Main Board Rule 13.29 / GEM 17.30A in its announcement published pursuant to Main Board Rule 13.28/ GEM Rule 17.30?

              Answer:

              Yes, or alternatively it may issue a separate announcement to disclose the information required under Main Board Rule 13.28/ GEM Rule 17.30. In either case, the required information must be announced within the timeframe prescribed under Main Board Rule 13.29/ GEM Rule 17.30A.

              The listed issuer is reminded that, under Main Board Rule 13.36(5) / GEM Rule 17.42B, it cannot issue new shares for cash under a general mandate at a discount of 20% or more to the benchmarked price set out in Main Board Rule 13.36(5) / GEM Rule 17.42B unless it can satisfy the Exchange that it is in a serious financial position or there are exceptional circumstances. In the present case, the listed issuer must obtain the Exchange's consent before it enters into the proposed placing and publishes the relevant announcement.

              FAQ Series 8, FAQ No. 31. Issue 9
              LR reference: Main Board Rules 13.29 / GEM Rules 17.30A
              Released on 28/11/2008

              Question:

              A listed issuer proposes a rights issue of shares which will be fully underwritten by its controlling shareholder. Based on the size of the proposed rights issue, it is possible that if no qualifying shareholders take up their entitlement of rights shares, the controlling shareholder's interest in the listed issuer would increase to the extent that the public float of the listed issuer would fall below the minimum percentage required under the Listing Rules.

              Will the listed issuer be permitted to proceed with the rights issue?

              Answer:

              It is the responsibility of the listed issuer to ensure compliance with its continuing obligations under the Listing Rules from time to time, particularly when it proposes any corporate actions.

              In the circumstances described, the listed issuer must demonstrate to the Exchange's satisfaction that there are adequate arrangements in place to ensure that the proposed rights issue, if it proceeds, would not result in a breach of the public float requirement set out in the Listing Rules. An example of an acceptable arrangement would be for a conditional placing agreement to be entered into by the controlling shareholder to place down a sufficient amount of its shares in the listed issuer to independent third parties in order to maintain the public float at or above the minimum prescribed percentage set out in the Listing Rules.

              FAQ Series 7, FAQ No. 71
              LR reference: Main Board Rules 13.32(1) / GEM Rules 11.23(7)
              Released on 28/11/2008

              Question:

              Company I proposes to acquire a property from one of its directors, which constitutes a discloseable and connected transaction. The consideration for the proposed acquisition will be settled by issuing new shares of Company I to the vendor.

              No shareholder is required to abstain from voting if Company I were to convene a general meeting for the approval of the proposed acquisition. Company I has obtained the written approval of the transaction from its parent company holding 60% interest in Company I.

              Will the Exchange grant a waiver to Company I from convening a general meeting to approve the connected transaction pursuant to Main Board Rule 14A.37 / GEM Rule 20.35? Can Company I issue the consideration shares using the existing general mandate?

              Answer:

              As Company I is able to meet all the conditions set out in Main Board Rule 14A.37 / GEM Rule 20.35, a waiver from convening a general meeting to approve the proposed acquisition would normally be granted to Company I for the purpose of connected transaction rules.

              On the basis that Company I has obtained independent shareholder approval for the proposed acquisition, and the method of settling the consideration was clearly disclosed and not subject to amendment, Company I would be permitted to issue the consideration shares to the vendor pursuant to a general mandate according to Note 1 to Main Board Rule 13.36(2)(b) / the Note to GEM Rule 17.41(2).

              FAQ Series 7, FAQ No. 53
              LR reference: Main Board Rules 14A.37, 13.36 / GEM Rules 20.35, 17.39, 17.41
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              A listed issuer has some outstanding convertible bonds that are convertible into new shares of the issuer according to the terms of such bonds. These convertible bonds were issued by the listed issuer two years ago using the general mandate then available.

              Prior to the maturity date of the convertible bonds, the listed issuer and the holders of the convertible bonds propose to extend the maturity date and the conversion period of the bonds for one year and other terms of the bonds will remain unchanged. Is such proposal subject to the requirements relating to pre-emptive rights under Main Board Rule 13.36 / GEM Rules 17.39 to 17.42B?

              Answer:

              Yes. In the circumstances described, the proposed extension of the maturity date and the conversion period of the convertible bonds is effectively a new arrangement with the bond holders that involves issue of new shares of the listed issuer. The listed issuer must obtain shareholders' approval of such proposal at general meeting under Main Board Rule 13.36(1) / GEM Rule 17.39 unless it has an existing general mandate that is sufficient to cover all new shares that may be issued upon conversion of the outstanding convertible notes during the extended period. The listed issuer is also reminded that under Main Board Rule 28.05 / GEM Rule 34.05, any alterations in the terms of convertible debt securities after issue must be approved by the Exchange except where the alterations take effect automatically under the existing terms of such convertible debt securities.

              FAQ Series 7, FAQ No. 72
              LR reference: Main Board Rules 13.36, 28.05 / GEM Rules 17.39 to 17.42B, 34.05
              Released on 28/11/2008

              Question:

              When Eligible SEHK Issuers propose pre-emptive issues (including rights issues, open offers, bonus issues and scrip dividend schemes) or distributions in specie to shareholders, should they offer or distribute entitlement securities to Mainland investors holding eligible securities through Shanghai and Shenzhen Connect ("Southbound Shareholders")?

              Answer:

              Yes.

              FAQ Series 29, FAQ No. 1
              LR reference: Main Board Rules 13.36
              Released on 14/11/2014 (Updated on 04/11/2016)

              Question:

              Rule 13.36(2) states that an issuer may exclude overseas shareholders from a rights issue/open offer if, having made enquiries regarding the legal restrictions under the laws of the relevant place and the requirements of the relevant regulatory body or stock exchange, the directors of the issuer consider such exclusion to be necessary or expedient. Can Southbound Shareholders be excluded from participation in rights issues/open offers made by Eligible SEHK Issuers?

              Answer:

              No. Based on the CSRC Announcement [2016] No. 21 "Filing Requirements for Hong Kong Listed Issuers Making Rights Issues to Mainland Shareholders through Mainland-Hong Kong Stock Connect" which sets out the procedure for the filing of rights issue/open offer prospectus documents of Eligible SEHK Issuers, the Listing Department does not consider that Eligible SEHK Issuers have grounds to exclude the Southbound Shareholders from participation in the rights issues/open offers.

              Rule 2.03 sets out the general principle expected to be upheld by issuers, and requires that (i) all holders of listed securities should be treated fairly and equally; and (ii) all new issues of equity securities by a listed issuer should first be offered to the existing shareholders by way of rights unless they have agreed otherwise. This rule seeks to secure for holders of securities equality of treatment. Accordingly, on the basis of Rule 13.36, an Eligible SEHK Issuer failing to make its rights issue/open offer available to the Southbound Shareholders will not be granted an approval for the listing of the rights/open offer shares by the Listing Department under Rule 2A.06.

              FAQ Series 29, FAQ No. 3
              LR reference: Main Board Rules 2.03, 13.36(2)
              Released on 14/11/2014 (Updated on 04/11/2016)

              Question:

              What are the additional considerations for Eligible SEHK Issuers if the securities to be offered or distributed to shareholders in the above corporate actions are not eligible for trading under Shanghai and Shenzhen Connect?

              Answer:

              The scope of securities eligible for southbound trading under the Shanghai and Shenzhen Connect (Eligible Securities) is set out in http://www.hkex.com.hk/eng/market/sec_tradinfra/chinaconnect/Eligiblestock.htm.

              Southbound Shareholders may receive different types of securities from SEHK Eligible Issuers as entitlements under pre-emptive issues or distributions (e.g. warrants or convertible securities of the issuers, or shares of other entities):

              •   if the entitlement securities are not Eligible Securities but are listed on SEHK, Southbound Shareholders may sell them on SEHK through Shanghai and Shenzhen Connect, but they will not be allowed to buy such securities1; and
              •   if the entitlement securities are not listed on SEHK, Southbound Shareholders will not be allowed to buy or sell the securities on SEHK. HKSCC and ChinaClear will determine how to deal with the securities subscribed or received by Southbound Shareholders on an individual case basis2.

              Issuers are reminded of their obligation to treat all shareholders fairly and equally when they propose to offer or distribute securities to shareholders. They should consider making the following arrangements2:

              •   providing all shareholders with an option to receive their entitlements in cash rather than securities; and
              •   if the entitlement securities are not to be listed, offering a means for the shareholders to dispose of these securities.

              Issuers should also make clear disclosures in their corporate communications about actions their shareholders need to take in respect of the offered/distributed securities.

              Note
              1: See Article 77 of SSE Stock Connect Pilot Provisions 《上海證券交易所滬港通試點辦法》, Article 76 of SZSE Stock Connect Implementation Rules 《深圳證券交易所深港通業務實施辦法》, and Article 24 of ChinaClear Stock Connect Implementation Rules
              2: See the "Guide on distribution of dividends and other entitlements" published on the HKEX website

              FAQ Series 29, FAQ No. 4
              LR reference: Main Board Rules 2.03, 13.36(2)
              Released on 14/11/2014 (Updated on 04/11/2016)

              Question:

              Clarify whether an overseas legal opinion is required in the event that a proposed bonus issue of issue of warrants will exclude overseas shareholders.

              Answer:

              Note 1 to Main Board rule 13.36(2)(a) / GEM rule 17.41(1) states that the issuer must make enquiry regarding the legal restrictions under the laws of the relevant jurisdiction. It is up to the issuer to decide whether or not it should seek a legal opinion to support its analysis of compliance with the Rules.

              FAQ Series 1, FAQ No. 28
              LR reference: Main Board Rules 13.36(2)(a) / GEM Rules 17.41(1)
              Released on 30/3/2004

              Question:

              Is the requirement under Main Board rule 13.36(2)(a) / GEM rule 17.41(1) only applicable to pre-emptive issues such as rights issues/open offers?

              Answer:

              It applies to any allotment, issue or grant of securities pursuant to an offer made to all shareholders where overseas shareholders are excluded on practical grounds.

              FAQ Series 1, FAQ No. 29
              LR reference: Main Board Rules 13.36(2)(a) / GEM Rules 17.41(1)
              Released on 30/3/2004

              Question:

              A listed issuer proposes a bonus issue of warrants to its existing shareholders on a pro-rata basis.

              Main Board Rule 13.36(2)(a) / GEM Rule 17.41(1) provides that no shareholders' approval is required for an offer of securities to shareholders on a pro-rata basis. Can the listed issuer apply this rule in respect of its proposed bonus issue of warrants?

              Answer:

              The circumstances described involves issue of warrants and the listed issuer must also comply with Main Board Rule 15.02 / GEM Rule 21.02 which requires that all warrants must be approved by shareholders in general meeting unless they are issued by the directors under the authority of a general mandate granted to them by shareholders in accordance with Main Board Rule 13.36(2)/ GEM Rule 17.41(2).

              Accordingly, the listed issuer must have sufficient headroom under its general mandate to issue the bonus warrants, and if not shareholders' approval in a general meeting will be required.

              FAQ Series 7, FAQ No. 65
              LR reference: Main Board Rules 15.02, 13.36(2)(a) / GEM Rules 21.02, 17.41(1)
              Released on 28/11/2008

              Question:

              Are there new PRC requirements for Eligible SEHK Issuers to offer or distribute securities to Southbound Shareholders in the above corporate actions?

              Answer:

              (a) Rights issues and open offers

              Yes. The China Securities and Regulatory Commission (CSRC) has issued the Announcement [2016] No. 21 "Filing Requirements for Hong Kong Listed Issuers Making Rights Issues to Mainland Shareholders through Mainland-Hong Kong Stock Connect". The document sets out the requirements for Eligible SEHK Issuers offering securities to their Southbound Shareholders in rights issues / open offers (see also question 3 below).

              Issuers should also note that under Shanghai and Shenzhen Connect, China Securities Depository and Clearing Corporation Limited (ChinaClear) will provide nominee services for Southbound Shareholders to (i) sell their nil-paid rights on SEHK; and/or (ii) subscribe for their entitlement securities under the rights issues / open offers in accordance with relevant laws and regulations. However, it will not support excess applications by Southbound Shareholders through Shanghai and Shenzhen Connect1.

              Note 1: See Article 23 of ChinaClear's Implementing Rules for Registration, Depository and Clearing Services under Mainland-Hong Kong Stock Connect (ChinaClear Stock Connect Implementing Rules) 中國證券登記結算有限責任公司《內地與香港股票市場交易互聯互通機制登記、存管、結算業務實施細則》
              (b) Bonus issues, scrip dividend schemes and distributions in specie

              No rules or guidance has been published by the CSRC.

              FAQ Series 29, FAQ No. 2
              LR reference: Main Board Rules Chapter 7, 13.36(2)(a) Note 1
              Released on 14/11/2014 (Updated on 04/11/2016)

              Question:

              Is there any limit on the number of refreshments of the general mandate during a year? How is the "one year" determined — from refreshment of the general mandate or with reference to annual general meetings?

              Answer:

              There is no limit on the number of refreshments of the general mandate by Main Board and GEM issuers during a year. However, independent shareholders' approval is required for the second and subsequent refreshments during the year.

              The period of "one year" is a rolling one year period normally determined with reference to annual general meetings when a new mandate for the year is obtained.

              FAQ Series 1, FAQ No. 30
              LR reference: Main Board Rules 13.36(2)(b) / GEM Rules 17.41(2)
              Released on 30/3/2004

              Question:

              A listed issuer proposes a resolution to seek shareholders' approval for a bonus issue of shares to its existing shareholders pursuant to its articles of association at the forthcoming annual general meeting.

              Can the listed issuer take into account such bonus issue when determining the maximum number of shares that are allowed to be issued under a new general mandate proposed at the same general meeting?

              Answer:

              No, because the bonus shares are not yet issued at the time when the listed issuer seeks shareholders' approval for the new general mandate. Pursuant to Main Board Rule 13.36(2)(b) / GEM Rule 17.41(2), the maximum number of shares that may be issued under the general mandate is "(i) 20% of the number of issued shares of the issuer as at the date of the resolution granting the general mandate... plus the number of such securities repurchased by the issuer itself since the granting of the general mandate (up to a maximum number equivalent to 10% of the number of issued shares of the issuer as at the date of the resolution granting the repurchase mandate)...".

              FAQ Series 7, FAQ No. 61
              LR reference: Main Board Rules 13.36(2)(b) / GEM Rules 17.41(2)
              Released on 28/11/2008 (Updated April 2015)

              Question:

              A listed issuer proposes to issue convertible notes which are convertible into new shares of the issuer. According to the terms of the convertible notes, the conversion price will be determined based on the closing price of the shares of the listed issuer on the trading day immediately before the conversion.

              The listed issuer notes that based on the recent closing prices of its shares trading on the Exchange, the total number of new shares that may be issued upon conversion of the convertible notes would not exceed the number of new shares that can be issued under the existing general mandate.

              Is it acceptable if the listed issuer uses its general mandate for such issue?

              Answer:

              In the circumstances described, the number of conversion shares estimated by the listed issuer based on recent closing prices of its shares cannot reflect the actual number of conversion shares that may be issued by the listed issuer according to the terms of the convertible notes. This is because the conversion price, and therefore the actual number of conversion shares, will only be determined upon the conversion of the notes.

              The listed issuer must demonstrate that its existing general mandate is sufficient to cover the number of new shares that may be issued upon full conversion of the convertible notes based on the terms of the notes. In particular, it should take into account the lowest possible conversion price, i.e. the maximum number of new shares that may be issued. In the present case, if the maximum number of conversion shares exceeds the number of new shares that can be issued under the general mandate, the listed issuer must seek a specific mandate from its shareholders for issuing the conversion shares as required under Main Board Rule 13.36(1) / GEM Rule 17.39 before it issues the convertible notes.

              FAQ Series 7, FAQ No. 62
              LR reference: Main Board Rules 13.36(2)(b) / GEM Rules 17.41(2)
              Released on 28/11/2008

              Question:

              Mr. A is a director of Listco. Under his director service contract, he may be entitled to receive share awards to be granted under Listco's share award scheme.

              Can Listco apply the directors' service contract exemption under Rule 14A.95 if the share awards are granted to Mr. A in form of new shares of Listco?

              Answer:

              No. Transactions or arrangements involving issuance of new shares by a listed issuer to its connected persons are exempt from the connected transaction Rules only if they fall under the circumstances described in Rule 14A.92. Therefore, the grant of share awards in form of new shares to Mr. A will be subject to the announcement, reporting and shareholder approval requirements under Chapter 14A.

              FAQ Series 28, FAQ No. 20
              LR reference: Main Board Rules 14A.95, Note 1 to 13.36(2)(b) / GEM Rules 20.93, Note to 17.41(2)
              Released on 21/3/2014

              Question:

              Company A is the substantial shareholder of a subsidiary of Listco. It is a connected person of Listco at the subsidiary level.

              Listco proposes to place new shares for cash to Company A. Can Listco apply the exemption for transactions with connected persons at the subsidiary level under Rule 14A.101 to exempt the proposed placing from the independent shareholder approval requirement under Chapter 14A?

              Answer:

              No. Transactions or arrangements involving issuance of new shares by a listed issuer to its connected persons are exempt from the connected transaction Rules only if they fall under the circumstances described in Rule 14A.92. As Company A is a connected person of Listco, the issue of new shares of Listco to it will be subject to the announcement, reporting and shareholder approval requirements under Chapter 14A.

              FAQ Series 28, FAQ No. 21B
              LR reference: Main Board Rules 14A.92, 14A.101, Note 1 to 13.36(2)(b) / GEM Rules 20.90, 20.99, Note to 17.41(2)
              Released on 29/5/2015

              Question:

              Listco proposes to issue new shares to Mr. A as the consideration for an acquisition of assets from Mr. A.

              Mr. A is a director of certain insignificant subsidiaries of Listco. If Mr. A meets the conditions for the significant subsidiary exemption under Rule 14A.09 at the time of the proposed transaction, is the transaction subject to the connected transaction requirements under Chapter 14A?

              Answer:

              As Mr. A is not a connected person of Listco, the proposed transaction is not a connected transaction under Chapter 14A.

              FAQ Series 28, FAQ No. 21C
              LR reference: Main Board Rules 14A.09, Note 1 to 13.36(2)(b) / GEM Rules 20.08, Note to 17.41(2)
              Released on 29/5/2015

              Question:

              When a listed issuer refreshes the General Property Acquisition Mandate at a general meeting, does the controlling shareholder have to abstain from voting as in the case of refreshing a general mandate under Main Board Rule 13.36(4)(a)?

              Answer:

              Main Board Rule 13.36(4)(a) / GEM Rule 17.42A is not applicable to the refreshment of the General Property Acquisition Mandate.

              FAQ Series 8, FAQ No. 32. Issue 14
              LR reference: Main Board Rules 13.36(4)(a) / GEM Rules 17.42A
              Released on 28/11/2008

              Question:

              Please explain the top-up arrangement under refreshment of general mandate.

              Answer:

              Under the new rules, an issuer wishing to top-up the unused portion of their previous general mandate, based on the enlarged issued share capital, needs only to obtain shareholders' approval. They can top up to the number of shares so that, in percentage terms, the unused part of the general mandate before and after the pre-emptive issue of securities is the same.

              Example:

              Existing issued share capital : 100,000 shares

              General mandate (20%) before placing: 20,000 shares (20%)

              Placing of 5,000 shares under the general mandate: 5,000 shares

              Issued share capital after placing: 105,000 shares

              Unused general mandate: 15,000 shares (15% of 100,000 shares)

              New shares issued under a 1 for 2 rights issue: 52,500 shares

              Issued share capital after right issue: 157,500 shares

              Shareholders' approval will be required to top-up the general mandate from 15,000 to 23,625 shares (15% of 157,500 shares). Independent shareholders' approval will be required for an additional mandate for 7,875 shares (i.e. 5% of 157,500 shares).

              FAQ Series 1, FAQ No. 31
              LR reference: Main Board Rules 13.36(4)(e) / GEM Rules 17.42A(5)
              Released on 30/3/2004

              Question:

              A listed issuer proposes to enter into an agreement with one of its creditors under which the listed issuer agree to issue new shares for the repayment of a loan due to the creditor.

              The listed issuer intends to issue the new shares under a general mandate. Is such issue subject to the restriction on pricing of the new shares to be issued under general mandate set out Main Board Rule 13.36(5) / GEM Rule 17.42B?

              Answer:

              Yes. The proposal is in substance an issue of new shares for cash consideration. The listed issuer must ensure that the issue price of such new shares complies with the requirement of Main Board Rule 13.36(5) / GEM Rule 17.42B before it enters into the agreement.

              FAQ Series 7, FAQ No. 63
              LR reference: Main Board Rules 13.36(5) / GEM Rules 17.42B
              Released on 28/11/2008

              Question:

              Are there any examples of procedural and administrative matters?

              Answer:

              Procedural and administrative matters include, for example, adjourning a meeting by resolution to:

              (a) ensure orderly conduct of the meeting. (e.g. if the meeting facilities to house the number of members attending has become inadequate); or
              (b) maintain the orderliness of the meeting, e.g. if it becomes impossible to ascertain the views of the members, or there is disorder or threat of disorder from members or if there is a disturbance caused by members or the uninvited public; or
              (c) respond to an emergency such as a fire, a serious accident or hoisting of tropical cyclone warning signal No. 8 during a meeting; or
              (d) announce results at the end of the annual general meeting.

              FAQ Series 17, FAQ No. 14
              LR reference: Main Board Rules Note to Rule 13.39(4) / GEM Rules Note to Rule 17.47(4)
              Released on 19/12/2011

              Question:

              Should the independent board committee established under Main Board Rules 13.39(6)(a) and 14A.41/ GEM Rules 17.47(6)(a) and 20.39 comprise all independent non-executive directors of the listed issuer?

              Answer:

              The independent board committee should comprise all independent non-executive directors of the listed issuer, who have no material interest in the relevant transaction.

              FAQ Series 7, FAQ No. 42
              LR reference: Main Board Rules 13.39(6)(a) and (c), 14A.41 / GEM Rules 17.47(6)(a) and (c), 20.39
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              What is the procedure regarding the notification of board meetings?

              Answer:

              Issuers are required to inform HKEx and publish an announcement through the e-Submission System at least seven clear business days in advance of the date fixed for any board meeting at which the declaration, recommendation or payment of a dividend is expected to be decided or at which any announcement of the profits or losses for any year, half-year or other period is to be approved for publication. The announcement does not require publication in the newspapers. It must be published on the HKEx website and on the issuer's own website.

              FAQ Series 3, FAQ No. 12
              LR reference: Main Board Rules 13.43 / GEM Rules 17.48
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              Listco has published an announcement on the board meeting date to approve its annual results 7 clear business days before the board meeting.

              If Listco subsequently decides to postpone the board meeting to a later date, is it required to give another 7-day notice?

              Answer:

              Subject to its articles of association, Listco need not give another 7-day notice. However, it should as soon as practicable announce the postponement of board meeting and the revised board meeting date.

              FAQ Series 9, FAQ No. 25
              LR reference: Main Board Rules 13.43 / GEM Rules 17.48
              Released on 14/12/2009

              Question:

              If a director is a shareholder of the issuer, should he abstain from voting when the board considers dividend payments?

              Answer:

              No. If the director's interest is the same as all shareholders, as in the case of approving dividend payments, then he need not abstain from voting.

              FAQ Series 17, FAQ No. 15
              LR reference: Main Board Rules 13.44 and Note 1 to Appendix 3 / GEM Rules 17.48A and Note 5 to Appendix 3
              Released on 19/12/2011

              Question:

              If a director has a material interest in a board resolution approving a transaction concerning another company, but does not have any beneficial interest in the shares of that company, should he abstain from voting on the relevant resolution?

              Answer:

              Yes. As long as the director has a material interest in the transaction, he should abstain from voting, even if he has no beneficial interest in the shares of the other company.

              FAQ Series 17, FAQ No. 15A
              LR reference: Main Board Rules 13.44 and Note 1 to Appendix 3 / GEM Rules 17.48A and Note 5 to Appendix 3
              Released on 19/12/2011

              Question:

              Is it acceptable for an issuer to simply comply with this new Rule without amending its memorandum and articles of association (to remove the exception for a director voting on a resolution in which he has a less than 5% interest) until further substantial changes are required to be made to the documents?

              Answer:

              Yes, an issuer does not need to amend its constitutional document as a result of this Rule amendment.

              FAQ Series 17, FAQ No. 15B
              LR reference: Main Board Rules 13.44 / GEM Rules 17.48A
              Released on 19/12/2011

              Question:

              How soon after a Board Meeting is held to approve preliminary announcements of financial results and/or dividends do the results have to be published?

              Answer:

              Under Listing Rules MB 13.45/ GEM 17.49, an issuer must publish any preliminary results announcement immediately after approval by the Board. Preliminary results that have been approved at a board meeting in the morning of a business day should be submitted for publication via the e-Submission System during the lunchtime publication window between 12.00 noon and 12.30 p.m. on a normal business day, or between 12.30 p.m. and 11.00 p.m. on the eves of Christmas, New Year and the Lunar New Year when there is no afternoon session.

              Where the listed issuer expects that it would not be in a position to publish the preliminary results announcement during the lunchtime publication window on a normal business day, it should consider holding the board meeting in the afternoon so that the preliminary results announcement may be published after 4.30 p.m. on that business day, or failing that, between 6.00 a.m. and 8.30 a.m. on the following business day at the latest.

              The directors have the direct responsibility to ensure that the information is kept strictly confidential until it is announced.

              FAQ Series 3, FAQ No. 72
              LR reference: Main Board Rules 13.45 / GEM Rules 17.49
              Released on 22/3/2007 (Updated on 25/7/2016)

              Question:

              How soon after the holding of the board meeting approving preliminary results can a press conference be held?

              Answer:

              Under the Listing Rules, the release of information by way of a formal announcement via the HKEx website is regarded as the formal channel of communication with the investing public. Listed issuers should manage the release of their financial results in accordance with these principles and requirements. Under Note 1 to Listing Rules MB 13.45/ GEM 17.49, issuers' directors have the direct responsibility to ensure that the information is kept strictly confidential until it is announced. The preliminary results announcement needs first to have been published on the HKEx website before a press conference / analyst meeting can be held and one has to allow reasonable time from the time of submission for the announcement to be uploaded and published on the HKEx website. The listed issuer should also have proper procedures in place to ensure that this is the case.

              Listed issuers should take all reasonable steps to keep the preliminary results confidential before it is announced. What would amount to all reasonable steps would depend on the particular circumstances prevailing. As general guidance we recommend that listed issuers take steps, including but not limited to the following:

              •   measures to ensure the timely delivery of the announcement to HKEx upon market close and immediately after the board meeting;
              •   planned timetable that would allow reasonable processing time for HKEx to upload the announcement prior to press conference/analyst meetings; and
              •   measures that would safeguard the accuracy and content of the announcement (including virus free soft copies files).

              Preliminary results announcements must be published, without delay, during time periods permitted on a business day by Listing Rules MB 2.07C(4)(a) and GEM 16.18(3)(a).

              FAQ Series 3, FAQ No. 73
              LR reference: Main Board Rules 13.45 / GEM Rules 17.49
              Released on 22/03/2007 (Updated on 01/05/2015)

              Question:

              After 4.30 p.m. on a normal business day, can a press conference be held even though the preliminary results announcement has not yet been published?

              Answer:

              No. Note 1 to Listing Rule MB 13.45/ GEM 17.49 sets out specific requirements for listed issuers after board meetings for approval of results and dividends:

              "...The directors are reminded that it is their direct responsibility to ensure that such information is kept strictly confidential until it is announced."

              Under the Listing Rules, the release of information by way of a formal announcement via the HKEx website is regarded as the formal channel of communication with the investing public. Listed issuers should manage the release of their financial results in accordance with these principles and requirements. Listed issuers should therefore release formal announcements before the dissemination of financial results at the press conference / analyst meeting.

              FAQ Series 3, FAQ No. 76
              LR reference: Main Board Rules 13.45 / GEM Rules 17.49
              Released on 22/3/2007 (Updated on 25/7/2016)

              Question:

              If I submit a preliminary results announcement for publication, would it be sufficient to select only one headline category, e.g. "Final Results"?

              Answer:

              In addition to "Final Results", all appropriate headline categories must be selected, such as dividend, closure of books, and change in directors. If the auditors have qualified or modified their audit opinion, the headline category "Qualified and/or modified audit opinion" must also be selected.

              Issuers should not include in the preliminary results announcements information of a nature that would require pre-clearance under the Listing Rules.

              FAQ Series 3, FAQ No. 77
              LR reference: Main Board Rules 2.07C(3), 13.45(3), Appendix 24 / GEM Rules 16.18, 17.49(3), Appendix 17
              Released on 22/3/2007 (Updated on 21/5/2007)

              Question:

              What are the disclosure requirements under Section 436 of the New Ordinance for a Hong Kong incorporated issuer publishing its:

              (a) annual / interim results announcement;
              (b) interim report, quarterly results announcement / financial report, circulars or listing documents?

              Answer:

              (a) Section 436(3) of the New Ordinance requires the issuer to include a statement indicating that the statement of comprehensive income for a full financial year and/or the statement of financial position at a financial year end (the "Statements") presented in the account are not statutory financial statements under the New Ordinance. The issuer must also disclose whether (i) an auditor's report had been prepared; and (ii) the auditors gave a qualified or modified audit opinion on the Statements.
              (b) The issuer must also comply with the above disclosure requirements if the financial reports, circulars or listing documents contain the Statements.

              For details, please refer to Accounting Bulletin 6 "Guidance on the Requirements of Section 436 of the Hong Kong Companies Ordinance Cap.622" issued by Hong Kong Institute of Certified Public Accountants at: http://app1.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeII/ab6.pdf

              FAQ Series 31, FAQ No. 13
              LR reference: Main Board Rules 13.48, 13.49(1), 13.49(6), 14.66 to 14.69, 11.03 & 11.04, 11.16 to 11.19, 14.61 & 14.62, 4.25 to 4.29 / GEM Rules 18.49, 18.53, 18.66, 18.78, 18.79, 19.66 to 19.69, 14.03 & 14.06, 14.29 to 14.31, 19.61 & 19.62, 7.27 to 7.31
              Released on 11/9/2015

              Question:

              An issuer proposes to amend its bye-laws which will be approved at the forthcoming annual general meeting to be held after 31 March 2004.

              If the notice of the annual general meeting sets out the resolutions for amendments of the bye-laws, does the issuer need to publish a separate announcement on the amendments?

              Answer:

              If an issuer has already included details of the resolution to amend its bye-laws or other constitutive document in the notice of annual general meeting, it is not required to publish a separate announcement on the amendments of the bye-laws.

              FAQ Series 1, FAQ No. 32
              LR reference: Main Board Rules 13.51(1) / GEM Rules 17.50(1)
              Released on 30/3/2004

              Question:

              A listed issuer proposes to seek shareholders' approval for certain amendments to its articles of association.

              Main Board Rule 13.51(1) / GEM Rule 17.50(1) requires the listed issuer to submit a confirmation from its legal advisers that the proposed amendments comply with the requirements of the Exchange Listing Rules and the laws of the place where it is incorporated or otherwise established.

              The Rule also requires the listed issuer to confirm that there is nothing unusual about the proposed amendments for a company listed in Hong Kong. Is the listed issuer required to obtain a legal opinion in this regard?

              Answer:

              With respect to the listed issuer's confirmation that there is nothing unusual about the proposed amendments to its articles of association, it is up to the listed issuer to decide whether an enquiry with its legal advisers needs to be made to assist the directors to determine whether there is anything unusual about the proposed amendments to the articles of association. In assessing the question of what is unusual, the directors should have regard to whether the proposed amendments are customary or a common feature of the articles of association of companies listed in Hong Kong.

              FAQ Series 8, FAQ No. 35. Issue 7
              LR reference: Main Board Rules 13.51(1) / GEM Rules 17.50(1)
              Released on 28/11/2008

              Question:

              Listco proposes to send corporate communications to its shareholders using electronic means. For this purpose, Listco will put in place adequate arrangements that comply with Main Board Rule 2.07A and all applicable laws and regulations. It will also seek shareholder approval for amending its articles of association to allow it to use electronic means to communicate with its shareholders.

              Listco's proposed amendments to its articles of association will comply with (i) the laws of its place of incorporation and (ii) the Listing Rules except Paragraph 5 of Appendix 3 to the Main Board Rules.

              Under Paragraph 5 of Appendix 3, an issuer's articles of association must provide that a copy of its director's report or the summary financial report must be delivered or sent by post to the registered address of every member.

              Would the Exchange consider that the proposed amendment of the articles of association by Listco a breach of Paragraph 5 of Appendix 3 to the Main Board Rules?

              Answer:

              The purpose of Main Board Rule 2.07A is to facilitate issuers' greater use of electronic means to communicate with shareholders to the extent permitted under applicable laws and regulations and their own constitutional documents. For this purpose, Paragraph 5 of Appendix 3 should be read in conjunction with Rule 2.07A.

              Provided that Listco's proposal has satisfied all the requirements under Rule 2.07A and is permitted under all applicable laws and regulations, the proposed amendments to its articles of association would not be regarded as a breach of Paragraph 5 of Appendix 3.

              FAQ Series 9, FAQ No. 23
              LR reference: Main Board Rules 2.07A, 13.51(1), Appendix 3 paragraph 5 / GEM Rules 16.04A, 17.50(1), Appendix 3 paragraph 5
              Released on 14/12/2009

              Question:

              Under Main Board Rule 13.51(1)/ GEM Rule 17.50(1), an issuer proposing to amend its articles of association must submit to the Exchange a letter to the issuer from its legal advisers confirming that the proposed amendments comply with the Listing Rules and the laws of the place of incorporation of the issuer.

              Listco will amend its articles of association and proposes the following arrangements:

              •   Can Listco appoint one legal adviser to opine on the compliance with Listing Rules and another legal adviser to opine on the compliance with the laws of the place of incorporation of the issuer?
              •   Can the confirmation letter be issued by Listco's in-house legal counsel?

              Answer:

              Yes. The arrangements are acceptable as long as Listco considers the persons have the professional qualifications and experience to provide the confirmation letter.

              FAQ Series 9, FAQ No. 24
              LR reference: Main Board Rules 13.51(1) / GEM Rules 17.50(1)
              Released on 14/12/2009

              Question:

              Is a director of a listed issuer required to execute a new declaration and undertaking ("DU Form(s)") in the case of a re-designation of directorship from executive director to non-executive director or vice-versa?

              Answer:

              No. Where a director is or is proposed to be re-designated, the listed issuer is not required to procure the re-designated director to lodge with the Exchange a declaration and undertaking in the form set out in Form B/H in Appendix 5 of the Main Board Rules or Form A/B in Appendix 6 of the GEM Rules.

              However, in accordance with Main Board Rule 13.51(2) or GEM Rule 17.50(2), an issuer must inform the Exchange of the re-designation of a director immediately after such re-designation takes effect, and the issuer must simultaneously make arrangements to ensure that an announcement of the re-designation of the director is published in accordance with Main Board Rule 2.07C or Chapter 16 of the GEM Rules as soon as practicable.

              FAQ Series 8, FAQ No. 36. Issue 17
              LR reference: Main Board Rules 13.51(2), Form B/H in Appendix 5 / GEM Rules 17.50(2), Form A/B in Appendix 6
              Released on 28/11/2008

              Question:

              How should an existing director / supervisor of an issuer seeking to transfer from GEM to the Main Board complete paragraph 2 of Part 1 of Form B/H/I in Appendix 5?

              Answer:

              For the purpose of paragraph 2 of Part 1 of Forms B/H/I, a GEM transfer issuer is regarded as a listed issuer. Existing directors and supervisors of a GEM transfer issuer must state in the relevant Forms B/H/I that their personal details have been set out in the transfer announcement made under Main Board Rule 9A.08, i.e. the date of the GEM transfer announcement should be inserted in the space provided.

              Every GEM transfer issuer must:

              •   disclose the biographical information of each existing director or supervisor in the GEM transfer announcement in the same manner as required under Main Board rule 13.51(2); and
              •   submit Form B/H/I to the Exchange immediately after the GEM transfer announcement is published.

              FAQ Series 8, FAQ No. 59. Issue 17
              LR reference: Main Board Rules Form B/H/I in Appendix 5, 9A.08, 9A.09(12), 13.51(2)
              Released on 28/11/2008 (Updated on 13/3/2009)

              Question:

              In the case of the resignation, retirement or removal of a director, supervisor or chief executive, will an issuer also be required to make the disclosures set out in (a) to (x) of Main Board Rule 13.51(2)/GEM Rule 17.50(2)?

              Answer:

              No, it is not intended that when a director, supervisor or chief executive resigns, retires or is removed that the announcement should contain the items listed under (a) to (x) of Main Board Rule 13.51(2)/GEM Rule 17.50(2).

              FAQ Series 17, FAQ No. 16
              LR reference: Main Board Rules 13.51(2) / GEM Rules 17.50(2)
              Released on 19/12/2011

              Question:

              Please clarify the requirement of "professional qualification".

              Answer:

              Professional qualification under Main Board Rule 13.51(2)(c) / GEM Rule 17.50(2)(c) refers to a qualification in respect of a professional discipline, for example law, accounting, engineering, architecture, surveying or medicine. It also includes any professional title and membership of a professional body.

              FAQ Series 8, FAQ No. 37. Issue 13
              LR reference: Main Board Rules 13.51(2)(c) / GEM Rules 17.50(2) (c)
              Released on 28/11/2008

              Question:

              If there is no information to be disclosed pursuant to the requirements under certain paragraphs, say (h) to (w), in Main Board Rule 13.51(2)/GEM Rule 17.50(2), is a negative statement required for each sub-paragraph including a recital of the language of the sub-paragraph in full or, alternatively, is it acceptable for the negative statement to be made by quoting the rule reference without a detailed description of each of the requirements therein?

              Answer:

              Subject to the comment below, compliance with the requirements of Main Board Rule 13.51(2)/GEM Rule 17.50(2), could be achieved by either approach. We think the alternative offers a more elegant and focused form of disclosure. Under either approach separate disclosure should always be made pursuant to Main Board Rule 13.51(2)(w) /GEM Rule 17.50(2)(w) to confirm, in the announcement, whether or not there are any other matters that need to be brought to the attention of holders of securities of the listed issuer.

              FAQ Series 2, FAQ No. 2
              LR reference: Main Board Rules 13.51(2)(x) / GEM Rules 17.50(2)(x)
              Released on 6/6/2006 (Updated on 30/9/2009)

              Question:

              If the board of directors of an issuer decides in its board meeting held on 31 March 2015 to revise its financial statements for the financial year ended 30 June 2014, will the issuer need to publish an announcement under the headline category "Revision of Published Financial Statements and Reports"?

              Answer:

              As the relevant Rule amendments take effect on 1 April 2015, the new headline category "Revision of Published Financial Statements and Reports" will be available from the same date.

              The issuer needs to publish an announcement as soon as practicable after the directors decide to revise the financial statements. The announcement should state the fact and provide reason(s) leading to the revision of the published financial statements and the financial impact.

              The issuer must select the new headline category if it publishes its announcement concerning the revision of published financial statements and reports on or after 1 April 2015.

              FAQ Series 31, FAQ No. 11
              LR reference: Main Board Rules 13.51(7) / GEM Rules 17.50(6)
              Released on 6/2/2015

              Question:

              Does the new rule apply to financial reports with glossy covers published by a listed issuer pursuant to the Main Board Listing Rules/GEM Listing Rules? If yes, is it acceptable for the listed issuer to disclose its stock code in the corporate or shareholder information section instead of the cover pages of the documents?

              Answer:

              Financial reports are considered documents subject to Main Board Rule 13.51A/ GEM Rule 17.52A (the "Rule"). However, the Exchange would accept that the purpose of the Rule would be satisfied, in the circumstances described, provided that the stock code is displayed prominently in the corporate or shareholder information section of the document. This application of the Rule represents a modification to the strict wording of the Rule for which consent from the Securities and Futures Commission has been obtained under Main Board Rule 2.04/GEM Rule 2.07.

              FAQ Series 2, FAQ No. 3
              LR reference: Main Board Rules 13.51A / GEM Rules 17.52A
              Released on 6/6/2006 (Updated on 30/9/2009)

              Question:

              Can issuers publish on their websites the procedures for director election in a single language (i.e. English or Chinese only)?

              Answer:

              No, they must be published in both English and Chinese.

              FAQ Series 17, FAQ No. 17
              LR reference: Main Board Rules 13.51D / GEM Rules 17.50C
              Released on 19/12/2011

              Question:

              If the procedures for shareholders to propose a person for election as a director are set out in an issuer's constitutional documents (which are already required to be published on its website and the Exchange's website), does the issuer need to separately publish these procedures on its website?

              Answer:

              We would expect the issuer to publish the procedures separately on its website. This is because, first, the constitutional documents are usually very lengthy and investors may find it difficult to locate the procedures (especially if they are unaware that these procedures are set out in the constitutional documents). Second, publishing the procedures on the issuer's website should not be onerous and doing so will enhance transparency.

              FAQ Series 21, FAQ No. 6
              LR reference: Main Board Rules 13.51D / GEM Rules 17.50C
              Released on 27/3/2013

              Question:

              Will the submissions for publication I make through the e-Submission System be vetted by HKEx prior to publication?

              Answer:

              No. If an announcement requires pre-vetting by the Listing Division, an issuer must not submit that announcement for publication until clearance, by way of the usual indication that the Exchange has "no further comments", has been obtained.

              If an issuer wishes to submit an announcement or document for vetting the issuer should log onto the e-Submission System as a "Listing Related Matter" user. The announcement or document can then be submitted to HKEx's Listing Division and vetted if necessary. Announcements or documents submitted as a "Listing Related Matter" user are not published by the e-Submission System.

              It is the issuer's responsibility to decide whether an announcement or document should be submitted for publication or submitted for vetting through the e-Submission System. An issuer can consult HKEx's published "Guide on pre-vetting requirements and selection of headline categories for announcements" (http://www.hkex.com.hk/eng/rulesreg/listrules/guidref/guide_pre_vetting_req.htm) for guidance on this matter.

              FAQ Series 3, FAQ No. 170
              LR reference: Main Board Rules 13.52, 13.52A, 13.52B / GEM Rules 17.53, 17.53A, 17.53B
              Released on 22/3/2007 (Updated on 7/3/2011)

              Question:

              Main Board Rule 13.52(2) / GEM Rule 17.53(2) sets out the types of announcements that require pre-vetting. As for other types of announcements, can a listed issuer submit a draft to the Exchange for review before publication?

              Answer:

              The Exchange will not accede to a listed issuer's request to pre-vet its announcement save in exceptional circumstances. Nevertheless the issuer is encouraged to consult the Exchange on any Rule compliance issues in relation to the announcement and/or the subject matter before it publishes the announcement.

              FAQ Series 8, FAQ No. 38. Issue 7
              LR reference: Main Board Rules 13.52(2) / GEM Rules 17.53(2)
              Released on 28/11/2008

              Question:

              Where a listed issuer publishes an announcement under the Rules that is not subject to the pre-vetting requirement under Main Board Rule 13.52(2) / GEM Rule 17.53(2), will the Exchange require the listed issuer to submit any documents (for example Listing Rule compliance checklists) for the purpose of post-vetting the announcement?

              Answer:

              If the announcement is made in respect of a share / discloseable transaction required under Main Board Rules 14.34 and 14.35 / GEM Rules 19.34 and 19.35, the listed issuer must complete the "Size Tests Checklist" and submit it to the Listing Division not later than the publication of the announcement.

              The Exchange may require the listed issuer to submit information and/or documents in respect of an announcement published by the issuer to demonstrate its compliance with the Rules. In such cases, the Exchange will inform the listed issuer of the specific information and/or documents required. A checklist for disclosure requirements applicable to a particular type of announcement may need to be submitted by the listed issuer upon request by the Exchange in individual cases.

              FAQ Series 8, FAQ No. 39. Issue 7
              LR reference: Main Board Rules 13.52(2) / GEM Rules 17.53(2)
              Released on 28/11/2008

              Question:

              Under what circumstances will the Exchange exercise the right under Main Board Rule 13.52A / GEM Rule 17.53A to request review of announcements, circulars or other documents before their publication?

              Answer:

              The Exchange will only exercise this power in exceptional circumstances. This is generally the case where the Exchange has an interest in reviewing certain disclosure in a listed issuer's announcement, for example the Exchange has required the listed issuer to make certain specific disclosure in its announcement and such disclosure is necessary to ensure a fair, orderly and efficient market. In such cases, the Exchange will communicate to the listed issuer its direction to review the announcement prior to publication and the reasons for its decision.

              FAQ Series 8, FAQ No. 40. Issue 7
              LR reference: Main Board Rules 13.52A / GEM Rules 17.53A
              Released on 28/11/2008)

              Question:

              When an A+H issuer proposes a corporate action (e.g. distribution of dividends or other entitlements), does it need to disclose the timetables for both A and H shareholders in the same announcement?

              Answer:

              Yes. The issuers should ensure clear communications to all shareholders if they propose different timetables (e.g. ex-entitlement date, record date and payment date) for their distributions to shareholders in the two markets.

              FAQ Series 29, FAQ No. 7
              LR reference: Main Board Rules 13.52B
              Released on 14/11/2014

              Question:

              How will an investor who holds his shares in the issuer through the Central Clearing and Settlement System ("CCASS"), i.e. he holds his shares in the name of HKSCC Nominees Limited and his name does not appear on the issuer's register of members, ("CCASS investor"), receive corporate communications from the issuer?

              Answer:

              "CCASS investor" includes: (i) a person or company whose shares are held through a broker or custodian; and (ii) a beneficial shareholder whose shares are held in CCASS directly.

              Main Board Rule 13.56 and GEM Rule 17.60 require an issuer, as soon as practicable following a request to Hong Kong Securities Clearing Company Limited ("HKSCC") and at the expense of the issuer, to send copies of any corporate communications to any person or company whose listed securities are held in CCASS either directly as a beneficial shareholder or through a broker or custodian, and who has notified the issuer from time to time through HKSCC, that he or it wishes to receive corporate communications.

              Therefore, whenever an issuer publishes a corporate communication, it can send to all these CCASS investors a notification of the publication of a corporate communication on its website together with a request form. If a CCASS investor wishes to receive a hard copy of the corporate communication, the CCASS investor should complete and return the request form to the share registrar or other agent of the issuer (the postage for which will be borne by the issuer). The issuer will then send the CCASS investor a hard copy free of charge.

              We would expect issuers to have in place an arrangement to anticipate the preference of CCASS investors that requested a hard copy in response to a previous notification. This arrangement should ensure, on a best efforts basis, that these CCASS investors are in future sent hard copies of corporate communications without having to complete and return a request form for every corporate communication unless they have at one time ceased to have holdings in that particular issuer.

              Arrangements which a CCASS investor may have with his or its broker should not be affected.

              FAQ Series 8, FAQ No. 40A. Issue 1
              LR reference: Main Board Rules 13.56 / GEM Rules 17.60
              Released on 31/12/2009

              Question:

              A director has a service contract without a fixed term which is terminable by either party by giving notice of 6 months. Is shareholders approval necessary as the contract may be for a term that may exceed 3 years?

              Answer:

              The purpose of the rule is to ensure that the issuer is not unduly burdened by service contracts that are for an inordinate length or which require heavy compensation or lengthy notice for early termination. Such contingent liabilities may be significant, in which case, shareholders' approval must be obtained for these service contracts. In this case, we consider that there is no significant commitment on the issuer as there is no specific term and only six months notice is required. Therefore, the contract does not need to be approved by shareholders.

              FAQ Series 1, FAQ No. 33
              LR reference: Main Board Rules 13.68 / GEM Rules 17.90
              Released on 30/3/2004

              Question:

              Is shareholders' approval required for a director's service contract with a fixed term of 3 years, but requiring a notice of 6 months before termination after the fixed term? The contract does not mention the compensation for early termination of the fixed term. It expressly states however that, if the contract is terminated when the remaining term is more than 1 year, a compensation in dollars for the remaining term will be needed. Will this contract require shareholders' approval?

              Answer:

              Yes, shareholders' approval is required because the service contract is of a fixed term of 3 years and a notice of 6 months is required for termination after the fixed term and accordingly, the service contract may endure for more than 3 years.

              In addition, the service contract will be subject to shareholders' approval because it expressly provides for a scenario where more than 1 year's remuneration will be payable in order to terminate the contract.

              FAQ Series 1, FAQ No. 34
              LR reference: Main Board Rules 13.68 / GEM Rules 17.90
              Released on 30/3/2004

              Question:

              Is an "employment contract" with a director the same as a director's "service contract" and should it be treated as a notifiable transaction?

              Answer:

              We would expect an "employment contract" with a director to contain the terms upon which he is to provide his services to issuer.

              We consider that as the director is also an employee, an employment contract should be subject to the same disclosure and shareholders' approval requirements as for service contracts if it falls within the situation described in Main Board rule 13.68 / GEM rule 17.90. Directors' employment contracts are not subject to the requirements of notifiable transactions.

              FAQ Series 1, FAQ No. 35
              LR reference: Main Board Rules 13.68 / GEM Rules 17.90
              Released on 30/3/2004

              Question:

              After despatch of the notice of a general meeting, an issuer receives a notice from a shareholder to propose a person for election as a director at the general meeting.

              Clarify the disclosure requirements for the announcement or supplementary circular in respect of the nomination.

              Answer:

              Issuers must publish details of the candidate as required under Main Board Rule 13.51(2) / GEM Rule 17.50(2) in an announcement or supplementary circular.

              The issuer must also assess whether or not it is necessary to adjourn the meeting of the election to give shareholders at least 10 business days to consider the relevant information disclosed in the announcement or supplementary circular.

              FAQ Series 1, FAQ No. 36
              LR reference: Main Board Rules 13.70 / GEM Rules 17.46B
              Released on 30/3/2004 (updated on 2/7/2010)

              Question:

              A shareholder proposes a person for election as a director at the forthcoming AGM after Listco has issued the AGM notice.

              Listco will issue a supplemental notice for the nomination of the director. Is it required to comply with the minimum 20 clear business days' notice period under Code Provision E.1.3 for the despatch of this supplemental notice?

              Answer:

              For nomination of directors in the circumstances described, Main Board Rule 13.70/ GEM Rule 17.46B specifically require the issuer to assess whether it is necessary to adjourn the general meeting to give shareholders at least 14 days to consider the information disclosed in the supplemental notice. It would normally be acceptable for Listco to issue the supplemental notice 14 days before the AGM or the adjourned AGM.

              FAQ Series 9, FAQ No. 27
              LR reference: Main Board Rules Appendix 14, Code Provision E.1.3, 13.70 / GEM Rules Appendix 15, Code Provision E.1.3, 17.46B
              Released on 14/12/2009

              Question:

              Regarding disclosure of biographical details of directors to be elected at a general meeting, is it sufficient for such information to be disclosed in the annual report if the election is to be proposed at an Annual General Meeting, or is it necessary to include details in the notice, or should another circular be sent to shareholders?

              Answer:

              Main Board rule 13.74 / GEM rule 17.46A states that disclosure of the details must be made in the notice or accompanying circular.

              For appointments at the AGM, if the annual report is the accompanying circular, then reference to the annual report is acceptable as long as there is no doubt as to where the information can be found and to which director reference is being made and the disclosure requirements of Main Board Rule 13.51(2)/ GEM Rule 17.50(2) have been complied with. It is not necessary to send another circular if details are included in the annual report.

              However, for appointments at times other than at the AGM, reference to the annual report is not acceptable. Certain shareholders as at the date when disclosure is made under Main Board Rule 13.51(2) / GEM Rule 17.50(2) may not have been so when the circular or notice of AGM was sent. Also, there may have been changes in the information previously published which will need to be updated. Therefore incorporation of information by reference to other documents is not acceptable.

              FAQ Series 1, FAQ No. 37
              LR reference: Main Board Rules 13.74 / GEM Rules 17.46A
              Released on 30/3/2004

              Question:

              Is an issuer required to seek shareholder approval for the appointment of a new auditor if the existing auditor resigns before the end of his term of office?

              Answer:

              Shareholder approval is not required for the appointment of an auditor to fill a casual vacancy during the year. However, the issuer must seek shareholder approval for the formal appointment of the auditor at the next annual general meeting.

              FAQ Series 17, FAQ No. 18
              LR reference: Main Board Rules 13.88 / GEM Rules 17.100
              Released on 19/12/2011

              Question:

              Can issuers publish their constitutional documents in a single language (i.e. English or Chinese only)?

              Answer:

              No, the constitutional documents must be published in both English and Chinese.

              FAQ Series 17, FAQ No. 19
              LR reference: Main Board Rules 13.90 / GEM Rules 17.102
              Released on 19/12/2011

              Question:

              If we translate our constitutional document, would both languages be of equal effect?

              Answer:

              For translation of constitutional documents, you should specify which of the two languages (Chinese or English) prevail in case of discrepancies or inconsistencies.

              FAQ Series 17, FAQ No. 19A
              LR reference: Main Board Rules 13.90 / GEM Rules 17.102
              Released on 19/12/2011

              Question:

              Do issuers have to publish their constitutional documents by way of an announcement? Which announcement headline(s) should they use?

              Answer:

              Issuers do not need to publish their constitutional documents by way of an announcement. They may select the current Tier One Headline Category — Constitutional Documents when submitting their documents for publication on the HKExnews website.

              FAQ Series 17, FAQ No. 19B
              LR reference: Main Board Rules 13.90 / GEM Rules 17.102
              Released on 19/12/2011

              Question:

              If an issuer has amended its constitutional documents (memorandum and articles of association, bye-laws or other equivalent constitutional document) many times over the years since its incorporation, is it required to post to the Exchange website its documents incorporating all the previous amendments?

              Answer:

              The issuer is required to publish a consolidated version of the constitutional document which has incorporated all the changes. This may be a conformed copy or a consolidated version not formally adopted by shareholders at a general meeting. However, if the issuer does so, the front page of the published constitutional document should include a statement that it is a conformed copy or a consolidated version not formally adopted by shareholders at a general meeting.

              FAQ Series 17, FAQ No. 19C
              LR reference: Main Board Rules 13.90 / GEM Rules 17.102
              Released on 19/12/2011

              Question:

              My company is a Bermuda company and in order to publish a consolidated version of the constitutional document, we need to obtain shareholder and court approval and register the consolidated constitutional document with the Bermuda Companies Registry.

              Answer:

              See response to Question 19C above.

              FAQ Series 17, FAQ No. 19D
              LR reference: Main Board Rules 13.90 / GEM Rules 17.102
              Released on 19/12/2011

              Question:

              How will Hong Kong-incorporated issuers satisfy the Rules regarding disclosure of their memorandum and articles of association?

              Answer:

              For Hong Kong-incorporated issuers, reference to "memorandum and articles of association" in the Rules will be deemed to refer solely to their articles of association because provisions of the memorandum of association will be automatically deemed under the New CO to be regarded as provisions of the issuer's articles of association.

              FAQ Series 26, FAQ No. 17
              LR reference: Main Board Rules 13.90 / GEM Rules 17.102
              Released on 21/2/2014

              Question:

              Will Hong Kong-incorporated issuers (prospective or existing) need to amend and reprint their articles of association in order to incorporate the contents of their memorandum of association for the purposes of the Exchange's disclosure requirements?

              Answer:

              There will be no need for Hong Kong-incorporated issuers to amend or reprint their articles of association for the purposes of the Exchange's disclosure requirements.

              FAQ Series 26, FAQ No. 18
              LR reference: Main Board Rules 13.90 / GEM Rules 17.102
              Released on 21/2/2014

              Question:

              Can an issuer adopt other guidelines instead of the ESG Reporting Guide ("ESG Guide" or "Guide")? Where an issuer adopts alternative reporting guidance or international standards with comparable provisions to the Guide, is it required to give any explanation/reconciliation in relation to the Guide?

              Answer:

              The Guide sets out minimum parameters for reporting with a view to facilitating issuers' disclosure and communication with investors and other stakeholders. Issuers may adopt international standards or guidelines, such as the Global Reporting Initiative's G4 Sustainability Reporting Guidelines, CDP's Climate Change Information Request and Water Information Request, the International Organization for Standardization's Guidance on Social Responsibility, and the Corporate Sustainability Assessment for inclusion in the Dow Jones Sustainability Indices.

              To avoid duplication, adopting international reporting standards or guidelines that contain comparable provisions to the ESG Guide should be sufficient compliance with the Guide without the need for further explanation. However, issuers that report on international standards or guidelines should make clear which "comply or explain" provisions and recommended disclosures of the Guide they are reporting on.

              FAQ Series 18, FAQ No. 2
              LR reference: Main Board Rules 13.91, Appendix 27 / GEM Rules 17.103, Appendix 20
              Released on 31/8/2012 (Updated on 21/12/2015)

              Question:

              What is the implementation date of the amendments to the Rules and the Guide adopted in the "Consultation Conclusions on Review of the Environmental, Social and Governance Reporting Guide" published in December 2015?

              Answer:

              The amendments to Main Board Rule 13.91 and Main Board Rules Appendix 16 Paragraphs 6 and 53 (GEM Rules 17.103, 18.07 and 18.84), the upgrade of the General Disclosures under each Aspect of the Guide from recommended to "comply or explain", and the amendments to the recommended disclosures will be effective for issuers' financial years commencing on or after 1 January 2016. An ESG report, if not presented in the issuer's annual report, should be published no later than three months after the publication of the issuer's annual report; and the issuer's annual report must be published no more than four months (in the case of a Main Board issuer) and three months (in the case of a GEM issuer) after the end of the financial year.

              So, for an issuer with a financial year starting from 1 January, its 2016 ESG report must contain the information required under the General Disclosures of each Aspect of the Guide, or else it must give considered reasons. At the latest, a Main Board issuer with a financial year starting from 1 January must publish its 2016 annual report by 30 April 2017, and should publish its 2016 ESG report by 31 July 2017. However, if the issuer publishes its 2016 annual report earlier, say on 31 March 2017, then it should publish its 2016 ESG report by 30 June 2017.

              The upgrade of the KPIs in the "Environmental" Subject Area from recommended to "comply or explain" will be effective for issuers' financial years commencing on or after 1 January 2017. So, for an issuer with a financial year starting from 1 January, its 2017 ESG report must contain the information required under the "Environmental" KPIs (in addition to the information required under the General Disclosures of each Aspect of the Guide), or else it must give considered reasons. Similar to the example given above, a Main Board issuer with a financial year starting from 1 January must, at the latest, publish its 2017 annual report by 30 April 2018, and should publish its 2017 ESG report by 31 July 2018. However, if the issuer publishes its 2017 annual report earlier, say on 31 March 2018, then it should publish its 2017 ESG report by 30 June 2018.

              FAQ Series 18, FAQ No. 3
              LR reference: Main Board Rules 13.91, Appendix 16 Paragraphs 6 and 53, Appendix 27 / GEM Rules 17.103, 18.07, 18.84, Appendix 20
              Released on 31/8/2012 (Updated on 21/12/2015)

            • Chapter 14

              View Current PDF

              Question:

              If a listed subsidiary issues new shares by way of a general mandate to acquire assets, what are the notifiable transaction implications for the listed parent?

              Answer:

              An allotment of shares by the listed subsidiary would be a deemed disposal for the listed parent and the transaction, depending on the size tests as defined in Main Board Rule 14.04(9) / GEM Rule 19.04(9), may fall to be treated as a very substantial disposal, major transaction or discloseable transaction of the listed parent and be subject to the relevant notifiable transaction requirements under Main Board Chapter 14 / GEM Chapter 19.

              Furthermore, the acquisition of assets by the listed subsidiary would constitute an acquisition of assets by the listed parent (or its subsidiary). The transaction, depending on the size tests defined in Main Board Rule 14.04(9) / GEM Rule 19.04(9), may fall to be treated as a very substantial acquisition, major transaction or discloseable transaction of the listed parent and be subject to the relevant notifiable transaction requirements under Main Board Chapter 14 / GEM Chapter 19.

              FAQ Series 8, FAQ No. 41. Issue 10
              LR reference: Main Board Rules 14.04, 14.29 / GEM Rules 19.04, 19.29
              Released on 28/11/2008

              Question:

              The definition of "transaction" includes entering into or terminating operating leases which have a significant impact on the operations of the listed issuer concerned. Does it refer to operating leases where the listed issuer acts as a lessee?

              Answer:

              Main Board Rule 14.04(1)(d) / GEM Rule 19.04(1)(d) applies whether the listed issuer is the lessee or the lessor of the subject operating leases.

              FAQ Series 7, FAQ No. 3
              LR reference: Main Board Rules 14.04(1)(d) / GEM Rules 19.04(1)(d)
              Released on 28/11/2008

              Question:

              Does the term "joint venture entity" under Main Board Rule 14.04(1)(f) / GEM Rule 19.04(1)(f) only refer to an entity which will be accounted for as a jointly controlled entity in the accounts of the listed issuer concerned?

              Answer:

              No. The term "joint venture entity" under Main Board Rule 14.04(1)(f) / GEM Rule 19.04(1)(f) may refer to any entity in any form which is to be jointly established by a listed issuer and any other party / parties, but is not limited to an entity which will be accounted for as a jointly controlled entity in the listed issuer's accounts.

              FAQ Series 7, FAQ No. 4
              LR reference: Main Board Rules 14.04(1)(f) / GEM Rules 19.04(1)(f)
              Released on 28/11/2008

              Question:

              Main Board Rule 14.15(2) / GEM Rule 19.15(2) sets out the requirements for calculating the consideration ratio for a transaction involving establishment of a joint venture entity. Are the assets ratio, profits ratio and the revenue ratio applicable to a transaction involving formation of a joint venture entity?

              If the joint venture partner proposes to inject its assets (other than cash) as capital contribution for setting up the joint venture entity, is it necessary to calculate the percentage ratios for the asset injection?

              Answer:

              For the purpose of classifying a transaction involving formation of a joint venture entity, the listed issuer is normally required to compute the assets ratio and the consideration ratio, and the consideration determined with reference to Main Board Rule 14.15(2) / GEM Rule 19.15(2) would form the numerator for each of these ratios. As to the profits and revenue ratios, they would normally be inapplicable as the joint venture entity would be newly set up and its profits and revenue figures would not be available.

              Nevertheless, where the formation of joint venture entity involves injection of assets (other than cash) by the listed issuer and/or any joint venture partner into the joint venture entity, the listed issuer should consider whether the transaction would result in an acquisition and/or disposal of assets by the listed issuer. In the circumstances described, if the joint venture entity is to be accounted for as a subsidiary of the listed issuer, the injection of assets by the joint venture partner into the joint venture entity would in effect result in an acquisition of such assets by the listed issuer. The listed issuer should compute the percentage ratios of such acquisition for classifying the transaction.

              FAQ Series 7, FAQ No. 5
              LR reference: Main Board Rules 14.04(1)(f), 14.07 / GEM Rules 19.04(1)(f), 19.07
              Released on 28/11/2008

              Question:

              An issuer proposes to liquidate a subsidiary.

              Is the proposed voluntary liquidation of the subsidiary subject to the notifiable transaction requirements?

              Answer:

              The process of voluntary liquidation does not constitute a "transaction". However, the liquidation process may involve certain transactions that are subject to notifiable transaction Rules, for example, disposal of the subsidiary's assets.

              FAQ Series 9, FAQ No. 1
              LR reference: Main Board Rules 14.04(1) / GEM Rules 19.04(1)
              Released on 14/12/2009

              Question:

              Listco proposes to form a joint venture with an independent third party.

              According to the joint venture agreement, the transfer of interest in the joint venture by Listco or the joint venture partner to any third parties is subject to a right of first refusal of the other shareholder. Is the grant of the right of first refusal by/to Listco a transaction under the notifiable transaction rules?

              Answer:

              In this case, the right of first refusal gives Listco or the joint venture partner (as the case may be) the right to acquire the other's interest in the joint venture before the other can dispose of it to any third party. Granting the right of first refusal by/to Listco is not a notifiable transaction given that (i) no consideration is payable for the right and (ii) Listco will still have the discretion on whether to acquire or dispose of (as the case may be) the interest in the joint venture when the right is exercised. If Listco or the joint venture partner exercises the right of first refusal, the disposal or acquisition by Listco would be a transaction.

              FAQ Series 9, FAQ No. 2
              LR reference: Main Board Rules 14.04(1) / GEM Rules 19.04(1)
              Released on 14/12/2009

              Question:

              The court has ordered Listco to sell its property to settle an outstanding loan.

              Is the forced sale of the property by court order subject to the notifiable transaction requirements?

              Answer:

              Since Listco is bound to follow the court order and has no discretion to act in an opposite manner, the sale of the property by the court order is not regarded as a "transaction". Therefore the notifiable transaction requirements are not applicable in this situation. Nevertheless, if the information is inside information which requires disclosure under the Inside Information Provisions, Listco must also simultaneously announce the information under Main Board Rule 13.09(2)(a)/ GEM Rule 17.10(2)(a)1.

              FAQ Series 9, FAQ No. 3
              LR reference: Main Board Rules 14.04(1)(a) / GEM Rules 19.04(1)(a)
              Released on 14/12/2009 (Updated on 2/1/2013)

              Question:

              Do the notifiable transaction rules apply to share repurchases by an issuer?

              Answer:

              Repurchases by an issuer of its own shares are normally not subject to the notifiable transaction rules.

              FAQ Series 9, FAQ No. 4
              LR reference: Main Board Rules 14.04(1)(a) / GEM Rules 19.04(1)(a)
              Released on 14/12/2009

              Question:

              Company A is an associated company of Listco. Company A proposes to issue new shares to Mr. X (the Proposed Issue).

              The Proposed Issue would dilute Listco's interest in Company A. Is it a transaction for Listco under Chapter 14? Is it a connected transaction for Listco under Chapter 14A if Mr. X is a connected person of Listco?

              Answer:

              The Proposed Issue is not a transaction for Listco under both Chapters 14 and 14A as Company A is not a subsidiary of Listco.

              FAQ Series 20, FAQ No. 1
              LR reference: Main Board Rules 14.04(1)(a), 14A.25 / GEM Rules 19.04(1)(a), 20.23
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Listco is a property developer and from time to time maintains term deposits and balances with various banks. It now proposes to place cash deposits with Company A on normal commercial terms.

              Company A is a finance company approved by regulatory authorities in the Mainland. It only provides financial services to its group companies including Listco.

              As Company A is a connected person, the proposed placing of cash deposits would be a connected transaction for Listco under Chapter 14A. Would it also constitute a transaction under Chapter 14?

              Answer:

              Yes. The proposed placing of cash deposits would be regarded as Listco providing financial assistance to Company A which falls within the definition of "transaction" under both Rules 14.04(1)(e) and 14A.24(4).

              FAQ Series 20, FAQ No. 2
              LR reference: Main Board Rules 14.04(1)(e), 14A.24(4) / GEM Rules 19.04(1)(e), 20.22(4)
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Mr. X is Listco's executive director. He has been providing financial assistance to support Listco's business.

              Listco proposes to provide Mr. X with a corporate credit card for payment of his travelling expenses related to Listco's business. If he also uses the corporate credit card for payment of his personal purchases, Listco would set off the payment against the amount due from Listco to Mr. X.

              Would the use of the corporate credit card for payment of Mr. X's personal expenses constitute a transaction for Listco under Chapters 14 and 14A?

              Answer:

              Yes. Listco is liable for settling any payment made through the corporate credit card. Allowing Mr. X to use the card for payment of his personal expenses is a means to provide financial assistance to Mr. X. It falls within the definition of "transaction" under both Rules 14.04(1)(e) and 14A.24(4).

              FAQ Series 20, FAQ No. 3
              LR reference: Main Board Rules 14.04(1)(e), 14A.24(4) / GEM Rules 19.04(1)(e), 20.22(4)
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              A listed issuer has published an audited interim accounts.

              Can the listed issuer refer to profits and revenue figures shown in such accounts for computation of the profits ratio and revenue ratio?

              Answer:

              Under Main Board Rules 14.16 and 14.17 / GEM Rules 19.16 and 19.17, the profits and revenue figures to be used by a listed issuer as the basis of the profits ratio and revenue ratio must be the figures shown in its latest published audited accounts. This normally refers to the annual accounts of the listed issuer as the use of the profits and revenue figures shown in such accounts would provide a more meaningful measurement of the relative size of a transaction to the listed issuer based on the profitability and level of activity of a full financial year.

              FAQ Series 7, FAQ No. 6
              LR reference: Main Board Rules 14.04(2), 14.17 / GEM Rules 19.04(2), 19.17
              Released on 28/11/2008

              Question:

              Company X is a jointly controlled entity of Listco A whose securities are listed on the Exchange.

              Company X proposes to acquire certain assets from a third party. Is Listco A required to comply with the requirements of Chapter 14 of the Main Board Rules / Chapter 19 of the GEM Rules for the proposed acquisition of assets by Company X?

              Answer:

              It would depend on whether Company X is a subsidiary of Listco A as defined in Main Board Rule 1.01/ GEM Rule 1.01. An assessment of whether an undertaking is a subsidiary for Listing Rules purposes would include consideration of how the entity is accounted for and whether the entity is a subsidiary undertaking as defined by schedule 1 to the Companies Ordinance. For example, Listco A owns more than 50% of the equity interest in Company X but it does not control the majority of the board of Company X under the terms of the joint venture agreement. Even though Company X is only accounted for as an associated company in Listco A's consolidated accounts, Company X is still a subsidiary of Listco A for the purpose of the Listing Rules due to Listco A's shareholding in Company X.

              The notifiable transaction requirements under Chapter 14 of the Main Board Rules / Chapter 19 of the GEM Rules generally apply to transactions undertaken by the listed company and/or its subsidiaries. For the purposes of Chapter 14 of the Main Board Rules / Chapter 19 of the GEM Rules, the term "listed issuer" is defined under Main Board Rule 14.04(6) / GEM Rule 19.04(6) to include the listed company itself and its subsidiaries, unless the context otherwise requires.

              In the circumstances described, if Company X is regarded as a subsidiary of Listco A pursuant to Main Board Rule 1.01/ GEM Rule 1.01, Listco A must ensure compliance with the requirements under Chapter 14 of the Main Board Rules / Chapter 19 of the GEM Rules in respect of the proposed acquisition of assets by Company X.

              FAQ Series 7, FAQ No. 1
              LR reference: Main Board Rules 1.01, 14.04(6) / GEM Rules 1.01, 19.04(6)
              Released on 28/11/2008 (Updated April 2015)

              Question:

              Is financial assistance given by a company holding a Money Lender Licence or by a licensed corporation under the Securities & Futures Ordinance (e.g. margin financing) considered to be financial assistance provided in the ordinary and usual course of business for the purpose of notifiable transaction rules?

              Answer:

              The new rules state that only a banking company provides financial assistance in its ordinary and usual course of business. A banking company is defined as a bank, a restricted licence bank or a deposit-taking company as defined in the Banking Ordinance or a bank constituted under appropriate overseas legislation or authority.

              Neither of these entities is included in the definition of a banking company and therefore neither will be treated as providing financial assistance in their ordinary and usual course of business under the rules.

              Note: Main Board rules 14.04(1)I and 14.04(8) (GEM rules 19.04(1)I and 19.04(8)) were amended in March 2006. Under the revised rules, financial assistance provided by a securities house (i.e. a corporation licensed or registered under the Securities and Futures Ordinance for Type 1 (dealing in securities) or Type 8 (securities margin financing) regulated activity) under rule 14.04(1)I(iii) will also be regarded as financial assistance provided in the ordinary and usual course of business for the purpose of notifiable transaction rules.

              FAQ Series 1, FAQ No. 39
              LR reference: Main Board Rules 14.04(8) / GEM Rules 19.04(8)
              Released on 30/3/2004 (Updated on 30/9/2009)

              Question:

              What assets should be taken into account for the purposes of the control of assets test in Rule 18.03(1)(a)?

              Answer:

              To satisfy the control of assets test in Rule 18.03(1)(a), a Mineral Company must have an interest greater than 50% (by value) in its total assets, together with sufficient rights over the exploration for and/or extraction of Natural Resources.

              In this context, the Exchange will apply the total assets definition in Rule 14.04(12).

              FAQ Series 12, FAQ No. 4
              LR reference: Main Board Rules 18.03(1)(a), 14.04(12) / GEM Rules 18A.03(1)(a), 19.04(12)
              Released on 26/5/2010

              Question:

              How should an issuer compute the percentage ratios for providing financial assistance to a third party?

              Answer:

              For assets ratio and consideration ratio, the numerator will be the value of the financial assistance plus any "monetary advantage" (see Main Board Rule 14.12/ GEM Rule 19.12) accruing to the borrower.

              The revenue ratio and profits ratio are applicable when there is an identifiable income from providing the financial assistance (e.g. interest income). The annual amount will be used as the numerator for calculating these ratios.

              FAQ Series 9, FAQ No. 5
              LR reference: Main Board Rules 14.07 / GEM Rules 19.07
              Released on 14/12/2009

              Question:

              Listco proposes to subscribe for some convertible bonds issued by Company X which is an independent third party. Listco will have the sole discretion on whether to convert the bonds into Company X's new shares according to the terms of the bonds.

              Is the subscription of the convertible bonds a transaction for Listco under the notifiable transaction rules?

              If Listco exercises the conversion rights attached to the bonds, the acquisition of Company X's interest would be a major transaction or above. Can Listco seek prior shareholder approval for any exercise of the conversion rights when it subscribes for the bonds?

              Answer:

              Subscription of the convertible bonds is a form of financial assistance provided by Listco to Company X. Listco should compute the percentage ratios for classifying the subscription under the notifiable transaction rules.

              When Listco proposes to exercise any conversion rights attached to the bonds, it will have to comply with the applicable notifiable transaction requirements for the acquisition of an interest in Company X.

              Under the notifiable transaction rules, it is acceptable for Listco to obtain prior shareholder approval for the exercise of the conversion rights at the time of subscription of the convertible bonds provided that it can provide sufficient information to its shareholders to assess the transaction.

              FAQ Series 9, FAQ No. 6
              LR reference: Main Board Rules 14.07 / GEM Rules 19.07
              Released on 14/12/2009

              Question:

              On the acquisition of an asset, say an equity interest, will the total assets test be applicable?

              Answer:

              The total assets test will apply to acquisitions of assets.

              If the book value of an asset to the vendor is unknown, the issuer must use the value of assets to be recorded in its books as the numerator of the total assets test. This would be the consideration payable, together with liabilities assumed (if any).

              FAQ Series 1, FAQ No. 45
              LR reference: Main Board Rules 14.07(1) / GEM Rules 19.07(1)
              Released on 30/3/2004

              Question:

              Do profits ratio and revenue ratio apply to an acquisition of fixed assets (e.g. equipment and machinery) by an issuer for its own use in its ordinary and usual course of business?

              Answer:

              The revenue and profits ratios are not applicable if these assets do not have an identifiable income stream.

              FAQ Series 9, FAQ No. 7
              LR reference: Main Board Rules 14.07(2) and (3) / GEM Rules 19.07(2) and (3)
              Released on 14/12/2009

              Question:

              If an issuer disposes of listed investment, should it adopt the turnover of the listed investment or the dividend income from the listed investment as the numerator of the revenue test?

              Answer:

              If the target is not consolidated in the accounts of the issuer, it should use the dividend income as the numerator. If the target is consolidated in the books of the issuer, it should use the revenue as disclosed in the annual report as the numerator.

              FAQ Series 1, FAQ No. 46
              LR reference: Main Board Rules 14.07(3) / GEM Rules 19.07(3)
              Released on 30/3/2004

              Question:

              Should the market capitalisation be the product of the average closing price for the 5 preceding business days and the existing issued capital on the date of the transaction or the average market capitalisation for the 5 preceding days? There will be a difference if the issued capital is not the same during the 5 day period.

              Also, is the average closing price the simple average or the weighted average?

              Answer:

              Normally, in the absence of changes to the number of shares in issue, market capitalisation will be calculated using the simple average closing price for the 5 preceding business days and the number of shares in issue at the date of the transaction. Where such calculation produces anomalous results, for example, if there have been issues of new securities during the five-day period before the transaction, the Exchange may require issuers to submit alternative computation that provides the most meaningful basis of calculation of their market capitalisation.

              FAQ Series 1, FAQ No. 47
              LR reference: Main Board Rules 14.07(4) / GEM Rules 19.07(4)
              Released on 30/3/2004

              Question:

              For the consideration test, does the total market capitalisation include the market value of all classes of securities. Please clarify if preference shares and warrants should be included.

              Answer:

              Market capitalisation is based on equity shares only. Preference shares and warrants are not included for the purpose of the market capitalisation calculation under Chapter 14.

              FAQ Series 1, FAQ No. 48
              LR reference: Main Board Rules 14.07(4) / GEM Rules 19.07(4)
              Released on 30/3/2004

              Question:

              Please clarify how the market capitalisation is calculated if the issuer has unlisted shares or shares listed in other markets, such as H-Share issuers with A and B Shares.

              Answer:

              The market capitalisation for the purpose of the consideration test is calculated with reference to the total issued share capital of the issuer. The market value of unlisted shares and shares listed on other exchanges is extrapolated from the market value of the shares listed on the Exchange for the 5 days preceding the date of the transaction.

              FAQ Series 1, FAQ No. 49
              LR reference: Main Board Rules 14.07(4) / GEM Rules 19.07(4)
              Released on 30/3/2004

              Question:

              A listed issuer proposes to settle the consideration payable for an acquisition by issuance of a convertible note.
              Is the listed issuer required to calculate the equity capital ratio? If yes, what figure should be used as the numerator of the equity capital ratio?

              Answer:

              Yes. The listed issuer is required to calculate the equity capital ratio. The numerator should be the nominal value of the maximum number of shares that may be issued by the listed issuer assuming full conversion of the convertible note.

              FAQ Series 7, FAQ No. 7
              LR reference: Main Board Rules 14.07(5) / GEM Rules 19.07(5)
              Released on 28/11/2008

              Question:

              An issuer proposes to enter into an acquisition. Its subsidiary will issue new shares to the vendor to satisfy part of the consideration.

              Is the issuer required to calculate the equity capital ratio for classifying the proposed acquisition?

              Answer:

              The equity capital ratio is intended to apply to a transaction involving issue of equity capital of the listed issuer itself as consideration, including any securities convertible into the issuer's equity capital.

              In this case, the equity capital ratio is not applicable as the proposed acquisition involves issue of the securities of a subsidiary but not the issuer.

              FAQ Series 9, FAQ No. 10
              LR reference: Main Board Rules 14.07(5) / GEM Rules 19.07(5)
              Released on 14/12/2009

              Question:

              For the purpose of computing the revenue test of a banking company, please advise which figure should be used for the denominator: interest income, interest income net of interest expenses or operating income?

              Answer:

              Net interest income plus other operating income. Operating income is as defined in FD-1: Financial Disclosure by Locally Incorporated Authorized Institutions in the Supervisory Policy Manual issued by the HKMA.

              FAQ Series 1, FAQ No. 50
              LR reference: Main Board Rules 14.14 / GEM Rules 19.14
              Released on 30/3/2004

              Question:

              A listed issuer proposes to acquire a target company from a third party vendor. The consideration for the acquisition includes (i) a fixed amount of cash and (ii) a further amount that may be payable by the listed issuer after completion of the acquisition upon occurrence of certain future events. Such further amount will be determined based on the valuation of the target company agreed by the parties at the relevant time.

              How should the listed issuer calculate the consideration ratio?

              Answer:

              Under Main Board Rule 14.15(4) / GEM Rule 19.15(4), when calculating the consideration ratio, if the listed issuer may pay consideration in the future, the consideration is the maximum total consideration payable under the agreement.

              For the proposed acquisition of the target company, the numerator of the consideration ratio should include the fixed amount of cash as well as the maximum value of the further consideration that may be paid by the listed issuer in the future. If the total consideration is not subject to a maximum or such maximum value cannot be determined, the proposed acquisition will normally be classified as a very substantial acquisition, notwithstanding the transaction class into which it otherwise falls.

              FAQ Series 7, FAQ No. 8
              LR reference: Main Board Rules 14.15(4) / GEM Rules 19.15(4)
              Released on 28/11/2008

              Question:

              A listed issuer has been publishing unaudited quarterly results for the first 3 and 9 months of each financial year, which include a condensed consolidated balance sheet as at the end of the reporting period.

              Can the listed issuer refer to the total assets shown in the unaudited quarterly results recently published by the listed issuer when calculating the assets ratio?

              Answer:

              For a GEM issuer, GEM Rule 19.16 provides that the issuer must refer to the total assets shown in its latest published audited accounts or half-year, quarterly or other interim report (whichever is more recent) for the purpose of calculating the assets ratio. In the circumstances described, a GEM issuer can refer to the total assets shown in its latest published quarterly results when calculating the assets ratio.

              For a Main Board issuer, Main Board Rule 14.16 provides that the issuer must refer to the total assets shown in its latest published audited accounts or interim report (whichever is more recent). While the rule makes no references to quarterly accounts, where the Main Board issuer has adopted quarterly reporting as recommended by the Code on Corporate Governance Practices set out in Appendix 14 to the Main Board Rules, it is acceptable for the issuer to refer to the total assets shown in its recently published quarterly results when calculating the assets ratio.

              FAQ Series 7, FAQ No. 9
              LR reference: Main Board Rules 14.16 / GEM Rules 19.16
              Released on 28/11/2008

              Question:

              A listed issuer has recently published the preliminary announcement of its results for latest financial year according to the Listing Rules. The listed issuer has not yet published the relevant annual report. When computing the assets ratio, profits ratio and revenue ratio, can the listed issuer refer to the figures shown in the preliminary results announcement?

              Answer:

              Under Main Board Rules 14.16 and 14.17 / GEM Rules 19.16 and 19.17, the listed issuer should refer to the total assets, profits and revenue figures shown in its latest published audited accounts. Where the preliminary results announcement published by the listed issuer is based on its audited financial statements, the listed issuer should refer to the audited figures shown in such announcement for computing the assets, profits and revenue ratios.

              There may be situations where the audit of the listed issuer's accounts has not yet been completed and the listed issuer has published the preliminary results announcement based on its accounts which have been agreed with the auditors. In such circumstances, the listed issuer must ensure accuracy of the figures used for computing the assets, profits and revenue ratios. In rare circumstances, where any such figures need to be revised in the audited accounts subsequently available, the listed issuer should re-compute the relevant percentage ratios and comply with any additional requirements if the proposed transaction should fall under a higher classification.

              FAQ Series 7, FAQ No. 10
              LR reference: Main Board Rules 14.16, 14.17 / GEM Rules 19.16, 19.17
              Released on 28/11/2008

              Question:

              Adjustment is required to total assets for proposed dividend. If the dividend has a scrip alternative and subsequently scrip shares are issued, how should the total assets be adjusted?

              If the dividend is proposed by a listed subsidiary of the issuer, is any adjustment required to be made by the issuer to its total assets?

              Answer:

              A scrip dividend will not have an impact on total assets. However the issuer may not at the relevant time be able to determine to what extent scrip shares will be issued. Therefore where adjustment is being made for the proposed dividend, the issuer should assume that the total dividend is paid in cash unless the number of scrip shares to be issued is known.

              Adjustment to total assets should be made to the extent that the total consolidated assets will be reduced by the dividend to be paid by the subsidiary.

              FAQ Series 1, FAQ No. 52
              LR reference: Main Board Rules 14.16(1) / GEM Rules 19.16(1)
              Released on 30/3/2004

              Question:

              For the profits test, if an issuer has incurred a net loss in its latest published accounts, is it required to submit a 5 tests calculation for all potential notifiable transactions since the alternative test has to be agreed by the Exchange?

              Answer:

              Yes, it is required to submit a 5 tests calculation. If an issuer incurred a net loss, it should submit alternative tests in respect of profitability (such as a gross profit comparison). In addition, where any of the 5 tests cannot be calculated, the issuer should, at the time of submission of the tests to the Exchange, submit alternative tests (if any) for our consideration.

              FAQ Series 1, FAQ No. 53
              LR reference: Main Board Rules 14.20 / GEM Rules 19.20
              Released on 30/3/2004

              Question:

              A listed issuer is proposing a group restructuring under which one of its wholly owned subsidiaries would transfer certain fixed assets to a 70%-owned subsidiary of the listed issuer at fair value of the assets.

              Is the proposed group restructuring subject to the requirements under Chapter 14 of the Main Board Rules / Chapter 19 of the GEM Rules?

              Answer:

              In the case of a group restructuring, the Exchange will take into account the substance of the transaction and its impact on the listed issuer group as a whole when applying the notifiable transaction requirements.

              In the circumstances described, the proposed group restructuring would involve a disposal of fixed assets by one subsidiary and an acquisition of the same assets by another subsidiary. Calculations of the percentage ratios may produce an anomalous result for the purpose of classifying the transaction. The Exchange may accept alternative size tests calculated by the listed issuer based on the net disposal of the listed issuer's interest in the fixed assets.

              FAQ Series 7, FAQ No. 2
              LR reference: Main Board Rules 14.20, 14.04(1)(a) / GEM Rules 19.20, 19.04(1)(a)
              Released on 28/11/2008

              Question:

              A listed issuer proposes to acquire a minority interest in a target company (5% of its equity capital) as an investment which will be classified as available-for-sale financial assets in the listed issuer's accounts.

              How should the listed issuer compute the assets ratio, profits ratio and revenue ratio?

              Answer:

              The proposed transaction involves acquisition of an equity capital. According to Main Board Rule 14.28 / GEM Rule 19.28, when calculating the assets, profits and revenue ratios, the value of the target company's total assets, profits and revenue calculated in accordance with Main Board Rule 14.27 / GEM Rule 19.27 is to be multiplied by the percentage of equity interest being acquired by the listed issuer.

              However, where these percentage ratios produce an anomalous result, listed issuer may submit alternative tests for the Exchange's consideration pursuant to Main Board Rule 14.20 / GEM Rule 19.20. In the circumstances described, it is normally acceptable for the listed issuer to use the fair value of the interest in the target company to be acquired (determined in accordance with the applicable accounting standards adopted by the listed issuer) as the numerator of the alternative test to the assets ratio. As to the profits and revenue ratios, the listed issuer may submit alternative tests calculated with reference to the dividend declared by the target company and any dividend policy established by the target company for the Exchange's consideration.

              FAQ Series 7, FAQ No. 12
              LR reference: Main Board Rules 14.20, 14.28 / GEM Rules 19.20, 19.28
              Released on 28/11/2008

              Question:

              A listed issuer has published its latest annual audited accounts. It has also completed the disposal of a major subsidiary to a third party after the year end, details of which were disclosed by the listed issuer.
              The listed issuer now proposes to acquire a target company. When computing the assets ratio for such acquisition, the total assets figure of the listed issuer shown in its latest audited accounts would need to be adjusted for the disposal according to Main Board Rule 14.18 / GEM Rule 19.18. When computing the profits and revenue ratios for the acquisition, would it be necessary to adjust the listed issuer's profits and revenue figures to exclude the results of the disposed subsidiary?

              Answer:

              The requirement of Main Board Rule 14.18 / GEM 19.18 only applies to the total assets figure of the listed issuer.

              Main Board Rule 14.17 / GEM Rule 19.17 provides the circumstances under which the Exchange may prepare to accept the exclusion of profits and revenue from the discontinued operations of a listed issuer for the purpose of the profits ratio and revenue ratio respectively.

              In the circumstances described, the disposal of a major subsidiary may not fall under the situation described in Main Board Rule 14.17 / GEM Rule 19.17. Nevertheless, if the calculations of the profits and/or revenue ratios produce an anomalous result, the listed issuer may need to submit alternative size tests by excluding the results of the disposed subsidiary to the Exchange for consideration under Main Board Rule 14.20 / GEM Rule 19.20. The listed issuer should consult the Exchange when calculating the percentage ratios for the proposed acquisition.

              FAQ Series 7, FAQ No. 11
              LR reference: Main Board Rules 14.20, 14.17, 14.18 / GEM Rules 19.20, 19.17, 19.18
              Released on 28/11/2008

              Question:

              The latest audited accounts of Listco cover a period of 18 months due to the change in financial year end date.

              Should Listco use the annualised profits and revenue for computing the profits ratio and the revenue ratio?

              Answer:

              While the Listing Rules require an issuer to calculate the revenue and profits ratios based on figures in its latest audited accounts, these calculations may produce anomalous results in the circumstances described and alternative size tests using annualised figures may be acceptable. Listco should consult the Exchange if it proposes to adopt the alternative size tests.

              FAQ Series 9, FAQ No. 8
              LR reference: Main Board Rules 14.20, 14.07(2) and (3), 14.17 / GEM Rules 19.20, 19.07(2) and (3), 19.17
              Released on 14/12/2009

              Question:

              Listco's principal businesses are securities trading and brokerage. In its latest audited accounts, Listco changed the presentation of "turnover" using the gains or losses from sale of investments on a net basis, rather than presenting the sale proceeds (as turnover) and the carrying value of the investments (as costs of sale) separately as in its previous accounts.

              Listco proposes to acquire a target company. If the revenue ratio calculated based on the "turnover" presented in Listco's latest accounts (i.e. the net gain/loss from sale of investments) produces an anomalous result, can Listco submit an alternative size test using the proceeds from sale of investments under its securities trading business as the denominator?

              Answer:

              For revenue ratio calculation, "revenue" normally means revenue arising from the principal activities of a company.

              Since securities trading is a principal activity of Listco, it is normally acceptable for Listco to adopt an alternative size test using the proceeds from sale of investments as the denominator if the relevant information is also available from its accounts. Listco must consult the Exchange if it proposes to adopt an alternative size test.

              FAQ Series 9, FAQ No. 9
              LR reference: Main Board Rules 14.20, 14.07(3), 14.14 / GEM Rules 19.20, 19.07(3), 19.14
              Released on 14/12/2009

              Question:

              A listed issuer has recently completed an acquisition of the 80% interest in a target company, which constituted a major transaction, and it had complied with the applicable requirements under the Listing Rules. The listed issuer now proposes to acquire the remaining 20% interest in the same company which will by itself constitute a discloseable transaction.

              Would the Exchange apply Main Board Rule 14.22 / GEM Rule 19.22 to aggregate the proposed acquisition with the previous major transaction in the following scenarios?

              (a) The proposed acquisition when aggregated with the completed transaction would be classified as a major transaction.
              (b) The proposed acquisition when aggregated with the completed transaction would be classified as a very substantial acquisition.

              Answer:

              The Exchange would consider the proposed acquisition and the completed transaction as a series of transactions as they involve acquisition of interest in one particular company and are entered into by the listed issuer within a short period of time.

              In determining whether to aggregate these transactions, the Exchange would also take into account the classification of the completed transaction, and whether the series of transactions when aggregated would result in a higher transaction classification and therefore be subject to additional Rule requirements.

              In scenario (a), the listed issuer had complied with the major transaction requirements in respect of the completed transaction and the Exchange would not require the listed issuer to reclassify the proposed acquisition by aggregating it with the completed transaction.

              In scenario (b), the Exchange would require the listed issuer to aggregate the proposed acquisition with the completed transaction and the listed issuer would need to comply with the very substantial acquisition requirements in respect of the proposed acquisition.

              FAQ Series 7, FAQ No. 14
              LR reference: Main Board Rules 14.22 / GEM Rules 19.22
              Released on 28/11/2008

              Question:

              A listed issuer has recently completed an acquisition which did not constitute a notifiable transaction. The listed issuer now proposes another acquisition which will constitute a discloseable transaction on a standalone basis. However, these acquisitions when aggregated would be classified as a major transaction.

              If the Exchange requires aggregation of the currently proposed acquisition with the previous acquisition, Main Board Rule 14.22 / GEM Rule 19.22 provides that the listed issuer must comply with the requirements for the relevant classification of the transaction when aggregated. How would the major transaction requirement apply to these acquisitions?

              Answer:

              Normally, the major transaction requirement would only apply to the currently proposed acquisition but not the previous acquisition.

              Nevertheless, the listed issuer should ensure adequate information relating to the previous acquisition be disclosed in the announcement and circular of the proposed acquisition if such information is necessary for shareholders to make a properly informed decision on how to vote in respect of the proposed acquisition.

              FAQ Series 7, FAQ No. 15
              LR reference: Main Board Rules 14.22 / GEM Rules 19.22
              Released on 28/11/2008

              Question:

              The Listing Rules provide that the Exchange may require an issuer to aggregate a series of transactions if they are all completed within a 12 month period or are otherwise related.

              How is the "12 month period" determined — with reference to the date of completion of the transactions or to their agreement dates?

              Answer:

              The "12 month period" should be calculated by reference to the completion date of the previous transaction(s).

              FAQ Series 9, FAQ No. 11
              LR reference: Main Board Rules 14.22 / GEM Rules 19.22
              Released on 14/12/2009

              Question:

              If an issuer completes a series of acquisitions with different parties within a 12 month period, each of which is not major (as defined in Chapter 14) but their cumulative size exceeds the 25% threshold, will this company be treated as a Mineral Company upon completion of the transactions?

              Answer:

              The principles of aggregation (Listing Rule 14.22) apply to transactions undertaken by all listed companies, including those that enter into a series of small acquisitions of Mineral or Petroleum Assets.

              FAQ Series 12, FAQ No. 13
              LR reference: Main Board Rules 14.22 / GEM Rules 19.22
              Released on 26/5/2010

              Question:

              An issuer must now seek guidance from the Exchange on the application of the aggregation rules under certain specified circumstances before it enters into any proposed notifiable transactions or connected transactions.

              Does an issuer need to consult the Exchange if:

              (a) the proposed transactions, even when aggregated with the previous transaction(s), will not exceed the percentage ratios to be treated as a notifiable transaction or a connected transaction subject to the announcement, reporting and/or shareholders' approval requirements; or
              (b) the issuer has already decided to aggregate the proposed transaction with the previous transaction(s) and comply with the requirements for the relevant classification of the transaction when aggregated?

              Answer:

              The purpose of the new Rules is to help issuers to comply before entering into the transaction. Since the circumstances in (a) and (b) do not involve any risk of non-compliance with the Rules, prior consultation with the Exchange is not required.

              FAQ Series 8, FAQ No. 43. Issue 7
              LR reference: Main Board Rules 14.23A, 14A.84, 14A.85, 14A.86 / GEM Rules 19.23A, 20.82, 20.83, 20.84
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Main Board Rule 14.23A provides that the Exchange will not aggregate a series of transactions carried out by an issuer in the course of construction, development or refurbishment of an asset for the issuer's own use in its ordinary and usual course of business if the sole basis for aggregation is that the transactions form parts of one asset.

              Does the Rule apply to the transactions carried out by Listco in the course of construction of a property for (1) its own use as an office; or (2) rental purpose as an investment property?

              Answer:

              (1) Given that the property is constructed for Listco's own use in its ordinary and usual course of business, the Rule will apply in the circumstances described.
              (2) The Rule will apply if property investment is an ordinary and usual course of business of Listco.

              In the above situations, Listco should note that each individual contract or agreement with a third party vendor is itself a transaction and subject to the notifiable transaction requirements if it exceeds the threshold(s) triggering the notifiable transaction rules.

              FAQ Series 9, FAQ No. 12
              LR reference: Main Board Rules 14.23A / GEM Rules 19.23A
              Released on 14/12/2009

              Question:

              Under the amended rule, if a transaction involves a major acquisition and a discloseable disposal, does it mean that only the acquisition and not the disposal requires shareholder approval?

              Answer:

              The rule amendment only clarifies the content requirements for the circular. It does not change the requirement as to how to classify a transaction as a whole to determine whether shareholder approval is required. In the circumstances described, the transaction as a whole would be classified as a major transaction and requires shareholder approval.

              FAQ Series 11, FAQ No. 9
              LR reference: Main Board Rules 14.24 / GEM Rules 19.24
              Released on 20/5/2010

              Question:

              Listco proposes to sell its interest in a subsidiary in return for cash and the buyer's interest in a target (the Transaction). The sale of the subsidiary is a major transaction and the acquisition of the target is a discloseable transaction.

              Does the circular need to include the following information?

              •   an accountants' report on the target company
              •   a valuation report on the target's property interests (the target is a property company)
              •   pro forma financial information showing the impact of the Transaction on Listco

              Answer:

              As the acquisition is a discloseable transaction, the circular need not contain an accountants' report on the target or a valuation report on the target's property interests.

              The circular also does not need to contain pro forma financial information on the Transaction because the Rules do not require this information for a major disposal or a discloseable acquisition.

              FAQ Series 11, FAQ No. 10
              LR reference: Main Board Rules 14.24 / GEM Rules 19.24
              Released on 20/5/2010

              Question:

              A listed issuer proposes to acquire an equity interest in a target company which has commenced operation for less than one year. Would the listed issuer be required to use the annualized profits or revenue (as the case may be) of the target company as the numerators of the profits ratio or the revenue ratio?

              Answer:

              Under Main Board Rules 14.26 and 14.27/ GEM Rules 19.26 and 19.27, the numerators of the profits ratio and the revenue ratio are to be calculated by reference to the profits and revenue attributable to the target company's capital as disclosed in its accounts.

              Listing Rules do not require the listed issuer to annualize the profits or the revenue of the target company when computing the percentage ratios. However, the results of such calculations may be regarded by the Exchange as anomalous and alternative tests may be required to assess the relative size of the target company compared to the listed issuer group.

              FAQ Series 7, FAQ No. 13
              LR reference: Main Board Rules 14.26, 14.27 / GEM Rules 19.26, 19.27
              Released on 28/11/2008

              Question:

              If a listed subsidiary conducts a placing of new shares by way of a general mandate, would it also constitute a notifiable transaction for the listed parent?

              Answer:

              An allotment of shares by the listed subsidiary would also be a deemed disposal for the listed parent as it would result in a reduction in the percentage equity interest of the listed parent in such subsidiary. Accordingly, the transaction, depending on the size tests as defined in Main Board Rule 14.04(9) / GEM Rule 19.04(9), may fall to be treated as a very substantial disposal, major transaction or discloseable transaction of the listed parent and subject to relevant notifiable transaction requirements under Main Board Chapter 14 and GEM Chapter 19.

              Where the size of the deemed disposal falls to be a major transaction or above, the placing is subject to approval by shareholders of the listed parent. The Exchange ordinarily expects the listed parent in these circumstances to maintain control over the matter by making the general mandate of the listed subsidiary conditional on it not triggering a major transaction for the listed parent. Issuers should make prior consultation with the Exchange if they anticipate any practical issues relating to compliance in this connection.

              FAQ Series 8, FAQ No. 42. Issue 10
              LR reference: Main Board Rules 14.29, 14.04 / GEM Rules 19.29, 19.04
              Released on 28/11/2008

              Question:

              What are the procedures issuers should follow prior to the morning pre-opening trading session or the afternoon trading session in reviewing the publication status of its announcement and considering whether notifying the HKEx that a trading suspension may be required?

              Answer:

              The assessment of whether a trading halt or suspension will be required is based on the trading halt or suspension policy having regard to the two factors: nature of announcement and publication of the announcement on the HKEx website.

              Trading halt or suspension arising from publication failures will be required where the subject matter of the announcement is information necessary to avoid a false market in the issuer's securities or is inside information which needs to be disclosed under the Inside Information Provisions (Listing Rules MB 13.09 / GEM 17.10) or relates to a notifiable transaction and a trading halt or suspension is required under Listing Rules MB 14.37 / GEM 19.37. For pre-vetted announcements, this determination will be agreed with the Listing Division of the HKEx before clearance of the announcement. For post-vetted announcement, the issuer will make the assessment. In either case this assessment should be also generally reflected in the headline categories selected by the issuers.

              An issuer should take reasonable steps to gain comfort that publication of its announcement on the HKEx website has been successful. Such steps may include noting receipt of e-mail confirmation from HKEx and checking the HKEx website directly.

              Where, for whatever reason the publication of the announcement on the HKEx website is delayed (by reference to the trading halt or suspension policy above), the issuer should contact the Listing Division of the HKEx immediately and where appropriate, request a trading halt or suspension.

              FAQ Series 3, FAQ No. 144
              LR reference: Main Board Rules 13.09, 13.10A, 14.37 / GEM Rules 17.10, 17.11A, 19.37
              Released on 22/3/2007 (Updated on 2/1/2013)

              Question:

              What is the trading halt/ suspension policy applicable to Main Board and GEM issuers in respect of publication of announcements containing inside information and/or notifiable transactions?

              Answer:

              Trading in the securities of an issuer may be halted or suspended due to publication failure (i.e. to publish an announcement on HKEx websites) where the subject matter of the announcement is information discloseable under Listing Rules MB 13.09/ GEM 17.10 or relates to a notifiable transaction and trading halt or suspension is required under Listing Rules MB 14.37/ GEM 19.37. This is consistent with the principle set out in Chapter 6 of Main Board Rules/ Chapter 9 of GEM Rules on trading halts and suspensions, i.e. that halt or suspension is only required where the HKEx considers it necessary for the protection of the investor or the maintenance of an orderly market.

              Where an obligation to issue an announcement containing inside information has arisen for an issuer, it should publish the announcement during the next available publication window. For example, where the issuer has signed an agreement in relation to a notifiable transaction that is inside information after trading hours on a normal business day, and an announcement is published on the HKEx website by 8.30 a.m. of the next business day (i.e. either during the publication windows from 4.30 p.m. to 11.00 p.m. of that business day, or between 6.00 a.m. to 8.30 a.m. of the next business day), no trading halt or suspension would be necessary. Similarly, where an agreement is signed after the morning trading session and an announcement is published on the HKEx website between 12.00 noon to 12.30 p.m. of the same business day, no trading halt or suspension is necessary. In both circumstances where an announcement cannot be published before the next trading session, a halt or suspension in the trading of the issuer's securities would be required until commencement of the trading session (morning or afternoon) after the publication of the announcement. For example, where the announcement is published during the 12.00 noon to 12.30 p.m. publication window of the next business day, the issuer may apply for resumption of trading in its securities at 1.00 p.m.

              Where an issuer's obligation to publish an announcement relating to inside information is triggered during trading hours (for example, where confidentiality cannot be maintained and an obligation to publish an announcement on inside information arises under Listing Rule MB 13.09/ GEM 17.10 or in the circumstances described in Listing Rules MB 14.37 / GEM 19.37), the issuer should request a halt or suspension in trading of its securities, and publish an announcement as soon as possible during the next publication window. Resumption in trading of the issuer's securities may take place during the commencement of the next trading session after the publication of the announcement.

              A resumption announcement should clearly set out that an application will be made for resumption in the trading of securities and the expected time of resumption (i.e. at the commencement of the next trading session after the publication of the announcement).

              Issuers are reminded of their obligations to submit an announcement for clearance by the Exchange before publication where the subject matter of the announcement requires pre-vetting under the Listing Rules. Please refer to the Guide on Pre-vetting requirements and Selection of Headline Categories for Announcements at http://www.hkex.com.hk/eng/rulesreg/listrules/guidref/guide_pre_vetting_req.htm which sets out categories of announcements requiring pre-vetting.

              Issuers are also reminded that they should manage their affairs, particularly with regard to the signing of agreements, to ensure that there will be continuous and informed trading of their securities save in exceptional circumstances. It follows that, as far as practicable, issuers should seek to ensure that complex and lengthy announcements are disseminated as soon as possible during either the lunchtime publication window or outside trading hours to allow investors adequate time to consider the content of such disclosures.

              FAQ Series 3, FAQ No. 178
              LR reference: Main Board Rules Chapter 6, 13.09, 13.10A, 14.37 / GEM Rules Chapter 9, 17.10, 17.11A, 19.37
              Released on 22/3/2007 (Updated on 25/7/2016)

              Question:

              Listco A proposes to vary certain terms of a major transaction after it has been approved by its shareholders.

              The resolutions passed by the Listco A's shareholders in respect of the major transaction have given the directors the authority to take all steps necessary or expedient to implement the major transaction. Will Listco A be required to re-comply with the shareholders' approval requirement in respect of the revised transaction?

              Answer:

              Depending on the nature and materiality of the changes in the terms, Listco A may be required to re-comply with the shareholders' approval requirement for the revised transaction.

              In the circumstances described, while the directors of Listco A are authorised to take steps that they consider necessary or expedient to implement the major transaction, any changes to the terms of the transaction so made by the directors should be non-material as a material change would in substance give rise to a new transaction and should not be made without prior shareholders' approval.

              FAQ Series 7, FAQ No. 16
              LR reference: Main Board Rules 14.40 / GEM Rules 19.40
              Released on 28/11/2008

              Question:

              Where written shareholder approval has been obtained for a transaction, the amended rule requires an information circular to be despatched within 15 business days after publication of the announcement.

              If the stock market is open for only half day due to a typhoon or other reason, is it counted as a business day?

              Answer:

              The Listing Rules define a "business day" as any day on which the Exchange is open for the business of securities dealing. Accordingly if, for whatever reason, the Exchange is open for the business of dealing in securities for only half day, it is counted as a business day.

              FAQ Series 11, FAQ No. 11
              LR reference: Main Board Rules 1.01, 14.41, 14A.46, 14A.48 / GEM Rules 1.01, 19.41, 20.44, 20.46
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              Listco proposes a major transaction involving acquisition of a target company. Listco's controlling shareholder holds 60% of Listco and has given written approval for the acquisition.

              If Listco subsequently becomes aware that the reporting accountants would issue a qualified opinion in the accountants' report of the target company, is Listco required to convene a general meeting to seek shareholder approval of the major transaction?

              Answer:

              Under Main Board Rule 14.86, the Exchange will not accept a written shareholder approval of a major transaction if the reporting accountants give a qualified opinion in the accountants' report. Listco should convene a general meeting to seek shareholder approval of the major transaction.

              FAQ Series 9, FAQ No. 18
              LR reference: Main Board Rules 14.44, 14.86 / GEM Rules 19.44, 19.86
              Released on 14/12/2009

              Question:

              An issuer proposes to obtain written shareholder approval of a major transaction and make relevant disclosure in the announcement. Does the issuer need to obtain the Exchange's prior approval of this arrangement before it publishes the announcement?

              Answer:

              The Listing Rules do not specifically require an issuer to seek the Exchange's prior consent for the written shareholder approval of a major transaction. Nevertheless, if the written approval is to be given by a group of shareholders, the Rules require the issuer to provide sufficient information to the Exchange to demonstrate that the shareholders are a "closely allied group of shareholders".

              If the major transaction is also a connected transaction, a waiver from convening the general meeting is required under the connected transaction rules.

              FAQ Series 9, FAQ No. 17
              LR reference: Main Board Rules 14.44, 14A.06(5), 14A.37 / GEM Rules 19.44, 20.06(5), 20.35
              Released on 14/12/2009 (Updated on 1/7/2014)

              Question:

              Is a listed issuer required to disclose the identity of the counterparty and of its ultimate beneficial owner in the announcement for a notifiable transaction?

              Answer:

              Main Board Rules 14.58 to 14.60 / GEM Rules 19.58 to 19.60 set out the minimum disclosure requirements for announcements of different types of notifiable transactions.

              Main Board Rule 14.58(3) / GEM Rule 19.58(4) requires the announcement to contain a confirmation that the counterparty and its ultimate beneficial owner are independent of the listed group and the connected persons of the listed issuer. Disclosure of the identity of the counterparty and its ultimate beneficial owner would not be required under this rule unless they are not independent third parties.

              Notwithstanding the above, when determining the amount of information that needs to be disclosed in a notifiable transaction announcement, the listed issuer must also observe the general principle for disclosure under Main Board Rule 2.13 / GEM Rule 17.56. In some circumstances, disclosure of the identity of the counterparty and its ultimate beneficial owner may be necessary to enable shareholders and investors to make an informed assessment of the transaction.

              FAQ Series 7, FAQ No. 17
              LR reference: Main Board Rules 14.58(3) / GEM Rules 19.58(4)
              Released on 28/11/2008

              Question:

              The Listing Rules require an issuer to disclose in the announcement the basis for determining the consideration for the transaction. How much detail should be provided by the issuer?

              Answer:

              The disclosure is intended to help shareholders understand how the issuer's directors determined the consideration. The level of detail will depend on the circumstances of each case. Nevertheless, the directors are normally expected to describe the key factors that they have taken into account when making the determination.

              FAQ Series 9, FAQ No. 13
              LR reference: Main Board Rules 14.58(5) / GEM Rules 19.58(6)
              Released on 14/12/2009

              Question:

              Main Board Rule 14.58(6) / GEM Rule 19.58(7) requires disclosure of the book value of the assets being the subject of the notifiable transaction in the announcement.

              In the case of an acquisition of equity capital, should the total assets or the net assets of the target company be disclosed in the announcement?

              Answer:

              It is normally acceptable for the listed issuer to disclose the net asset value shown in the target company's latest accounts as defined in Main Board Rule 14.04(2)(b) / GEM Rule 19.04(2)(b).

              Nevertheless, the listed issuer should also disclose any other material information concerning the assets and liabilities of the target company that the issuer considers necessary to enable shareholders and investors to properly assess the value of the target company under Main Board Rule 2.13 / GEM Rule 17.56.

              FAQ Series 7, FAQ No. 18
              LR reference: Main Board Rules 14.58(6) / GEM Rules 19.58(7)
              Released on 28/11/2008

              Question:

              A listed issuer proposes to acquire interest in a target company which uses accounting standards different from those of the listed issuer.

              When disclosing the target company's financial information required under Main Board Rules 14.58(6) and (7) / GEM Rules 19.58(7) and (8), can the listed issuer refer to the relevant figures shown in the target company's accounts?

              Answer:

              Under Main Board Rule 2.13 / GEM Rule 17.56, the listed issuer must ensure the information contained in its announcement be accurate and complete in all material respects and not misleading or deceptive.

              In circumstances described, reference can be made to Main Board Rule 14.07 / GEM Rule 19.07 which requires the listed issuer to perform, where applicable, an appropriate and meaningful reconciliation of the relevant figures of the target company for the purpose of calculating the percentage ratios. In such situation, the listed issuer should consider disclosing the target company's financial information based on the accounting standards of the listed issuer for the purposes of Main Board Rules 14.58(6) and (7) / GEM Rules 19.58(7) and (8).

              Where the listed issuer discloses relevant figures shown in the target company's accounts for the purposes of Main Board Rules 14.58(6) and (7) / GEM Rules 19.58(7) and (8), it should make reference to the accounting standards adopted by the target company and where applicable, provide an explanation of any principal differences between the accounting standards of the listed issuer and the target company which may have a material impact on the financial information of the target company contained in the announcement.

              FAQ Series 7, FAQ No. 19
              LR reference: Main Board Rules 14.58(6), 14.58(7) / GEM Rules 19.58(7), 19.58(8)
              Released on 28/11/2008

              Question:

              Main Board Rule 14.58(7) / GEM Rule 19.58(8) requires listed issuers to disclose in the announcement the net profits (both before and after taxation and extraordinary items) attributable to the assets which are the subject of the transaction for the two financial years immediately preceding the transaction.

              Is the requirement applicable to a transaction involving acquisition or disposal of real property? If yes, what information should be disclosed?

              Answer:

              It would depend on whether the property to be acquired / disposed of by the listed issuer is a revenue-generating asset with an identifiable income stream. Where the listed issuer proposes to acquire / dispose of a property held for rental purpose, it would be required to disclose the net rental income generated from such property before and after taxation taking into account all related disbursements such as expenses for managing the property and allowances to maintain it in a condition to command its rent.

              FAQ Series 7, FAQ No. 20
              LR reference: Main Board Rules 14.58(7) / GEM Rules 19.58(7)
              Released on 28/11/2008

              Question:

              The Listing Rules require an issuer to disclose in the announcement "where applicable, the net profits (both before and after taxation and extraordinary items) attributable to the assets which are the subject of the transaction for the two financial years immediately preceding the transaction".

              Is the requirement applicable if the target company recorded net losses for the last 2 years or it has a trading record of less than 2 years?

              Answer:

              Yes. The disclosure requirement applies to the net profits or losses attributable to the target company for the two financial years immediately preceding the transaction, or if less, the period since its incorporation or establishment.

              FAQ Series 9, FAQ No. 14
              LR reference: Main Board Rules 14.58(7) / GEM Rules 19.58(8)
              Released on 14/12/2009

              Question:

              Listco proposes to dispose of its interest in a subsidiary.

              The gain or loss on the disposal can only be ascertained at the completion of the disposal. Is Listco required to disclose this gain or loss in its announcement when it enters into the agreement for the proposed disposal?

              Answer:

              Although the actual gain or loss on the disposal is yet to be determined, Listco should disclose the expected gain or loss and its basis in the announcement under the rule. If Listco expects that there will be a difference between the actual gain or loss on the disposal and the disclosed amount, it should explain in the announcement the reason for the difference.

              FAQ Series 9, FAQ No. 15
              LR reference: Main Board Rules 14.60(3)(a) / GEM Rules 19.60(3)(a)
              Released on 14/12/2009

              Question:

              The Rule requires an issuer to disclose in the announcement information on the shareholders who have approved or will approve the major transaction by way of a written certificate.

              After issuing an announcement for a major transaction, Listco decides to obtain a written shareholder approval of the major transaction. Is it required to issue a further announcement to disclose this fact?

              Answer:

              Yes. Listco should issue a further announcement to disclose the information required under Main Board Rule 14.60(5).

              FAQ Series 9, FAQ No. 16
              LR reference: Main Board Rules 14.60(5) / GEM Rules 19.60(5)
              Released on 14/12/2009

              Question:

              Will valuations of Natural Resource assets (i.e. Reserves) based on discounted cash flows (DCF) be regarded as profit forecasts under Rule 14.61?

              Answer:

              Where a new applicant Mineral Company or listed issuer provides a valuation of Natural Resource assets (i.e. Reserves) based on DCF, the Exchange will not regard the DCF as a profit forecast requiring review by an independent accountant. However, issuers must disclose all relevant assumptions and the reason why a particular valuation method is chosen.

              FAQ Series 12, FAQ No. 21
              LR reference: Main Board Rules 14.61, 11.17, 18.34, Appendix 1A(34)(2), Appendix 1B(29)(2) / GEM Rules 19.61, 14.29, 18A.34
              Released on 26/5/2010

              Question:

              What are the disclosure requirements under Section 436 of the New Ordinance for a Hong Kong incorporated issuer publishing its:

              (a) annual / interim results announcement;
              (b) interim report, quarterly results announcement / financial report, circulars or listing documents?

              Answer:

              (a) Section 436(3) of the New Ordinance requires the issuer to include a statement indicating that the statement of comprehensive income for a full financial year and/or the statement of financial position at a financial year end (the "Statements") presented in the account are not statutory financial statements under the New Ordinance. The issuer must also disclose whether (i) an auditor's report had been prepared; and (ii) the auditors gave a qualified or modified audit opinion on the Statements.
              (b) The issuer must also comply with the above disclosure requirements if the financial reports, circulars or listing documents contain the Statements.

              For details, please refer to Accounting Bulletin 6 "Guidance on the Requirements of Section 436 of the Hong Kong Companies Ordinance Cap.622" issued by Hong Kong Institute of Certified Public Accountants at: http://app1.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeII/ab6.pdf

              FAQ Series 31, FAQ No. 13
              LR reference: Main Board Rules 13.48, 13.49(1), 13.49(6), 14.66 to 14.69, 11.03 & 11.04, 11.16 to 11.19, 14.61 & 14.62, 4.25 to 4.29 / GEM Rules 18.49, 18.53, 18.66, 18.78, 18.79, 19.66 to 19.69, 14.03 & 14.06, 14.29 to 14.31, 19.61 & 19.62, 7.27 to 7.31
              Released on 11/9/2015

              Question:

              A listed issuer proposes to acquire a target company, which constitutes a notifiable transaction. The listed issuer has prepared a valuation of the target company using the discounted cashflow method, which is regarded as a profit forecast under Main Board Rule 14.61/ GEM Rule 19.61.

              Is the listed issuer required to disclose such valuation in its announcement and circular for the notifiable transaction and comply with Main Board Rule 14.62/ GEM Rule 19.62 and paragraph 29(2) of Appendix 1B to the Main Board Rules/ GEM Rules?

              Answer:

              Under the Listing Rules, there is no specific requirement for the listed issuer to disclose the profit forecast for the target company to be acquired. However, the listed issuer must observe the general disclosure principle under Main Board Rule 2.13/ GEM Rule 17.56. For example, where the valuation of the target company was a primary factor in forming the basis for the consideration or other material terms of the transaction, disclosure of the valuation would need to be made in the relevant announcement and circular.

              Where a notifiable transaction announcement / circular contains a profit forecast in respect of the listed issuer or a company which is/ is proposed to become, one of its subsidiaries, the listed issuer is required to comply with Main Board Rule 14.62 / GEM Rule 19.62 and paragraph 29(2) of Appendix 1B to the Main Board Rules/ GEM Rules (as the case may be).

              FAQ Series 7, FAQ No. 21
              LR reference: Main Board Rules 14.62, 14.66(2), 2.13, Appendix 1B Paragraph 29(2) / GEM Rules 19.62, 19.66(3), 17.56, Appendix 1B Paragraph 29(2)
              Released on 28/11/2008 (Updated on 30/9/2009)

              Question:

              A listed issuer proposes to acquire a revenue generating asset, which constitutes a notifiable transaction. There is a valuation of such asset prepared using the discounted cashflow method, which is regarded as a profit forecast under Main Board Rule 14.61/ GEM Rule 19.61.

              Will the listed issuer be required to comply with the formal reporting requirements under Main Board Rule 14.62/ GEM Rule 19.62 if it discloses the valuation of the revenue generating asset in its announcement issued under the notifiable transaction rules?

              Answer:

              Under Main Board Rule 14.62 / GEM Rule 19.62, the formal reporting requirements apply where the announcement contains a profit forecast in respect of the listed issuer or a company which is/ is proposed to become, one of its subsidiaries.

              In this case, while the profit forecast made in respect of the revenue generating asset may not fall within Main Board Rule 14.62 / GEM Rule 19.62, the listed issuer must ensure compliance with Main Board Rule 2.13 / GEM Rule 17.56 when its announcement contains profit forecast of the asset to be acquired, particularly where the assets are material to the listed issuer.
              The listed issuer should also note that where the proposed acquisition constitutes a major transaction or above that requires a circular, it is required to comply with the formal reporting requirements in respect of the profit forecast of the asset contained in the circular pursuant to Paragraph 29(2) of Appendix 1B to the Main Board Rules / GEM Rules.

              FAQ Series 7, FAQ No. 22
              LR reference: Main Board Rules 14.62, 14.66(2), 2.13, Appendix 1B Paragraph 29(2) / GEM Rules 19.62, 19.66(3), 17.56, Appendix 1B Paragraph 29(2)
              Released on 28/11/2008 (Updated on 30/9/2009)

              Question:

              A listed issuer has obtained written shareholders' approval for a proposed major transaction under Main Board Rule 14.44/ GEM Rule 19.44. The Exchange has accepted the written shareholders' approval in lieu of holding a general meeting based on the information provided by the listed issuer.

              As there will not be any voting on the proposed transaction at general meeting, is the circular for such transaction required to contain a recommendation from the directors as to the voting action that shareholders should take pursuant to Main Board Rule 14.63(2)(c)/GEM Rule 19.63(2)(c)?

              Answer:

              Main Board Rule 14.63(2)/GEM Rule 19.63(2) sets out certain information that need to be contained in the circular for a notifiable transaction if voting or shareholders' approval is required. Pursuant to Main Board Rule 14.63(2)(c)/GEM Rule 19.63(2)(c), the circular for the proposed transaction must contain a recommendation from the directors as to the voting action that shareholders should take, indicating whether or not the proposed transaction is, in the opinion of the directors, fair and reasonable and in the interest of the shareholders as a whole.

              In circumstances described, while the directors' recommendation to shareholders on how to vote would no longer be necessary, the circular must disclose the directors' opinion as to whether the proposed transaction is fair and reasonable and in the interest of the shareholders' as a whole.

              FAQ Series 7, FAQ No. 24
              LR reference: Main Board Rules 14.63(2)(c) / GEM Rules 19.63(2)(c)
              Released on 28/11/2008

              Question:

              Where a circular in relation to a notifiable transaction contains a profit forecast, paragraph 29(2) of Appendix 1B to the Main Board Rules / GEM Rules requires that the financial advisers must report that they have satisfied themselves that the forecast has been stated by the directors after due and careful enquiry and such report must be set out in the circular.

              If no financial advisers have been appointed in connection with the notifiable transaction, can the directors of the listed issuer make their own confirmation that they have made the forecast after due and careful enquiry?

              Answer:

              In the case of a notifiable transaction, Main Board Rule 14.62(3) / GEM Rule 19.62(3) provides that where the announcement contains a profit forecast and no financial advisers have been appointed in connection with the transaction, the listed issuer may provide a letter from the board of directors confirming they have made the forecast after due and careful enquiry.

              In the circumstances described, we may apply the principle of Main Board Rule 14.62(3) / GEM Rule 19.62(3) to the circular and accept the directors' confirmation for the purpose of Paragraph 29(2) of Appendix 1B. The listed issuer should consult the Exchange in advance in such circumstances.

              FAQ Series 7, FAQ No. 23
              LR reference: Main Board Rules 14.66(2), Appendix 1B Paragraph 29(2) / GEM Rules 19.66(3), Appendix 1B Paragraph 29(2)
              Released on 28/11/2008 (Updated on 30/9/2009)

              Question:

              A listed issuer is preparing its circular in respect of a proposed major acquisition.

              Main Board Rule 14.66(10) / GEM Rule 19.66(11) requires the listed issuer' circular to contain a statement of indebtedness of the group as at the most recent practicable date pursuant to paragraph 28 of Appendix 1B to the Main Board Rules/ GEM Rules. Can the listed issuer refer to the indebtedness position of the group disclosed in its latest published audited accounts or interim report?

              Answer:

              The rule requires the listed issuer to provide up-to-date indebtedness statement of its group in the circular for shareholders' consideration. The Listing Division ordinarily requires the indebtedness statement to be dated not more than 8 weeks before the circular is issued, which follows the guidance set out in our letter of 21 July 2008 to market practitioners in relation to the disclosure of indebtedness statements in listing documents of new applicants. Depending on the despatch date of the circular, the year / period end date for the listed issuer's latest published accounts or interim report may not be regarded as the most recent practicable date.

              Further, the listed issuer should note that according to Note 2 to Appendix 1B to the Main Board Rules/ GEM Rules, reference to the "group" under paragraph 28 of Appendix 1B is to be construed as including any company which will become a subsidiary of the listed issuer by reason of an acquisition which has been agreed or proposed since the date to which the latest audited accounts of the listed issuer have been made up.

              FAQ Series 7, FAQ No. 25
              LR reference: Main Board Rules 14.66(10), Appendix 1B Paragraph 28 / GEM Rules 19.66(11), Appendix 1B Paragraph 28
              Released on 28/11/2008 (Updated on 30/9/2009)

              Question:

              Pursuant to Main Board Rules 14.66(10) and 14.68(1) / GEM Rules 19.66(11) and 19.68(1), a circular relating to a very substantial disposal must contain a statement by the listed issuer's directors on the sufficiency of working capital available to the group pursuant to paragraph 30 of Appendix 1B to the Main Board Rules / GEM Rules.

              Where a listed issuer proposes to dispose of a subsidiary which constitutes a very substantial disposal, is it required to prepare the working capital statement on the group or the remaining group?

              Answer:

              Paragraph 30 of Appendix 1B to the Main Board Rules / GEM Rules requires a working capital statement on the group which includes the listed issuer and its subsidiaries including the subsidiary to be disposed of. Note to Appendix 1B does not qualify paragraph 30 to exclude the subsidiary to be disposed of.

              FAQ Series 7, FAQ No. 26
              LR reference: Main Board Rules 14.66(10), Appendix 1B Paragraph 30 / GEM Rules 19.66(11), Appendix 1B Paragraph 30
              Released on 28/11/2008 (Updated on 30/9/2009)

              Question:

              Listco's circular for a major acquisition will contain an accountants' report on the target being acquired, a statement on sufficiency of working capital and an indebtedness statement.

              (1) The Listing Rules require Listco to provide a letter from its financial advisers or auditors confirming that the working capital statement has been made by the directors after due and careful enquiry and persons or institutions providing finance have confirmed in writing that such facilities exist. Is it acceptable for Listco to provide a confirmation letter from the reporting accountants instead of its financial advisers or auditors?
              (2) Does the indebtedness statement need to be reviewed by professional accountants or advisers?

              Answer:

              (1) We will normally consider it acceptable for the reporting accountants to issue the confirmation letter in respect of the working capital statement contained in the circular.
              (2) The Listing Rules do not specifically require a review of the indebtedness statement by professional accountants or advisers. It is up to Listco to decide whether the review is necessary.

              FAQ Series 9, FAQ No. 19
              LR reference: Main Board Rules 14.66(10) and (12) / GEM Rules 19.66(11) and (13)
              Released on 14/12/2009

              Question:

              Main Board Rule 14.67 / GEM Rule 19.67 sets out specific disclosure requirements for a circular issued in relation to an acquisition constituting a major transaction.

              Are listed issuers required to comply with the disclosure requirements under Main Board Rule 14.67 / GEM Rule 19.67 for major transactions involving formation of a joint venture?

              Answer:

              When determining whether Main Board Rule 14.67 / GEM Rule 19.67 applies, the Exchange will consider whether the proposed transaction involves an acquisition of assets by the listed issuer.

              Normally, where the formation of joint venture only involves cash injection by the listed issuer and the joint venture partner(s), the disclosure requirements under Main Board Rule 14.67 / GEM Rule 19.67 would not apply as there is no acquisition of assets by the listed issuer.

              Where the formation of joint venture involves injection of assets (other than cash) ("Injected Assets") by the joint venture partner into the joint venture that will become a subsidiary of the listed issuer, such arrangement would in effect result in acquisition of the Injected Assets by the listed issuer. In such case, if the acquisition is classified as a major transaction based on the percentage ratios, the disclosure requirements under Main Board Rule 14.67 / GEM Rule 19.67 would apply.

              FAQ Series 7, FAQ No. 27
              LR reference: Main Board Rules 14.67 / GEM Rules 19.67
              Released on 28/11/2008

              Question:

              Given the new and revised Hong Kong Standards on Auditing ("HKSAs") on auditor reporting (the "Auditor Reporting Standards") issued by the HKICPA on 31 August 2015 are effective for audits of financial statements for periods ending on or after 15 December 2016, will the Exchange update the audit terminology used in the Rules with reference to the new and revised Auditor Reporting Standards?

              Answer:

              Yes. The Exchange is aware that the words "qualified" auditors' reports and "qualification" used in the current Rules are out of date audit terminology. The table below summarises the terminologies used in the current Rules and HKSAs:

                Terminology used
              Meanings Current Rules HKSAs

              Matters that do affect the audit opinion:
               -  qualified opinion
               -  adverse opinion
               -  disclaimer of opinion

              Qualified /
              Qualification
              Modified
              opinion

              Matters that do affect the audit opinion:
               -  qualified opinion
               -  adverse opinion
               -  disclaimer of opinion

              AND/OR

              Matters that do not affect the audit opinion:
               -  emphasis of matter
               -  material uncertainty related to going concern

              Modified /
              Modification
              No specific
              equivalent term

              The Exchange will update the audit terminology used in the Rules with reference to the new and revised Auditor Reporting Standards. We intend to consult the market on proposed Rule amendments in this regard in due course.

              In the meantime, issuers are reminded that their audit committee should have in-depth conversations with their auditors at an early stage (e.g. about key audit matters, going concern issues and other significant events or transactions that occurred during the reporting period). Doing so may help to minimise the risk of last minute surprises and avoid delays in releasing their annual results (see paragraph 51 of the Exchange's Financial Statements Review Report 2015, which is available on the HKEX website at: http://www.hkex.com.hk/eng/rulesreg/listrules/guidref/Documents/frm-15.pdf).

              FAQ 001-2017
              LR reference: Main Board Rules 4.18, 4.19, 14.67(6)(a)(i), 14.86, Practice Note 3 Paragraph 5, Appendix 1A Paragraph 35, Appendix 1C Paragraph 42(2), Appendix 1E Paragraph 35, Appendix 16 Paragraphs 45(7) and 46(8), Appendix 24 / GEM Rules 7.22, 7.23, 18.50(8), 18.51, 18.64, 18.76, 18.78(5), 19.67(6)(a)(i), 19.86, Appendix 1A Paragraph 35, Appendix 1C Paragraph 42(2), Appendix 17
              Released on 6/1/2017

              Question:

              Main Board Rule 14.67(6)(b)(i) / GEM Rule 19.67(6)(b)(i) requires that a circular issued in relation to a major transaction involving acquisition of any revenue-generating assets (other than a business or company) with an identifiable income stream or asset valuation must include "a profit and loss statement and a valuation (where available) for the 3 preceding financial years (or less, where the asset has been held by the vendor for a shorter period) on the identifiable net income stream and valuation in relation to such assets...".

              A listed issuer is preparing a circular for its proposed major transaction involving acquisition of some revenue-generating assets. Is the requirement under Main Board Rule 14.67(6)(b)(i) / GEM Rule 19.67(6)(b)(i) applicable if both the profit and loss statement and valuation in respect of the assets to be acquired are not available from the vendor?

              Answer:

              For the purpose of Main Board Rule 14.67(6)(b)(i)/ GEM 19.67(6)(b)(i), where the target assets to be acquired have an identifiable income stream, a profit and loss statement in respect of such assets must be compiled and derived from the underlying books and records for inclusion in the circular for the proposed major transaction. Therefore, when the listed issuer enters into an agreement for the proposed acquisition, we expect that it will ensure that the relevant books and records are or will be made available to the listed issuer and the reporting accountants for compliance with the rule.

              The valuation of the target asset would need to be contained in the circular where it is available.

              FAQ Series 7, FAQ No. 28
              LR reference: Main Board Rules 14.67(6)(b)(i) / GEM Rules 19.67(6)(b)(i)
              Released on 28/11/2008 (Updated on 30/9/2009)

              Question:

              Will the Exchange grant relief from strict compliance with the disclosure requirements in the supplementary circular?

              Answer:

              The new Rule is intended to codify the Exchange's current approach to provide timing relief to allow issuers to publish a supplementary circular at a later time when the information becomes available. Any application for dispensation from strict compliance with the disclosure requirements in the supplementary circular will be considered on a case-by-case basis.

              FAQ Series 8, FAQ No. 46. Issue 16
              LR reference: Main Board Rules 14.67A / GEM Rules 19.67A
              Released on 28/11/2008

              Question:

              Are listed issuers required to obtain prior consent from the Exchange in order to defer complying with the disclosure requirements in the initial circular?

              Answer:

              Yes, the issuers must demonstrate to the satisfaction of the Exchange that the conditions set out in paragraphs (1)(a), (b) and (c) of Main Board Rule 14.67A / GEM Rule 19.67A are met. Issuers are also encouraged to consult the Exchange at the earliest opportunity.

              FAQ Series 8, FAQ No. 45. Issue 16
              LR reference: Main Board Rules 14.67A(1) / GEM Rules 19.67A(1)
              Released on 28/11/2008

              Question:

              A listed issuer proposes to despatch a circular for a very substantial disposal in mid July 2008. Since the listed issuer has a financial year end date of 31 December, it proposes to include in the circular an accountants' report on the remaining group pursuant to Main Board Rule 14.68(2)(a)(i) Note 1 covering the 3 financial years ended 31 December 2007 and a stub period from 1 January 2008 up to 30 April 2008.

              Is the listed issuer required to disclose the financial information during the stub period by way of an announcement upon despatch of the circular?

              Answer:

              While there is no specific announcement requirement for disclosing the financial information of the remaining group during the stub period reported in the accountants' report under Chapter 14 of the Main Board Rules / Chapter 19 of the GEM Rules, the listed issuer must observe the general disclosure obligation under Main Board Rule 13.09/ GEM Rule 17.10. Where any information which requires disclosure under the Inside Information Provisions emerges during the preparation of the circular in particular the financial information, the issuer must simultaneously announce the information under Main Board Rule 13.09(2)(a) / GEM Rule 17.10(2)(a)2.

              FAQ Series 7, FAQ No. 29
              LR reference: Main Board Rules 14.68(2)(a)(i)1 / GEM Rules 19.68(2)(a)(i)1
              Released on 28/11/2008 (Updated on 2/1/2013)

              Question:

              An issuer chooses to disclose the issuer group's financial information with separate disclosure on the disposal target (i.e. option (B) in the rule) in its VSD circular.

              (a) What financial information about the disposal target should be disclosed?
              (b) Can the auditors or reporting accountants give a review opinion on the issuer group's audited financial information? Should the issuer include an accountants' report instead of a review of the financial information?

              Answer:

              (a) There should be a separate note with information on the disposal target's figures included in the issuer group's balance sheet, income statement and cash flow statement. Normally this includes the target's balance sheet, income statement and cash flow statement. The information is required to prepare pro forma financial information for the remaining group.
              (b) The issuer should consult its auditors and reporting accountants, and decide the appropriate type of assurance.

              FAQ Series 11, FAQ No. 1
              LR reference: Main Board Rules 14.68(2)(a)(i) / GEM Rules 19.68(2)(a)(i)
              Released on 20/5/2010

              Question:

              This rule requires the financial information to comprise the balance sheet, the income statement, the cash flow statement and the statement on changes in equity. What should be included in these statements?

              Answer:

              They should include, at least, each of the major components and line items presented in the issuer's latest published annual accounts.

              FAQ Series 11, FAQ No. 2
              LR reference: Main Board Rules 14.68(2)(a)(i) / GEM Rules 19.68(2)(a)(i)
              Released on 20/5/2010

              Question:

              "HKAS 1 (Revised) — Presentation of Financial Statements" requires that an entity presents all income and expense items recognised in a period:

              (a) in a single statement of comprehensive income, or
              (b) in two statements: a statement displaying components of profit or loss (separate income statement) and a second statement beginning with profit or loss and displaying components of other comprehensive income (statement of comprehensive income).

              Please clarify the disclosure requirement of "an income statement" under this rule.

              Answer:

              Either option (a) or (b) is acceptable.

              FAQ Series 11, FAQ No. 3
              LR reference: Main Board Rules 14.68(2)(a)(i) / GEM Rules 19.68(2)(a)(i)
              Released on 20/5/2010

              Question:

              Can Listco disclose financial information partly under option (A) and partly under option (B) in its VSD circular? For example, can Listco disclose:

              •   the group's financial information with separate disclosure on the disposal target under option (B) for three financial years (ended more than 6 months from the circular date); and
              •   the disposal target's financial information under option (A) for the stub period?

              Answer:

              No. The issuer should adopt one of the options for the disclosure of financial information for the entire period which includes three financial years and the stub period.

              FAQ Series 11, FAQ No. 4
              LR reference: Main Board Rules 14.68(2)(a)(i) / GEM Rules 19.68(2)(a)(i)
              Released on 20/5/2010

              Question:

              Which standard should auditors or reporting accountants adopt for the review of financial information under this rule?

              Answer:

              The review should be conducted according to the relevant HKICPA or IAASB standards. Currently, the applicable standard for a review engagement is HKSRE 2400 / 2410 or ISRE 2400 / 2410.

              FAQ Series 11, FAQ No. 6
              LR reference: Main Board Rules 14.68(2)(a)(i) / GEM Rules 19.68(2)(a)(i)
              Released on 20/5/2010

              Question:

              Does an issuer need to publish the auditors' or reporting accountants' review report in a VSD circular?

              Answer:

              No, but the circular must state that the financial information has been reviewed by the issuer's auditors or reporting accountants; and, where applicable, contain details of any qualifications or modifications in the review report.

              FAQ Series 11, FAQ No. 7
              LR reference: Main Board Rules 14.68(2)(a)(i) / GEM Rules 19.68(2)(a)(i)
              Released on 20/5/2010

              Question:

              Note 2 to this rule states that the Exchange may relax the disclosure requirement if the disposal target's assets are not consolidated in the issuer's accounts.

              Under what circumstances would the Exchange relax the disclosure requirement?

              Answer:

              There is a similar rule to exempt the accountants' report requirement for an acquisition of a minority interest in a company that constitutes a major transaction. The rule amendments mirror this exemption for VSDs.

              We would consider, for example, whether the issuer has access to the disposal target's books and records to prepare the required information, and whether the circular has provided shareholders with sufficient information about the disposal, etc. We will give the exemption case by case.

              FAQ Series 11, FAQ No. 8
              LR reference: Main Board Rules 14.68(2)(a)(i) note 2 / GEM Rules 19.68(2)(a)(i) note 2
              Released on 20/5/2010

              Question:

              In a VSD, Listco proposes to sell its interest in a company acquired two years ago. Can Listco include, in the circular, the company's financial information from the acquisition date?

              Answer:

              The circular should contain the company's financial information for at least three financial years.

              FAQ Series 11, FAQ No. 5
              LR reference: Main Board Rules 14.68(2)(a)(i), 4.06(1)(a) note / GEM Rules 19.68(2)(a)(i), 7.05(1)(a) note
              Released on 20/5/2010

              Question:

              Main Board Rule 14.68(3) / GEM Rule 19.68(3) requires disclosure of the financial information on the remaining group under paragraph 32 of Appendix 16 to the Main Board Rules/ GEM Rule 18.41 in a circular for very substantial disposals. Please clarify the reporting period in respect of such disclosure.

              Answer:

              Where financial information on the issuer's group is contained in the circular (i.e. under Main Board Rule 14.68(2)(a)(i)(B)/ GEM Rule 19.68(2)(a)(i)(B)), the disclosure under Main Board Rule 14.68(3) should cover the same reporting period.

              Where financial information on the disposal target is contained in the circular (i.e. under Main Board Rule 14.68(2)(a)(i)(A)/ GEM Rule 19.68(2)(a)(i)(A)), the disclosure under Main Board Rule 14.68(3) should cover the reporting period of the issuer group's previously published financials (i.e. the latest three financial years and, where applicable, the most recent interim period, for which the issuer group's financial information has been published).

              FAQ Series 7, FAQ No. 30
              LR reference: Main Board Rules 14.68(3) / GEM Rules 19.68(3)
              Released on 28/11/2008 (Updated on 2/7/2010)

              Question:

              Main Board Rule 14.69(3) / GEM Rule 19.69(3) provides that a circular issued in relation to a very substantial acquisition must contain "a valuation report on the enlarged group's interests in land or buildings in accordance with Chapter 5 of the Main Board Rules / Chapter 8 of the GEM Rules".
              Please clarify the application of Main Board Rule 14.69(3) / GEM Rule 19.69(3) where the asset to be acquired by a listed issuer under a proposed very substantial acquisition is neither a property nor a company whose assets consist solely or mainly of property/ properties.

              Answer:

              Main Board Rule 5.02/GEM Rule 8.02 provides that where a notifiable transaction involves an acquisition or disposal of a property or a company whose assets consist solely or mainly of property and any of the percentage ratios of the transaction exceeds 25% (i.e. major transaction or above), a valuation of and information on such property must be included in the circular.

              Where the acquisition target is neither a property nor a company whose assets consist solely or mainly of property/ properties as described in Main Board Rule 5.02/GEM Rule 8.02, Rule 14.69(3) / GEM Rule 19.69(3) would not be applicable.

              FAQ Series 7, FAQ No. 31
              LR reference: Main Board Rules 14.69(3) / GEM Rules 19.69(3)
              Released on 28/11/2008

              Question:

              Listco has granted an option to Mr. X to acquire an asset from Listco. Mr. X is an independent third party and the option is exercisable at his discretion. Listco has complied with the notifiable transaction Rules as if the option had been exercised.

              If Mr. X subsequently becomes a connected person of Listco, would Listco be required to comply with the connected transaction Rules for the grant of the option as if it had been exercised?

              Answer:

              No. Listco would need to comply with the announcement requirements when the option is exercised, transferred or expired, or when Mr. X notifies Listco that he will not exercise the option.

              FAQ Series 20, FAQ No. 4
              LR reference: Main Board Rules 14.74, 14.77, 14A.61 / GEM Rules 19.74, 19.77, 20.59
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              A listed issuer proposes to enter into a transaction involving the grant of an option to the listed issuer to acquire an asset from an independent third party. The option is exercisable at the discretion of the listed issuer.

              At the time of the grant of the option, the listed issuer does not have any plan or timetable on whether and when it will exercise the option to acquire the target asset.

              It proposes to seek shareholders' approval for the exercise of an option, in addition to seeking any shareholders' approval necessary for the entering into of the option.

              The actual monetary value of the total consideration payable upon exercise and all other relevant information are known and would be disclosed to the shareholders at the time when the shareholders' approval is obtained. There is no change in any relevant facts at the time of exercise.

              (1) Will the listed issuer be required to seek separate shareholders' approval at the time of exercise of the option?
              (2) Will the answer to (1) be different if the vendor of the target asset is a connected person of the listed issuer?

              Answer:

              (1) The listed issuer may, at the time of entering into an option, seek any shareholders' approval necessary for the exercise of the option (in addition to seeking any shareholders' approval necessary for entering into of the option). Such approval, if obtained, will be sufficient for satisfying the shareholders' approval requirement for notifiable transactions pursuant to Main Board Rule 14.76(2)/ GEM Rule 19.76(2).
              (2) If the vendor is a connected person of the listed issuer at the time of exercise of the option, the listed issuer will be required to compute the percentage ratios at the time of exercise of the option pursuant to Main Board Rule 14A.79(3) / GEM Rule 20.77(3), irrespective of whether it has sought shareholders' approval for the exercise of option at the time of entering into an option. Depending on the result of the relevant percentage ratios, the listed issuer may be required to comply with the announcement, reporting and shareholders' approval requirements at the time of exercise of the option.

              FAQ Series 7, FAQ No. 60
              LR reference: Main Board Rules 14A.79(3), 14.76(2) / GEM Rules 20.77(3), 19.76(2)
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Do the provisions on financial assistance in the New CO affect the Rules relating to financial assistance for issuers incorporated in Hong Kong?

              Answer:

              No. As is the case under the Existing CO, the provisions on financial assistance in the New CO relate to the provision of financial assistance by a company or its subsidiaries for the acquisition of its own shares only. The Rules govern the provision of financial assistance by issuers (whether for the acquisition of their own shares or otherwise) and, as such, issuers incorporated in Hong Kong must comply with any applicable financial assistance provisions under both the New CO and the Rules.

              FAQ Series 26, FAQ No. 13
              LR reference: Main Board Rules 14 and 14A / GEM Rules Chapters 19 and 20
              Released on 21/2/2014

            • Chapter 14A

              View Current PDF

              Question:

              Margin financing activity is the principal business of a securities company. Will such transactions be considered as financial assistance and will the issuer be required to comply with the disclosure requirement?

              Does "banking company" include a company with a money lender licence?

              Answer:

              Margin financing activity is financial assistance and a securities company is not a banking company. Therefore the issuer will have to comply with the disclosure, reporting and/or shareholders' approval requirements.

              The definition of "banking company" does not include a company with a money lending licence.

              FAQ Series 1, FAQ No. 55
              LR reference: Main Board Rules 14A.06(3), 14A.06(17), 14A.88 / GEM Rules 20.06(3), 20.06(17), 20.86
              Released on 30/3/2004 (Updated on 1/7/2014)

              Question:

              An issuer proposes to obtain written shareholder approval of a major transaction and make relevant disclosure in the announcement. Does the issuer need to obtain the Exchange's prior approval of this arrangement before it publishes the announcement?

              Answer:

              The Listing Rules do not specifically require an issuer to seek the Exchange's prior consent for the written shareholder approval of a major transaction. Nevertheless, if the written approval is to be given by a group of shareholders, the Rules require the issuer to provide sufficient information to the Exchange to demonstrate that the shareholders are a "closely allied group of shareholders".

              If the major transaction is also a connected transaction, a waiver from convening the general meeting is required under the connected transaction rules.

              FAQ Series 9, FAQ No. 17
              LR reference: Main Board Rules 14.44, 14A.06(5), 14A.37 / GEM Rules 19.44, 20.06(5), 20.35
              Released on 14/12/2009 (Updated on 1/7/2014)

              Question:

              Under the non-competition agreement between Listco and its controlling shareholder, Listco has been granted a right of first refusal to acquire certain assets from the controlling shareholder at a price and on terms to be negotiated between the parties.

              If Listco decides not to exercise the "right of first refusal" when the controlling shareholder proposes to sell the assets, will it be regarded as non-exercise of an option and subject to the connected transaction requirements?

              Answer:

              Given that the terms of the acquisition are subject to further negotiation between the parties, the right of first refusal does not constitute an option under Rule 14A.06(27). Therefore, non-exercise of the right of first refusal by Listco does not constitute a non-exercise of an option.

              FAQ Series 28, FAQ No. 7
              LR reference: Main Board Rules 14A.06(27), 14A.24(2)(a) / GEM Rules 20.06(27), 20.22(2)(a)
              Released on 21/3/2014

              Question:

              Company A is an associated company of Listco.

              Mr. X is a director of Listco. Is Company A a connected person of Listco if Mr. X is also

              (a) a director of Company A?
              (b) a shareholder of Company A?

              Answer:

              (a) Company A is not a connected person of Listco simply because Mr. X is a director of Company A.
              (b) It would depend on Mr. X's shareholding in Company A.
              (i) If Mr. X can control the exercise of 10% or more of the voting power at general meetings of Company A:
              •   Company A is a "commonly held entity" and any financial assistance to / from Company A is a connected transaction for Listco under Rule 14A.26.
              •   Listco acquiring an interest in Company A is a connected transaction for Listco under Rule 14A.28.
              (ii) If Mr. X can control the exercise of 30% or more of the voting power at general meetings of Company A or can control the composition of a majority of the board of Company A, Company A is an associate of Mr. X and therefore a connected person of Listco. Any transaction (including financial assistance) with Company A is a connected transaction for Listco.

              FAQ Series 20, FAQ No. 9
              LR reference: Main Board Rules 14A.07, 14A.26, 14A.28 / GEM Rules 20.07, 20.24, 20.26
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Do the connected transaction Rules apply to any grant of loans to directors or their connected entities (as defined in the New CO) that are exempt under Part 11 of the New CO?

              Answer:

              Part 11 of the New CO governs fair dealing by directors and transactions involving directors and their connected entities.

              Since the scope of transactions regulated under Part 11 of the New CO and the connected transaction Rules are not the same, Hong Kong incorporated issuers must ensure that they comply with any applicable requirements under both the New CO and the Rules when they enter into loan transactions involving directors or their connected entities (as defined in the New CO) or connected persons or associates (as defined in the Rules).

              FAQ Series 26, FAQ No. 12
              LR reference: Main Board Rules 14A.07, 14A.76, 14A.87 to 14A.90 / GEM Rules 20.07, 20.74, 20.85 to 20.88
              Released on 21/2/2014 (Updated on 1/7/2014)

              Question:

              Does a substantial shareholder of a jointly controlled entity of the listed issuer fall within the definition of "connected person" under Chapter 14A of the Main Board Rules/ Chapter 20 of the GEM Rules?

              Answer:

              It would depend on whether the jointly controlled entity falls within the definition of "subsidiary" under Rule 1.01 of the Main Board Rules/ GEM Rules.

              Where the jointly controlled entity is a "subsidiary" of the listed issuer under Main Board Rule 1.01 / GEM Rule 1.01, its substantial shareholder is a connected person of the listed issuer under Main Board Rule 14A.07 / GEM Rule 20.07. Under Rule 1.01, the term "subsidiary" includes:

              (a) a "subsidiary undertaking" as defined in schedule 1 to the Companies Ordinance;
              (b) any entity which is accounted for and consolidated in the audited consolidated accounts of another entity as a subsidiary pursuant to applicable Hong Kong Financial Reporting Standards or International Financial Reporting Standards; and
              (c) any entity which will, as a result of acquisition of its equity interest by another entity, be accounted for and consolidated in the next audited consolidated accounts of such other entity as a subsidiary pursuant to applicable Hong Kong Financial Reporting Standards or International Financial Reporting Standards.

              FAQ Series 7, FAQ No. 33
              LR reference: Main Board Rules 14A.07(1) / GEM Rules 20.07(1)
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Subsidiary A is a non wholly-owned subsidiary of Listco. It is owned as to 90% by Listco and 10% by Entity X.

              Are Entity X and Subsidiary A connected persons of Listco?

              Answer:

              Entity X is a connected person of Listco because he/it is a substantial shareholder of Subsidiary A, unless Entity X falls under any exemption under Chapter 14A (e.g. the insignificant subsidiary exemption under Rule 14A.09)

              If Entity X is also a "connected person at the issuer level" (e.g. Listco's director, chief executive or substantial shareholder, or an associate of any of them), Subsidiary A is a connected subsidiary and therefore a connected person of Listco.

              If Entity X is a connected person only because of its relationship with Subsidiary A (and any other subsidiaries of Listco), Subsidiary A is not a connected person of Listco.

              FAQ Series 20, FAQ No. 7
              LR reference: Main Board Rules 14A.07(1), 14A.07(5), 14A.09, 14A.16(1) / GEM Rules 20.07(1), 20.07(5), 20.08, 20.14(1)
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              A month ago, Listco sold its entire interest in its subsidiary, Company A.

              Mr. X is a connected person of Listco under Rule 14A.07(2) because of his directorship in Company A before the disposal. He has no other relationship with Listco group.

              Can Listco apply the insignificant subsidiary exemption to its proposed transactions with Mr. X?

              Answer:

              Yes, if Company A was "insignificant" under Rule 14A.31(9) at the time when it ceased to be a subsidiary of Listco.

              FAQ Series 10, FAQ No. 5A
              LR reference: Main Board Rules 14A.07(2), 14A.09 / GEM Rules 20.07(2), 20.08
              Released on 17/9/2010 (Updated on 1/7/2014)

              Question:

              An issuer has completed a placing of new shares. When it assesses whether a subsidiary is "insignificant" under this Rule, does it need to adjust the assets ratio for the proceeds from the placing?

              Answer:

              No. The issuer should use the total assets shown in its group's audited accounts for the financial year(s) set out in the Rule without adjustments.

              FAQ Series 10, FAQ No. 1
              LR reference: Main Board Rules 14A.09 / GEM Rules 20.08
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              An issuer acquired a majority interest in Company A a few months ago.

              When assessing whether Company A is an "insignificant subsidiary" under this Rule, can the issuer refer to Company A's total assets, profits and revenue for the period after the date of acquisition?

              Answer:

              No. The assessment should be based on the latest financial year / three financial years described in the Rule, which may include Company A's financials before the date of acquisition.

              FAQ Series 10, FAQ No. 2
              LR reference: Main Board Rules 14A.09 / GEM Rules 20.08
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              An issuer has recently formed a joint venture with a third party.

              The joint venture is a non wholly-owned subsidiary of the issuer but it has yet to publish its first accounts. Can the issuer apply the insignificant subsidiary exemption? If yes, how will the percentage ratios be calculated?

              Answer:

              The exemption may apply to a newly established subsidiary even though it does not have a full year of accounts. The issuer may propose alterative size tests to assess the subsidiary's materiality.

              In the circumstances described, it would normally be acceptable for the issuer to compute an alternative assets ratio based on its total capital commitment in the joint venture. The profits and revenue ratios would be inapplicable as the joint venture is newly set up. The issuer should consult the Exchange.

              FAQ Series 10, FAQ No. 3
              LR reference: Main Board Rules 14A.09 / GEM Rules 20.08
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              When assessing whether a subsidiary is "insignificant" under this Rule, can the issuer change from the three year test to the one year test (or vice versa) from time to time?

              Answer:

              Yes. Both tests are meant to measure the materiality of a subsidiary.

              FAQ Series 10, FAQ No. 4
              LR reference: Main Board Rules 14A.09 / GEM Rules 20.08
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              Can the issuer apply the "anomalous test" if there are fluctuations in the subsidiary's results over the three years, for example due to exceptional performance in a particular year?

              Answer:

              The "anomalous test" will not apply in the circumstances described. This is because the "anomalous test" addresses circumstances where a particular percentage ratio is out of line with the others or does not reflect the subsidiary's materiality.

              FAQ Series 10, FAQ No. 5
              LR reference: Main Board Rules 14A.09 / GEM Rules 20.08
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              Listco has entered into an agreement to lease a property to Mr. X, a director of a Listco subsidiary, with fixed terms for 3 years.

              At the time of the lease agreement, the subsidiary is not "insignificant" and Mr. X does not meet the conditions for the exemption. Listco has complied with the applicable connected transaction requirements.

              If after 1 year, Mr. X meets the conditions for the exemption, is Listco still required to comply with the reporting and annual review requirements for the remaining term of the lease agreement?

              Answer:

              Listco may announce that it will apply the exemption to the lease after 1 year. Reporting and annual review of the lease will not be required as long as Mr. X meets the conditions for the exemption. If Mr. X no longer qualifies for the exemption, Listco must comply with the announcement, reporting and annual review requirements for the remaining term of the lease.

              Alternatively, Listco may continue to comply with the reporting and annual review requirements for the lease in the next 2 years. If it does this, it will not be required to re-comply with the announcement requirement if Mr. X no longer qualifies for the exemption.

              FAQ Series 10, FAQ No. 7
              LR reference: Main Board Rules 14A.09 / GEM Rules 20.08
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              Listco wishes to apply the "insignificant subsidiary exemption" (or the "passive investor exemption") to the following continuing connected transactions with Company X:

              (a) Listco proposes to purchase raw materials from Company X on a recurring basis. Company X currently meets the conditions for the exemption.
              (i) Do they need to enter into a framework agreement for these purchases?
              (ii) If they now enter into a framework agreement for the purchases for say 3 years, does it mean that all purchases conducted under this agreement are exempt?
              (b) Listco also enters into an agreement with Company X to lease an office building with fixed terms for 3 years. If Company X no longer meets the conditions for the exemption after one year, will Listco need to comply with the connected transaction Rules?

              Answer:

              (a)(i) A framework agreement is not required if the purchases are exempt under the Rule.
              (a)(ii) No. The framework agreement is not an agreement with fixed terms. If Company X no longer meets the conditions for the exemption within the three year period, Listco must comply with all applicable connected transaction Rules for its subsequent purchases from Company X.
              (b) Listco is only required to comply with the reporting, annual review and announcement requirements immediately upon it becoming aware of this fact.

              FAQ Series 10, FAQ No. 6
              LR reference: Main Board Rules 14A.09, 14A.60, 14A.99, 14A.100 / GEM Rules 20.08, 20.58, 20.97, 20.98
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              If a person is a connected person of an issuer only because of his/its relationship with the issuer's insignificant subsidiaries, would the insignificant subsidiary exemption apply to a placing of new securities by the issuer to such person?

              Answer:

              Yes, but the issuer must ensure that it has a specific or general mandate for the issue of new securities under Rule 13.36.

              FAQ Series 20, FAQ No. 20
              LR reference: Main Board Rules 14A.09 / GEM Rules 20.08
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Listco has acquired certain fixed assets from Company A (being a substantial shareholder of a subsidiary of Listco), which constitutes a connected transaction subject to the announcement and reporting requirements.

              Will Listco need to report the above acquisition in its next annual report if Company A becomes qualified for the insignificant subsidiary exemption based on Listco's results at the end of the year?

              Answer:

              Yes. Listco is required to comply with the connected transaction requirements applicable at the time of entering into the transaction.

              FAQ Series 28, FAQ No. 1
              LR reference: Main Board Rules 14A.09 / GEM Rules 20.08
              Released on 21/3/2014

              Question:

              Listco has entered into a framework agreement with Company A (being a substantial shareholder of a subsidiary of Listco) for purchasing certain raw materials at prices to be determined from time to time. It is not a connected transaction as Company A qualifies for the insignificant subsidiary exemption.

              If a year later, Company A no longer meets the insignificant subsidiary exemption (and is therefore a connected person at the subsidiary level), what are the connected transaction requirements applicable to this case?

              Answer:

              If Listco continues to conduct the transactions under the framework agreement, it needs to comply with the announcement, reporting and annual review requirements, unless the transactions are fully exempt under the de minimis exemption.

              FAQ Series 28, FAQ No. 2
              LR reference: Main Board Rules 14A.09, 14A.60, 14A.101 / GEM Rules 20.08, 20.58, 20.99
              Released on 21/3/2014

              Question:

              A few months ago, Listco entered into a one-off transaction with Mr. A (the Previous Transaction) who at that time qualified for the insignificant subsidiary exemption.

              Mr. A is recently appointed as a director of Listco and no longer qualifies for the insignificant subsidiary exemption. When Listco enters into a new transaction with Mr. A, will it need to aggregate the proposed transaction with the Previous Transaction for the purpose of the connected transaction Rules?

              Answer:

              No, because the Previous Transaction was not a connected transaction for Listco.

              FAQ Series 28, FAQ No. 15
              LR reference: Main Board Rules 14A.09, 14A.81 / GEM Rules 20.08, 20.79
              Released on 21/3/2014

              Question:

              Listco proposes to issue new shares to Mr. A as the consideration for an acquisition of assets from Mr. A.

              Mr. A is a director of certain insignificant subsidiaries of Listco. If Mr. A meets the conditions for the significant subsidiary exemption under Rule 14A.09 at the time of the proposed transaction, is the transaction subject to the connected transaction requirements under Chapter 14A?

              Answer:

              As Mr. A is not a connected person of Listco, the proposed transaction is not a connected transaction under Chapter 14A.

              FAQ Series 28, FAQ No. 21C
              LR reference: Main Board Rules 14A.09, Note 1 to 13.36(2)(b) / GEM Rules 20.08, Note to 17.41(2)
              Released on 29/5/2015

              Question:

              Under the revised Rules, the definitions of "close associate" and "associate" include any trustee by virtue of its capacity as such trustee, of which any director, chief executive or substantial shareholder (being an individual) or any of his family interests is a beneficiary of the trust.

              Do the definitions of "close associate" and "associate" include a trustee where the beneficiary of the trust is a company controlled by any of these parties?

              Answer:

              Yes. For the purpose of the definitions of "close associate" and "associate", the interest of a director, chief executive or substantial shareholder or any of his family interests includes all beneficial interests directly or indirectly held by any of these parties. This would include the trustee of any trust of which a company beneficially controlled by a director, chief executive or substantial shareholder or any of his family interests is a beneficiary. Similarly, where the substantial shareholder is a corporation, "close associate" and "associate" include the trustee of any trust of which a subsidiary of the substantial shareholder is a beneficiary.

              FAQ Series 1, FAQ No. 1
              LR reference: Main Board Rules 1.01, 14A.12(1)(b), 14A.13(2) / GEM Rules 1.01, 20.10(1)(b), 20.11(2)
              Released on 30/3/2004 (Updated on 1/7/2014)

              Question:

              Before the Rule amendments becoming effective, Listco has entered into an agreement for certain continuing connected transactions, and has complied with the announcement, circular and/or shareholders' approval requirements applicable to the agreement.

              Can Listco apply the new/revised Rules to the continuing connected transactions to be conducted under the agreement after Rule amendments?

              Answer:

              Yes if the transactions to be conducted under the agreement after the Rule amendments can meet all the exemption conditions under the relevant new/revised Rules (e.g. the transactions have a total value of less than HK$3 million which are therefore fully exempt under the revised Rules). Listco may announce that it will apply the exemption to these transactions, and the reporting or annual review of the transactions will not be required in the next annual report(s).

              FAQ Series 28, FAQ No. 25
              LR reference: Main Board Rules 14A.12(1)(a), 14A.14, 14A.76(1)(c), 14A.96, 14A.97 / GEM Rules 20.10(1)(a), 20.12, 20.74(1)(c), 20.94, 20.95
              Released on 21/3/2014

              Question:

              Listco has appointed Trustee A the trustee of its employee share scheme established for a wide scope of participants including Listco's directors and certain employees who are not connected persons. Since the interests of Listco's directors in the scheme are together less than 30%, Trustee A is not an "associate" of the directors under Rule 14A.12(1)(b) and therefore not a connected person of Listco.

              (a) Is Trustee A a "close associate" of the directors under Rule 1.01?
              (b) Will the shares held by Company A on behalf of the beneficiaries of the scheme be regarded as being "in public hands"?
              (c) Trustee A, acting as the trustee of the scheme, holds more than 10% of Listco's total issued shares. Under the scheme, it is not allowed to exercise the voting rights attaching to shares. Is Trustee A a substantial shareholder of Listco?

              Answer:

              (a) Yes. The exclusion for the definition of "associate" under Rule 14A.12(1)(b) does not apply to the definition of "close associate" under Rule 1.01.
              (b) No, because Trustee A is a close associate of Listco's directors and therefore a core connected person for the purpose of Rule 8.24.
              (c) No. Trustee A does not fall under the definition of "substantial shareholder" under Rule 1.01.

              FAQ Series 28, FAQ No. 4A
              LR reference: Main Board Rules 1.01, 8.24, 14A.12(1)(b) / GEM Rules 1.01, 11.23(11) Notes 2 and 3, 20.10(1)(b)
              Released on 1/7/2014

              Question:

              Will an employees' share scheme or occupational pension scheme be regarded as being established for a wide scope of participants based on the fact that the interests of connected persons in the scheme are together less than 30%?

              Answer:

              No. The scheme must satisfy both conditions to qualify for the trustee exemption. Whether or not a scheme is established for a wide scope of participants would depend on the circumstances of the individual cases.

              FAQ Series 28, FAQ No. 3
              LR reference: Main Board Rules 14A.12(1)(b) / GEM Rules 20.10(1)(b)
              Released on 21/3/2014

              Question:

              When determining the connected persons' aggregate interests in an employees' share scheme or occupational pension scheme, does the issuer have to take into account the interests of any employees who are relatives of the issuer's directors or substantial shareholder?

              Answer:

              It will depend on whether the relatives are deemed to be associates of the directors/substantial shareholder in the proposed transaction with the trustee of the scheme. The issuer should provide information for the Exchange to assess whether or not to apply the deeming provision, and judgement needs to be exercised in considering whether these persons stand to benefit from the transaction.

              FAQ Series 28, FAQ No. 4
              LR reference: Main Board Rules 14A.12(1)(b) / GEM Rules 20.10(1)(b)
              Released on 21/3/2014

              Question:

              Mr. X is a director of Listco. Company A is 20% owned by Mr. X and 40% owned by his son.

              Is a transaction between Listco and Company A a connected transaction?

              Answer:

              Yes. Since Mr. X and his son together have a majority control over Company A, Company A is Mr. X's associate and the transaction is a connected transaction for Listco.

              FAQ Series 10, FAQ No. 12
              LR reference: Main Board Rules 14A.12(2)(b) / GEM Rules 20.10(2)(b)
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              Mr. X is a director of Listco. Mr. Y is Mr. X's brother.

              Company A is held by Mr. Y who can exercise more than 50% of the voting power at its general meetings. As Company A is a "majority-controlled company" held by Mr. Y, it is an associate of Mr. X and therefore a connected person of Listco.

              Company B is 51% owned by Company A and is its subsidiary. Is Company B a connected person of Listco?

              Answer:

              Yes. Company B is also a "majority-controlled entity" held by Mr. Y because Mr. Y can, through its interest in Company A, control more than 50% of the voting power at general meetings of Company B.

              FAQ Series 20, FAQ No. 10
              LR reference: Main Board Rules 14A.12(2)(b) / GEM Rules 20.10(2)(b)
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Is Company B an associate of Mr. X in the following scenario?

              Answer:

              Yes, because Company B is a 30%-controlled company of Mr. X, and it is not exempt under Rule 14A.14 as Company A (being Mr. X's associate) has an interest in Company B of more than 10%.

              FAQ Series 28, FAQ No. 5
              LR reference: Main Board Rules 14A.14 / GEM Rules 20.12
              Released on 21/3/2014

              Question:

              Is Company D as an associate of Mr. X in the following scenario?

              Answer:

              No. The exemption under Rule 14A.14 applies in this case because:

              (i) Mr. X's 45% interest in Company D is held through Listco; and
              (ii) Company C is not an associate of Mr. X. Neither Mr. X nor any of his associates has a direct interest in Company D.

              FAQ Series 28, FAQ No. 6
              LR reference: Main Board Rules 14A.14 / GEM Rules 20.12
              Released on 21/3/2014

              Question:

              Company A is a subsidiary of Listco.

              Mr. X is a director of Listco. Is Company A a connected person of Listco if Mr. X is also

              (a) a director of Company A?
              (b) a shareholder of Company A?

              Answer:

              (a) Company A is not a connected person of Listco simply because Mr. X is a director of Company A.
              (b) It would depend on Mr. X's shareholding in Company A. If Mr. X can control the exercise of 10% or more of the voting power at general meetings of Company A, Company A is a connected subsidiary and therefore a connected person of Listco.

              FAQ Series 20, FAQ No. 8
              LR reference: Main Board Rules 14A.16(1) / GEM Rules 20.14(1)
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Companies A, B and C are non-wholly owned subsidiaries of Listco.

              Mr. X is a director of Listco. Mr. Y is not a connected person at the Listco's level.

              Company A is a connected person of Listco because of Mr. X's substantial interest in it. Companies B and C, being subsidiaries of Company A, are also connected persons.

              Does the exemption under this Rule apply to:

              (a) a transaction between Company A and Company B; and
              (b) a transaction between Company A and Company C?

              Answer:

              (a) Yes, because Company B is a connected person only because it is a subsidiary of Company A.
              (b) No. Company C is a connected person because it is a subsidiary of Company A AND because Mr. X is a substantial shareholder in it. The transaction does not meet the conditions for the exemption.

              FAQ Series 10, FAQ No. 14
              LR reference: Main Board Rules 14A.17 / GEM Rules 20.15
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              Mr. X is a director of Listco. Mr. Y is the Mr. X's nephew.

              Company A is 20% owned by Mr. X and 40% owned by Mr. Y. Is a transaction between Listco and Company A a connected transaction?

              Answer:

              Yes. Normally, the Exchange would aggregate the interests of Mr. X and Mr. Y in Company A and treat Company A as a connected person for the transaction. Listco should consult the Exchange.

              FAQ Series 10, FAQ No. 13
              LR reference: Main Board Rules 14A.21, 14A.22 / GEM Rules 20.19, 20.20
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              A listed issuer proposes to acquire a 70% interest in a target company from a third party vendor which is not a connected person of the listed issuer. At the same time, the parties would enter into an option agreement under which the vendor grants a call option (which is exercisable at the listed issuer's discretion) to the listed issuer for acquiring all the remaining 30% interest in the target company held by the vendor.

              Upon completion of the acquisition, the target company would be a subsidiary of the listed issuer and the vendor would become a connected person of the listed issuer given its substantial shareholding in the target company. Would the exercise of the call option by the listed issuer constitute a connected transaction under the Listing Rules?

              Answer:

              Whilst the vendor is not a connected person when the listed issuer enters into the option agreement, if the vendor has become a connected person at the time of the (discretionary) exercise of the option, the exercise of the option by the listed issuer would constitute a connected transaction pursuant to Main Board Rule 14A.25 / GEM Rule 20.23 and the listed issuer must comply with Main Board Rule 14A.79(3) / GEM Rule 20.77(3).

              FAQ Series 7, FAQ No. 59
              LR reference: Main Board Rules 14A.24(2)(a), 14A.25, 14A.79(3) / GEM Rules 20.22(2)(a), 20.23, 20.77(3)
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Listco has been granted an option to acquire a coal mine from its controlling shareholder within a period of three years from the date of grant.

              (a) Under the option agreement, the option will be terminated if the mining license cannot be obtained within 12 months from the date of the agreement. Will such termination constitute a connected transaction for Listco?
              (b) If Listco allows the option to lapse upon expiry of the option period (and the mining license was obtained), will this constitute a connected transaction for Listco?

              Answer:

              (a) No. Since the termination of the option is made under the term of the agreement and Listco has no discretion over the termination, it does not constitute a transaction under Note to Rule 14A.24(2)(a).
              (b) Yes. As Listco decides not to exercise the option, it must classify the transaction under Rule 14A.79(4) and comply with the applicable announcement and shareholder approval requirements before expiry of the option period.

              FAQ Series 28, FAQ No. 8
              LR reference: Main Board Rules 14A.24(2) / GEM Rules 20.22(2)
              Released on 21/3/2014

              Question:

              Company X is Listco's substantial shareholder.

              Listco proposes to acquire from an independent third party certain convertible notes issued by Company X. Is this a connected transaction for Listco?

              Answer:

              Although the counterparty is an independent third party, the acquisition would result in Listco holding the outstanding convertible notes and in substance providing financial assistance to Company X. The acquisition is a connected transaction for Listco.

              FAQ Series 9, FAQ No. 20
              LR reference: Main Board Rules 14A.24(4), 14A.25 / GEM Rules 20.22(4), 20.23
              Released on 14/12/2009 (Updated on 1/7/2014)

              Question:

              Listco is a property developer and from time to time maintains term deposits and balances with various banks. It now proposes to place cash deposits with Company A on normal commercial terms.

              Company A is a finance company approved by regulatory authorities in the Mainland. It only provides financial services to its group companies including Listco.

              As Company A is a connected person, the proposed placing of cash deposits would be a connected transaction for Listco under Chapter 14A. Would it also constitute a transaction under Chapter 14?

              Answer:

              Yes. The proposed placing of cash deposits would be regarded as Listco providing financial assistance to Company A which falls within the definition of "transaction" under both Rules 14.04(1)(e) and 14A.24(4).

              FAQ Series 20, FAQ No. 2
              LR reference: Main Board Rules 14.04(1)(e), 14A.24(4) / GEM Rules 19.04(1)(e), 20.22(4)
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Mr. X is Listco's executive director. He has been providing financial assistance to support Listco's business.

              Listco proposes to provide Mr. X with a corporate credit card for payment of his travelling expenses related to Listco's business. If he also uses the corporate credit card for payment of his personal purchases, Listco would set off the payment against the amount due from Listco to Mr. X.

              Would the use of the corporate credit card for payment of Mr. X's personal expenses constitute a transaction for Listco under 14 and 14A?

              Answer:

              Yes. Listco is liable for settling any payment made through the corporate credit card. Allowing Mr. X to use the card for payment of his personal expenses is a means to provide financial assistance to Mr. X. It falls within the definition of "transaction" under both Rules 14.04(1)(e) and 14A.24(4).

              FAQ Series 20, FAQ No. 3
              LR reference: Main Board Rules 14.04(1)(e), 14A.24(4) / GEM Rules 19.04(1)(e), 20.22(4)
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              A wholly owned subsidiary of Listco proposes to obtain a bank loan which will be guaranteed by Listco's substantial shareholder on normal commercial terms. No security over the assets of Listco's group will be provided for the guarantee.

              Listco has agreed to indemnify the substantial shareholder for the loan guaranteed by it. Does the provision of the indemnity constitute a connected transaction for Listco?

              Answer:

              No. The indemnity is a financial assistance provided by Listco in favour of its wholly owned subsidiary, and is not a connected transaction.

              FAQ Series 28, FAQ No. 9
              LR reference: Main Board Rules 14A.24(4), 14A.25 / GEM Rules 20.22(4), 20.23
              Released on 21/3/2014

              Question:

              Subsidiary X is owned as to 90% by Listco and 10% by Mr. A who is a connected person at the subsidiary level.

              Listco has agreed to provide a guarantee for the full amount of a loan facility granted by a bank to Subsidiary X. Will it be regarded as provision of financial assistance to Mr. A on the basis that he is not required to provide any guarantee for the loan facility in proportion to his interest in Subsidiary X?

              Answer:

              No. The guarantee is provided by Listco for the benefit of Subsidiary X. It is not regarded as provision of financial assistance to Mr. A.

              FAQ Series 28, FAQ No. 10
              LR reference: Main Board Rules 14A.24(4), 14A.25 / GEM Rules 20.24(4), 20.23
              Released on 21/3/2014

              Question:

              Listco has issued some convertible bonds (or warrants).

              If the bondholder (or warrantholder) is a connected person of Listco, would the issue of new shares by Listco to the connected person upon the exercise of the conversion rights (or subscription rights) according to the terms of the bonds (or warrants) constitute a connected transaction for Listco?

              Answer:

              No because Listco has no discretion over the conversion (or subscription), however, the issue of the convertible bonds (or warrants) to the connected person would have been a connected transaction.

              FAQ Series 20, FAQ No. 5
              LR reference: Main Board Rules 14A.24(6), 14A.25 / GEM Rules 20.22(6), 20.23
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Company I is the non-wholly owned subsidiary of a listed issuer and is owned as to 80% and 20% by the listed issuer and Company X respectively. Company X is a connected person of the listed issuer (a connected person at the level of the issuer's subsidiaries) only by virtue of its substantial shareholding in Company I.

              The listed issuer and Company X propose to provide shareholders' loans to Company I in proportion to their respective interest in Company I.

              Will the pro rata shareholders' loan arrangement be subject to the connected transaction rules?

              Answer:

              Since Company I is neither a connected person of the listed issuer nor a company falling under Main Board Rule 14A.27/ GEM Rule 20.25, the provision of the shareholder's loan by the listed issuer to Company I will not be a connected transaction.

              The provision of the shareholder's loan by Company X to Company I will constitute a connected transaction for the listed issuer under Main Board Rule 14A.25 / GEM Rule 20.23. Such shareholder's loan will be exempt from reporting, announcement and shareholders' approval requirements under Main Board Rule 14A.90/ GEM Rule 20.88 if it is provided by Company X on normal commercial terms (or better to the listed issuer) and no security is granted over the assets of the listed issuer in respect of the shareholder's loan.

              FAQ Series 7, FAQ No. 57
              LR reference: Main Board Rules 14A.25, 14A.89, 14A.90 / GEM Rules 20.23, 20.87, 20.88
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              A listed issuer and its holding company formed a 80:20 joint venture. The joint venture is accounted for as a (non wholly owned) subsidiary of the listed issuer.

              The listed issuer and its holding company propose to make a further capital contribution to the joint venture in form of cash, in proportion to their existing shareholding interests in the joint venture.

              Will the capital contributions by the listed issuer and its holding company constitute connected transactions?

              Answer:

              Given that the joint venture is a connected person of the listed issuer pursuant to Main Board Rule 14A.16(1)/ GEM Rule 20.14(1), the capital contribution by the listed issuer to the joint venture constitutes a connected transaction under Main Board Rule 14A.25/ GEM Rule 20.23 subject to announcement, reporting and shareholders' approval requirements.

              Since the holding company of the listed issuer is a connected person, its capital contribution to the joint venture (being a subsidiary of the listed issuer) also constitutes a connected transaction under Main Board Rule 14A.25/ GEM Rule 20.23. The capital contribution by the holding company will be exempt from the announcement, reporting and shareholders' approval requirements under Main Board Rule 14A.92(1) / GEM Rule 20.90(1) on the basis that the holding company's capital contribution will be made in proportion to its shareholding interests in the joint venture.

              FAQ Series 7, FAQ No. 37
              LR reference: Main Board Rules 14A.25, 14A.92(1) / GEM Rules 20.23, 20.90(1)
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Company A is an associated company of Listco. Company A proposes to issue new shares to Mr. X (the Proposed Issue).

              The Proposed Issue would dilute Listco's interest in Company A. Is it a transaction for Listco under Chapter 14? Is it a connected transaction for Listco under Chapter 14A if Mr. X is a connected person of Listco?

              Answer:

              The Proposed Issue is not a transaction for Listco under both Chapters 14 and 14A as Company A is not a subsidiary of Listco.

              FAQ Series 20, FAQ No. 1
              LR reference: Main Board Rules 14.04(1)(a), 14A.25 / GEM Rules 19.04(1)(a), 20.23
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Listco has entered into an agreement to acquire a target company from Company A. Listco has also entered into an agreement with Company A for purchase of raw materials at the then market prices from time to time for a 3-year period after the completion of the acquisition.

              Company A is an independent third party at the time of entering into the above agreements, but it will become a substantial shareholder of Listco by receiving consideration shares issued by Listco to it upon completion of the acquisition of the target company.

              Will the purchase of raw materials from Company A constitute a connected transaction?

              Answer:

              Yes, as the terms are not fixed at the time Company A is an independent third party, Listco must comply with all applicable announcement, reporting, annual review and shareholder approval requirements in relation to the agreement for the purchase transactions.

              FAQ Series 28, FAQ No. 11
              LR reference: Main Board Rules 14A.25 / GEM Rules 20.23
              Released on 21/3/2014

              Question:

              Company A is owned as to:

              •   10% by Listco;
              •   10% by Mr. X who is a director of Listco; and
              •   80% by certain independent third parties.

              Listco providing financial assistance to Company A is a connected transaction for Listco as Company A is a commonly held entity.

              If Listco proposes to subscribe new shares in Company A for cash, is it a connected transaction for Listco?

              Answer:

              Yes. Although Company A is not a connected person of Listco, the proposed subscription is a connected transaction for Listco under Rule 14A.28 because it involves Listco acquiring an interest in Company A, and Mr. X (a controller of Listco) is a substantial shareholder of Company A.

              FAQ Series 20, FAQ No. 6
              LR reference: Main Board Rules 14A.26, 14A.28 / GEM Rules 20.24, 20.26
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              A listed issuer proposes to acquire 60% interest in Company G which is wholly owned by Individual P, an independent third party.

              After the acquisition, Individual P will continue to hold 40% interest in Company G which will be a 60% owned subsidiary of the listed issuer.

              (1) Does the acquisition constitute a connected transaction?
              (2) Will the answer to (1) be different if Individual P is to be appointed as a director of the listed issuer after the acquisition?

              Answer:

              (1) Since Individual P is not a connected person of the listed issuer at the time of the transaction, the acquisition does not fall within the definition of "connected transaction" under Main Board Rule 14A.25/ GEM Rule 20.23.

              Since Individual P will not become a controller of the listed issuer as defined in Main Board Rule 14A.28(1)/ GEM Rule 20.26(1) after the acquisition, the acquisition does not fall within the definition of "connected transaction" under Main Board Rule 14A.28/ GEM Rule 20.26.
              (2) If Individual P is to be appointed as a director of the listed issuer after the acquisition, he will become a controller under Main Board Rule Rule 14A.28(1)/ GEM Rule 20.26(1) and the acquisition will fall within the definition of "connected transaction" under Main Board Rule 14A.28/ GEM Rule 20.26.

              FAQ Series 7, FAQ No. 38
              LR reference: Main Board Rules 14A.28 / GEM Rules 20.26
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              A listed issuer proposes to enter into a connected transaction which is exempt from the reporting, announcement and independent shareholders' approval requirements under Chapter 14A of the Main Board Rules or Chapter 20 of the GEM Rules.

              Is the listed issuer required to enter into a written agreement for the connected transaction?

              Answer:

              Yes. Pursuant to Main Board Rule 14A.34/ GEM Rule 20.32, a listed issuer and its subsidiaries must enter into written agreements in respect of all connected transactions undertaken.

              FAQ Series 7, FAQ No. 32
              LR reference: Main Board Rules 14A.34 / GEM Rules 20.32
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Company I proposes to acquire a property from one of its directors, which constitutes a discloseable and connected transaction. The consideration for the proposed acquisition will be settled by issuing new shares of Company I to the vendor.

              No shareholder is required to abstain from voting if Company I were to convene a general meeting for the approval of the proposed acquisition. Company I has obtained the written approval of the transaction from its parent company holding 60% interest in Company I.

              Will the Exchange grant a waiver to Company I from convening a general meeting to approve the connected transaction pursuant to Main Board Rule 14A.37 / GEM Rule 20.35? Can Company I issue the consideration shares using the existing general mandate?

              Answer:

              As Company I is able to meet all the conditions set out in Main Board Rule 14A.37 / GEM Rule 20.35, a waiver from convening a general meeting to approve the proposed acquisition would normally be granted to Company I for the purpose of connected transaction rules.

              On the basis that Company I has obtained independent shareholder approval for the proposed acquisition, and the method of settling the consideration was clearly disclosed and not subject to amendment, Company I would be permitted to issue the consideration shares to the vendor pursuant to a general mandate according to Note 1 to Main Board Rule 13.36(2)(b) / the Note to GEM Rule 17.41(2).

              FAQ Series 7, FAQ No. 53
              LR reference: Main Board Rules 14A.37, 13.36 / GEM Rules 20.35, 17.39, 17.41
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Rules 14A.40 and 14A.45 require the independent board committee and the independent financial adviser to give opinions on, among others, whether the connected transaction is in the ordinary and usual course of business of the issuer's group.

              Does the above requirement apply to one-off connected transactions such as merger and acquisition or continuing connected transactions that do not form part of the issuer's existing principal business activities?

              Answer:

              Yes. If the proposed connected transaction is not conducted in the ordinary and usual course of business of the issuer, the independent board committee and independent financial adviser can make a negative statement and explain why the transaction is in the interest of the issuer and its shareholders as a whole.

              FAQ Series 28, FAQ No. 11A
              LR reference: Main Board Rules 14A.40, 14A.45 / GEM Rules 20.38, 20.43
              Released on 1/7/2014

              Question:

              Should the independent board committee established under Main Board Rules 13.39(6)(a) and 14A.41/ GEM Rules 17.47(6)(a) and 20.39 comprise all independent non-executive directors of the listed issuer?

              Answer:

              The independent board committee should comprise all independent non-executive directors of the listed issuer, who have no material interest in the relevant transaction.

              FAQ Series 7, FAQ No. 42
              LR reference: Main Board Rules 13.39(6)(a) and (c), 14A.41 / GEM Rules 17.47(6)(a) and (c),20.39
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Where written shareholder approval has been obtained for a transaction, the amended rule requires an information circular to be despatched within 15 business days after publication of the announcement.

              If the stock market is open for only half day due to a typhoon or other reason, is it counted as a business day?

              Answer:

              The Listing Rules define a "business day" as any day on which the Exchange is open for the business of securities dealing. Accordingly if, for whatever reason, the Exchange is open for the business of dealing in securities for only half day, it is counted as a business day.

              FAQ Series 11, FAQ No. 11
              LR reference: Main Board Rules 1.01, 14.41, 14A.46, 14A.48 / GEM Rules 1.01, 19.41, 20.44, 20.46
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              Listco discloses in its annual report information of a related party transaction according to the accounting standards. If such transaction is a fully exempt connected transaction under Chapter 14A, does Listco need to comply with the disclosure requirement under Paragraph 8(2) of Appendix 16?

              Answer:

              Yes. Listco should specify that the related party transaction is a connected transaction under Chapter 14A and describe the exemption applicable to the transaction.

              FAQ Series 20, FAQ No. 23
              LR reference: Main Board Rules 14A.49, Appendix 16 — Paragraph 8(2) / GEM Rules 20.47, 18.09(2)
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Listco proposes to sell certain products to a connected person on normal commercial terms.

              The proposed continuing connected transactions in the current financial year would be fully exempt under the de minimis exemption. Would Listco be required to enter into a framework agreement for these transactions?

              Answer:

              A framework agreement is not required if the proposed transactions are fully exempt.

              FAQ Series 20, FAQ No. 14
              LR reference: Main Board Rules 14A.51, 14A.52 / GEM Rules 20.49, 20.50
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              An issuer proposes to enter into an agreement with its connected person for sale of products where the consideration will be charged based on cost plus 2% mark-up.

              (a) Is it acceptable for the issuer to disclose the pricing mechanism (i.e. cost-plus method) without the 2% mark-up percentage?
              (b) Our Guidance Letter (GL73-14) on pricing policies for continuing connected transactions states that where an issuer has difficulty in agreeing on specific pricing terms for its continuing connected transaction, it should disclose the method and procedures that it will follow to determine the price and terms of the transaction.

              Does the issuer have to disclose the methods and procedures for determining the pricing term of the sale transaction?

              Answer:

              (a) No. The issuer is obliged to disclose the 2% mark-up percentage because it is part of the terms of the transaction.
              (b) No. Given there are specific pricing terms in the agreement, the issuer only has to disclose the pricing term contained in the agreement and explain why the issuer's directors consider that they are normal commercial terms. The announcement/circular must also contain the view of the independent non-executive directors on the terms of the transactions.

              FAQ Series 28, FAQ No. 11B
              LR reference: Main Board Rules 14A.51, 14A.52 / GEM Rules 20.49, 20.50
              Released on 1/7/2014

              Question:

              An issuer proposes to enter into a framework agreement for a continuing connected transaction.

              If the issuer cannot agree with the connected person on specific pricing terms for the transaction, how should it comply with the disclosure requirement on the pricing policy?

              Answer:

              The issuer should agree with the connected person a framework for determining the pricing and terms of the transaction and disclose this pricing framework in the agreement and its announcement/circular. This pricing framework would likely be the same as that for transactions conducted by the issuer with independent third parties. See paragraph 9 of the Exchange's Guidance Letter (GL73-14) for further guidance.

              FAQ Series 28, FAQ No. 11C
              LR reference: Main Board Rules 14A.51, 14A.52 / GEM Rules 20.49, 20.50
              Released on 1/7/2014

              Question:

              An issuer proposes to enter into a framework agreement with its parent company for sale of different types of products.

              If different pricing policies apply to the different types of products, does the issuer have to disclose the pricing policy for each type of products?

              Answer:

              The issuer should categorise the products by their pricing policies and disclose separate pricing policies for each product category.

              FAQ Series 28, FAQ No. 11D
              LR reference: Main Board Rules 14A.51, 14A.52 / GEM Rules 20.49, 20.50
              Released on 1/7/2014

              Question:

              An issuer proposes to supply natural gas to its parent company based on government prescribed price that may change from time to time.

              How should the issuer describe the pricing policy for this continuing connected transaction?

              Answer:

              The issuer should disclose all the relevant details such as the name of the relevant government authority setting the reference price, how and where the price is disclosed or determined and, if applicable, the frequency of update to the price.

              FAQ Series 28, FAQ No. 11E
              LR reference: Main Board Rules 14A.51, 14A.52 / GEM Rules 20.49, 20.50
              Released on 1/7/2014

              Question:

              Can a listed issuer enter into a written agreement in respect of a continuing connected transaction for a term of 3 years which will be automatically renewed unless both parties agree to terminate the agreement?

              Answer:

              No. Under Main Board Rule 14A.52/ GEM Rule 20.50, the period for an agreement in respect of a continuing connected transaction must be fixed.

              In the circumstance described, the renewal of the agreement upon the expiry of the initial term of 3 years is not at the listed issuer's discretion nor, where applicable, subject to further independent shareholder approval and the agreement would continue unless both the listed issuer and the counterparty agree to terminate the agreement. On this basis, the agreement will not be regarded to have a fixed term as required under Main Board Rule 14A.52/ GEM Rule 20.50.

              FAQ Series 7, FAQ No. 49
              LR reference: Main Board Rules 14A.52 / GEM Rules 20.50
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              A listed issuer proposes to enter into an agreement for certain continuing connected transaction for a period of 6 years. Pursuant to Main Board Rule 14A.52/ GEM Rule 20.50, the listed issuer has obtained the opinion of an independent financial adviser explaining why a longer period for the agreement is required and confirming that it is normal business practice for contracts of such type to be of a duration of 6 years.

              (1) Is the listed issuer required to disclose the views of the independent financial adviser?
              (2) Is the listed issuer required to set annual caps in respect of the continuing connected transaction for the entire period for the agreement and comply with the applicable Listing Rules when it first enters into the agreement?

              Answer:

              (1) Yes. The information is necessary to enable shareholders to understand whether the agreement is entered into by the listed issuer on normal commercial terms. Such information should be disclosed in its circular to shareholders or, if the transaction is subject to the announcement and reporting requirements only, the announcement published under Main Board Rule 14A.35/ GEM Rule 20.33.
              (2) Yes. If the listed issuer cannot set annual caps for the entire term of agreement for any reasons, the listed issuer should seek guidance from the Exchange. The listed issuer would normally be required to set annual caps for a shorter period (say 3 years) and re-comply with the relevant Listing Rule requirements (including setting annual caps, issuing announcements and/or obtaining shareholders' approval) before the end of that (3 year) period.

              FAQ Series 7, FAQ No. 50
              LR reference: Main Board Rules 14A.52, 14A.53 / GEM Rules 20.50, 20.51
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Listco is principally engaged in mining and production of certain mineral resources.

              It proposes to enter into an off-take agreement with a connected person to sell part of its future mineral production to that person. Is it acceptable if the off-take agreement covers a period of more than 3 years?

              Answer:

              Yes, if Listco can provide an independent financial adviser's opinion to explain why a longer period for the agreement is required and confirm that it is normal business practice for this type of agreements to be of that duration.

              FAQ Series 20, FAQ No. 16
              LR reference: Main Board Rules 14A.52 / GEM Rules 20.50
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Some time ago, Listco and Mr. X (an independent third party at that time) entered into an agreement with fixed terms for leasing a factory building for 10 years.

              Listco now proposes to appoint Mr. X as a director, and the lease of the factory building will be a continuing connected transaction for Listco. Would Listco be required to provide an independent financial adviser's opinion on the duration of the lease agreement given that its duration is longer than 3 years?

              Answer:

              Under Rule 14A.60, Listco should comply with all applicable reporting, annual review and disclosure requirements for the lease agreement.

              The requirement for an independent financial adviser's opinion on the duration of the agreement under Rule 14A.52 would not apply.

              FAQ Series 20, FAQ No. 15
              LR reference: Main Board Rules 14A.52, 14A.60 / GEM Rules 20.50, 20.58
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              An issuer proposes to enter into a framework agreement for a continuing connected transaction with a director of its subsidiary. The transaction is exempt from the shareholder approval, independent financial advice and circular requirements under Rule 14A.101.

              If the agreement is more than three years, does the issuer have to appoint an independent financial adviser under Rule 14A.52 to confirm that it is normal business practice for agreement of this type to be of such duration?

              Answer:

              Yes. Rule 14A.52 applies to continuing connected transactions with persons connected at the subsidiary level if the transactions are more than three years.

              FAQ Series 28, FAQ No. 11F
              LR reference: Main Board Rules 14A.52 / GEM Rules 20.50
              Released on 1/7/2014

              Question:

              Main Board Rule 14A.53(2)/ GEM Rule 20.51(2) requires a listed issuer to set an annual cap for a continuing connected transaction not falling under Main Board Rule 14A.33/ GEM Rule 20.33.

              Should the listed issuer set the annual cap with reference to its financial year or calendar year?

              Answer:

              While this is a matter to be decided by the listed issuer, we encourage it to set the annual cap with reference to its financial year. The reason is that in our experience this would reduce the work and cost of the annual review of the continuing connected transaction required under Main Board Rule 14A.56(4)/ GEM Rule 20.54(4).

              FAQ Series 7, FAQ No. 51
              LR reference: Main Board Rules 14A.53 / GEM Rules 20.51
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              For continuing connected transactions involving purchases or sales of commodity products in an issuer's ordinary and usual course of business, can the issuer propose annual caps of a fixed quantum as monetary caps may not be meaningful due to volatility in the commodity prices?

              Answer:

              The connected transaction Rules require annual caps for continuing connected transactions be expressed in monetary terms. However, as described in the 2007 Listing Committee Annual Report, the Exchange may consider waiving the monetary cap requirement provided that the issuer discloses alternative caps of a fixed quantum, and a sensitivity analysis to illustrate how changes to the commodity prices will affect the value of the continuing connected transactions. When setting the alternative caps, the issuer would need to estimate the volume of the transactions and not the future commodity prices.

              An issuer should consult the Exchange if it wishes to apply for the waiver.

              FAQ Series 20, FAQ No. 17
              LR reference: Main Board Rules 14A.53, 14A.68(4) / GEM Rules 20.51, 20.66(4)
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Listco and a connected person have entered into an agreement for certain continuing connected transactions in the next 3 years. Based on the percentage ratios calculated at that time, the transactions were exempt from the independent shareholder approval requirement under the de minimis exemption.

              When Listco publishes its next audited accounts, will it be required to calculate the percentage ratios again to determine whether the transactions under the remaining term of the agreement still qualify for the de minimis exemption?

              Answer:

              No, if Listco has already complied with the applicable requirements for the transactions at the time it entered into the agreement and the aggregate value of the transactions were within the annual cap.

              However, if the cap is exceeded or Listco proposes to renew the agreement or negotiate a material change to its terms, Listco would need to calculate the percentage ratios based on its latest published accounts and re-comply with the applicable connected transaction requirements.

              FAQ Series 20, FAQ No. 13
              LR reference: Main Board Rules 14A.54, 14A.76 / GEM Rules 20.52, 20.74
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Listco has announced and obtained shareholder approval for entering into a master agreement with its parent company, which covers four different types of continuing connected transactions with separate annual caps.

              During the year, Listco expects that the actual amount of two types of continuing connected transactions under the agreement will exceed their annual caps. However, the total annual cap for all transactions under the agreement will remain unchanged.

              Is Listco required to re-comply with the announcement and shareholder approval requirements?

              Answer:

              Yes. Listco must recomply with the announcement and shareholder approval requirements under Rule 14A.54 because the actual amount of the sales of goods and supply of utilities to its parent company will exceed their individual annual caps.

              FAQ Series 28, FAQ No. 11G
              LR reference: Main Board Rules 14A.54 / GEM Rules 20.52
              Released on 1/7/2014

              Question:

              An issuer has entered into agreements for certain continuing connected transactions which are not fully exempt under Chapter 14A of the Rules.

              Does the issuer have to comply with the requirements for annual review by its independent non-executive directors and auditors if no continuing connected transaction has taken place during the year?

              Answer:

              No.

              FAQ Series 28, FAQ No. 11H
              LR reference: Main Board Rules 14A.55, 14A.56 / GEM Rules 20.53, 20.54
              Released on 1/7/2014

              Question:

              Rule 14A.60 applies where the issuer has entered into an agreement with fixed terms for a continuing transaction.

              Please clarify the meaning of

              (a) an agreement with fixed terms; and
              (b) a framework agreement.

              Answer:

              (a) An agreement with fixed terms refers to an agreement which sets out the specific terms for a continuing connected transaction, including the actual or per unit consideration in monetary terms, or a fixed formula for determining the consideration, or specific reference prices (e.g. prices prescribed by government or commodity prices quoted on an exchange) which form the basis of the consideration and where the volume transacted (e.g. number of units) is fixed.
              (b) A framework agreement refers to an agreement which sets out the framework within which a series of continuing connected transactions are to be conducted over a period. The actual terms of each transaction would be negotiated on a per transaction bases. The consideration for individual transactions may be subject to pricing guidelines or based on a range of parameters. Some of these agreements provide that the individual transaction will be conducted at market prices or the terms of individual transactions will be negotiated on an arm's length basis.

              FAQ Series 28, FAQ No. 12
              LR reference: Main Board Rules 14A.60 / GEM Rules 20.58
              Released on 21/3/2014

              Question:

              Listco has granted an option to Mr. X to acquire an asset from Listco. Mr. X is an independent third party and the option is exercisable at his discretion. Listco has complied with the notifiable transaction Rules as if the option had been exercised.

              If Mr. X subsequently becomes a connected person of Listco, would Listco be required to comply with the connected transaction Rules for the grant of the option as if it had been exercised?

              Answer:

              No. Listco would need to comply with the announcement requirements when the option is exercised, transferred or expired, or when Mr. X notifies Listco that he will not exercise the option.

              FAQ Series 20, FAQ No. 4
              LR reference: Main Board Rules 14.74, 14.77, 14A.61 / GEM Rules 19.74, 19.77, 20.59
              Released on 28/2/2013 (Updated on (1/7/2014)

              Question:

              Under the Listing Rules, when an issuer proposes to sell to a connected person an asset which it has held for 12 months or less, it must disclose the original acquisition cost of the asset in the announcement.

              Does this disclosure requirement apply if the disposal target is a company set up by the issuer for 12 months or less?

              Answer:

              The disclosure requirement is intended to apply to disposals of assets (including companies or businesses) that were acquired by the issuer in the last 12 months.

              In this case, the requirement would apply if the disposal is in substance a disposal of the underlying assets that were acquired by the issuer in the last 12 months.

              FAQ Series 9, FAQ No. 22
              LR reference: Main Board Rules 14A.68(6) / GEM Rules 20.66(6)
              Released on 14/12/2009 (Updated on 1/7/2014)

              Question:

              Does Main Board Rule 14A.70(8) / GEM Rule 20.68(8) apply to the acquisition of exploitation right in respect of a coal mine?

              Main Board Rule 14A.70(8)/ GEM Rule 20.68(8) applies as long as the primary significance of the asset being acquired or disposed of is its capital value.

              Answer:

              In the circumstance described, the listed issuer would acquire an exploitation right for natural resources and the primarily significance of such asset would be its capital value. Under Main Board Rules 18.09(3) and 18.10 / GEM Rules 18A.09(3) and 18A.10, a valuation is required for a major or above acquisition of mineral and/or petroleum assets. For the purpose of Main Board Rule 14A.70(8)/ GEM Rule 20.68(8), we will apply the same principle and will only require a valuation if the transaction is classified as major or above.

              FAQ Series 7, FAQ No. 55
              LR reference: Main Board Rules 14A.70(8) / GEM Rules 20.68(8)
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Does Main Board Rule 14A.70(8) / GEM Rule 20.68(8) apply to the acquisition of machinery and equipment by listed issuers?

              Answer:

              Given that the primary significance of machinery and equipment is their capital value, the listed issuer will be required to comply with Main Board Rule 14A.70(8) / GEM Rule 20.68(8) and include in its circular the report prepared by an independent valuer on the valuation of the machinery and equipment to ensure that sufficient information is provided for shareholders to make an informed decision.

              FAQ Series 7, FAQ No. 56
              LR reference: Main Board Rules 14A.70(8) / GEM Rules 20.68(8)
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Are all connected transactions involving the acquisition or disposal of Mineral or Petroleum Assets which require shareholder approval covered by Chapter 18?

              Answer:

              Where a Mineral Company proposes to acquire or dispose of assets which are solely or mainly Mineral or Petroleum Assets as part of a connected transaction which is also a Relevant Notifiable Transaction (i.e. a Major transaction or above) as defined in Chapter 18, the Mineral Company must comply with Chapter 14A and Listing Rule 18.09, i.e. provide a CPR. Some connected transactions below the major (i.e. 25%) threshold still require shareholder approval. These transactions are not required to be supported by a CPR.

              Valuations are required in certain cases under the connected transaction rules (see Listing Rule 14A.70(8) and FAQ Series 7 Item 55). In these cases, they must be provided by a Competent Evaluator in accordance with a Reporting Standard.

              FAQ Series 12, FAQ No. 15
              LR reference: Main Board Rules 18.09, 14A.70(8) Chapter 14A / GEM Rules 18A.09, 20.68(8) Chapter 20
              Released on 26/5/2010 (Updated on 1/7/2014)

              Question:

              Do the de minimis exemptions under Chapter 14A of the Main Board Rules / Chapter 20 of the GEM Rules apply to all types of connected transactions that do not exceed the thresholds specified therein?

              Answer:

              The de minimis exemptions do not apply to (a) connected transactions which are not on normal commercial terms; or (b) connected transactions which involve issue of new securities by a listed issuer to a connected person.

              FAQ Series 7, FAQ No. 43
              LR reference: Main Board Rules 14A.76 / GEM Rules 20.74
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Are the assets ratio and the revenue ratio applicable to continuing connected transactions involving:

              (a) sales of goods or services by listed issuers;
              (b) purchase of goods or services by listed issuers; and
              (c) lease of properties by listed issuers?

              Answer:

              For the purposes of classifying a connected transaction, listed issuers are required to compute the percentage ratios (other than the profits ratio) to assess the size of the transaction relative to that of the listed issuer pursuant to Main Board Rules 14A.76 and 14A.78/ GEM Rule 20.74 and 20.76. Listed issuers are therefore required to compute the assets ratio, revenue ratio and consideration ratio for the continuing connected transaction using the annual cap as the numerators.

              FAQ Series 7, FAQ No. 46
              LR reference: Main Board Rules 14A.76, 14A.78 / GEM Rules 20.74, 20.76
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              A listed issuer proposes to enter into an agreement with its substantial shareholder in respect of the purchase of raw materials from the substantial shareholder for a period of 6 months. The listed issuer expects that it will continue to carry out such transaction with the substantial shareholder after the 6-month period.

              Should the listed issuer compute the percentage ratios for the proposed transaction using the cap estimated based on the value of transaction under the term of the agreement (i.e. the 6-month period)?

              Answer:

              For a continuing connected transaction that is on normal commercial terms, the de minimis exemption under Main Board Rule 14A.76 / GEM Rule 20.74 applies if each of the percentage ratios (other than the profits ratio) is on an annual basis less than the threshold set out in the rule.

              In the circumstances described, the percentage ratios are calculated based on the estimated maximum value of the transaction under the agreement. Nevertheless, the Exchange may consider the calculation of the percentage ratios be anomalous given the parties' intention to continue with the transaction after the relevant 6-month period. The Exchange may require the listed issuer to submit alternative size tests calculated based on the reasonable estimated value of the transaction on an annualised basis to ensure an appropriate comparison of the size of the transaction against that of the listed issuer.

              FAQ Series 7, FAQ No. 47
              LR reference: Main Board Rules 14A.76, 14A.78, 14A.80 / GEM Rules 20.74, 20.76, 20.78
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Can an issuer apply the de minimis exemptions under Rule 14A.76 for provision of an indemnity for its director which is not exempt under Rule 14A.91?

              Answer:

              The issuer may apply the de minimis exemptions only if it can ascertain the maximum exposure that may arise from the director's indemnity arrangement. In this case, it should compute the asset ratio and consideration ratio based on the estimated maximum exposure amount.

              FAQ Series 28, FAQ No. 13A
              LR reference: Main Board Rules 14A.76, 14A.91 / GEM Rules 20.74, 20.89
              Released on 1/7/2014

              Question:

              How should an issuer compute the size tests for purchase of insurance for its director which is not exempt under Rule 14A.96?

              Answer:

              The issuer should compute the asset ratio, revenue ratio and consideration ratio based on the maximum annual amount of premium payable under the director's insurance.

              FAQ Series 28, FAQ No. 13B
              LR reference: Main Board Rules 14A.76, 14A.96 / GEM Rules 20.74, 20.94
              Released on 1/7/2014

              Question:

              Does the de minimis exemption under Rule 14A.87 apply to financial assistance provided by an issuer or its subsidiary which is not a banking company?

              Answer:

              Rule 14A.87 applies to banking companies only. For an issuer which is a non-banking company, it may apply the de minimis exemption under Rule 14A.76 if the financial assistance is provided to connected person on normal commercial terms and falls within the de minimis threshold.

              FAQ Series 28, FAQ No. 16
              LR reference: Main Board Rules 14A.76, 14A.87 / GEM Rules 20.74, 20.85
              Released on 21/3/2014

              Question:

              Subsidiary A is 80% owned by Listco and 20% owned by a director of Listco.

              Does the new threshold of 1% under paragraph (b) of the Rule apply to a transaction between Listco and Subsidiary A?

              Answer:

              No. Paragraph (b) of the Rule applies to transactions involving connected persons at the subsidiary level only. Subsidiary A does not qualify for the exemption because it is connected by virtue of Listco's director's 20% interest in it.

              FAQ Series 10, FAQ No. 9
              LR reference: Main Board Rules 14A.76(1)(b) / GEM Rules 20.74(1)
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              An issuer proposes to obtain a loan from its controlling shareholder on normal commercial terms. Since the loan will be secured by certain assets of the issuer, it is not exempt under Rule 14A.90.

              Can the issuer apply the de minimis exemptions to the above transaction? If yes, how should the issuer compute the size tests for classifying the transaction?

              Answer:

              The issuer may apply the de minimis exemption. It should compute the assets ratio and consideration ratio based on the principal amount of the loan and the revenue ratio based on the annual interests payable to its controlling shareholder. Given the loan is to be secured by the issuer's assets, the issuer should also compute the asset ratio and consideration ratio based on the value of the assets and also the revenue ratio based on any identifiable revenue stream generated from the assets.

              FAQ Series 28, FAQ No. 13
              LR reference: Main Board Rules 14A.76(1), 14A.76(2) 14A.90 / GEM Rules 20.74(1), 20.74(2), 20.88
              Released on 21/3/2014

              Question:

              A listed issuer proposes to enter into a transaction involving the grant of an option to the listed issuer to acquire an asset from an independent third party. The option is exercisable at the discretion of the listed issuer.

              At the time of the grant of the option, the listed issuer does not have any plan or timetable on whether and when it will exercise the option to acquire the target asset.

              It proposes to seek shareholders' approval for the exercise of an option, in addition to seeking any shareholders' approval necessary for the entering into of the option.

              The actual monetary value of the total consideration payable upon exercise and all other relevant information are known and would be disclosed to the shareholders at the time when the shareholders' approval is obtained. There is no change in any relevant facts at the time of exercise.

              (1) Will the listed issuer be required to seek separate shareholders' approval at the time of exercise of the option?
              (2) Will the answer to (1) be different if the vendor of the target asset is a connected person of the listed issuer?

              Answer:

              (1) The listed issuer may, at the time of entering into an option, seek any shareholders' approval necessary for the exercise of the option (in addition to seeking any shareholders' approval necessary for entering into of the option). Such approval, if obtained, will be sufficient for satisfying the shareholders' approval requirement for notifiable transactions pursuant to Main Board Rule 14.76(2)/ GEM Rule 19.76(2).
              (2) If the vendor is a connected person of the listed issuer at the time of exercise of the option, the listed issuer will be required to compute the percentage ratios at the time of exercise of the option pursuant to Main Board Rule 14A.79(3) / GEM Rule 20.77(3), irrespective of whether it has sought shareholders' approval for the exercise of option at the time of entering into an option. Depending on the result of the relevant percentage ratios, the listed issuer may be required to comply with the announcement, reporting and shareholders' approval requirements at the time of exercise of the option.

              FAQ Series 7, FAQ No. 60
              LR reference: Main Board Rules 14A.79(3), 14.76(2) / GEM Rules 20.77(3), 19.76(2)
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              An issuer is allowed to adopt the new alternative tests under Rule 14A.79(4)(b) for classifying transfer or termination or non-exercise of options if an asset valuation is provided by an independent expert using generally acceptable methodologies.

              (a) Does an issuer have to seek the Exchange's prior consent to adoption of the alternative tests under Rule 14A.79(4)(b) ?
              (b) Please clarify what are "generally acceptable methodologies" referred to in Rule 14A.79(4)(b) and who is qualified to provide such asset valuation.

              Answer:

              (a) Yes.
              (b) The valuation should follow the valuation standards that are widely used by professional asset/business valuers in the market and the valuer must be regulated by a recognised professional body. Examples of acceptable valuation standards include International Valuation Standards, Hong Kong Institute of Surveyor Valuation Standards on Trade-related Business Assets and Business Enterprise, The Hong Kong Business Valuation Forum Business Valuation Standards.

              FAQ Series 28, FAQ No. 14
              LR reference: Main Board Rules 14A.79(4)(b) / GEM Rules 20.77(4)(b)
              Released on 21/3/2014

              Question:

              Under Rule 14A.79(4)(b), the Exchange may allow an issuer to adopt the alternative classification test for transfer, termination or non-exercise of option granted by a connected person. Under the alternative classification test, the issuer must compute the asset and consideration ratios based on the higher of:

              (i) the difference between the exercise price and the underlying asset value; and
              (ii) The consideration or amount payable or receivable by the issuer's group.

              Should the issuer use the consideration payable or receivable upon the exercise of the option for (ii) above?

              Answer:

              No. The issuer should compute the alternative classification test under Rule 14A.79(4)(b)(ii) using consideration or amount payable or receivable (if any) for the transfer, termination or non-exercise of the option.

              FAQ Series 28, FAQ No. 14A
              LR reference: Main Board Rules 14A.79(4)(b) / GEM Rules 20.77(4)(b)
              Released on 1/7/2014

              Question:

              Is it correct that the Exchange would not aggregate a continuing connected transaction of an income nature with a continuing connected transaction of an expense nature?

              Answer:

              No. The Exchange may aggregate income and expense items if it considers the transactions are related. See also Listing Decisions LD64-4 and LD14-2011.

              FAQ Series 20, FAQ No. 12
              LR reference: Main Board Rules 14A.81 / GEM Rules 20.79
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              In Year 1, Listco signed an agreement for selling certain types of goods to its parent group (the First Transactions) in Years 1 to 3.

              In Year 2, Listco proposes to sell a new type of goods to its parent group (the Second Transactions) over Years 2 to 3. Based on the annual caps, these continuing connected transactions would be exempt from the independent shareholder approval requirement under the de minimis exemption. Would the Exchange require Listco to aggregate the Second Transactions with the First Transactions in Years 2 and 3 in the following circumstances?

              (a) The First Transactions were exempt from the independent shareholder approval requirement under the de minimis exemption.
              (b) The First Transactions were non-exempt continuing connected transactions, and Listco had complied with the connected transaction requirements for these transactions, including the independent shareholder approval requirement.

              Answer:

              The Exchange considers that the Second Transactions and the First Transactions are related as they are entered into by Listco with the same connected person and are of similar nature.

              (a) Listco would need to aggregate the transactions. If the percentage ratio(s) calculated on an aggregate basis exceed the de minimis threshold, the Second Transactions would require independent shareholder approval.
              (b) As Listco had already complied with all the connected transactions requirements for the First Transactions, the Exchange would not require Listco to aggregate the Second Transactions with the First Transactions.

              FAQ Series 20, FAQ No. 11
              LR reference: Main Board Rules 14A.81, 14A.82, 14A.83 / GEM Rules 20.79, 20.80, 20.81
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              An issuer must now seek guidance from the Exchange on the application of the aggregation rules under certain specified circumstances before it enters into any proposed notifiable transactions or connected transactions.

              Does an issuer need to consult the Exchange if:

              (a) the proposed transactions, even when aggregated with the previous transaction(s), will not exceed the percentage ratios to be treated as a notifiable transaction or a connected transaction subject to the announcement, reporting and/or shareholders' approval requirements; or
              (b) the issuer has already decided to aggregate the proposed transaction with the previous transaction(s) and comply with the requirements for the relevant classification of the transaction when aggregated?

              Answer:

              The purpose of the new Rules is to help issuers to comply before entering into the transaction. Since the circumstances in (a) and (b) do not involve any risk of non-compliance with the Rules, prior consultation with the Exchange is not required.

              FAQ Series 8, FAQ No. 43. Issue 7
              LR reference: Main Board Rules 14.23A, 14A.84, 14A.85, 14A.86 / GEM Rules 19.23A, 20.82, 20.83, 20.84
              Released on 28/11/2008 (Updated on 1/7/2014)

              Question:

              Company A is owned as to:

              •   20% by Listco;
              •   70% by Mr. X who is a director of Listco and
              •   10% by certain independent third parties.
              (a) Company A is a "commonly held entity" under Rule 14A.27. It proposes to borrow money from its shareholders on normal commercial terms to finance a new project. Is Listco's financial assistance to Company A exempt under Rule 14A.89 in the following circumstances?
              (i) Listco provides a loan of HK$20 million while Mr. X and/or the other shareholders provide loans of HK$80 million.
              (ii) Listco and Mr. X provide loans of HK$20 million and HK$70 million to Company A respectively.
              (b) If Company A proposes to raise funds by issuing new shares, would Listco's subscription of new shares in Company A be a connected transaction? If yes, would the proposed subscription be exempt on the basis that it is made in proportion to Listco's interest in Company A?

              Answer:

              (a)(i) Yes. The loan made by Listco is in proportion to its interest in Company A.
              (a)(ii) No. The loan made by Listco represented about 22% of the total amount of loans, which is not in proportion to its interest in Company A.
              (b) The proposed subscription is a connected transaction for Listco as Company A is an associate of Mr. X and therefore a connected person of Listco.

              Rule 14A.89 applies to provision of financial assistance only. The proposed subscription would not be exempt simply because it is made by Listco in proportion to its interest in Company A.

              FAQ Series 20, FAQ No. 21
              LR reference: Main Board Rules 14A.89 / GEM Rules 20.87
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              Company A is 60% owned by Listco and 40% by Listco's controlling shareholder.

              Company A has obtained a bank facility for which Listco has provided a full guarantee in favour of the bank (the "Bank Guarantee"). As Company A is a connected subsidiary of Listco, the provision of the Bank Guarantee constitutes a connected transaction for Listco.

              Can Listco apply the exemption under Rule 14A.89 if Listco's controlling shareholder has agreed to a counter-guarantee to Listco for 40% of the outstanding loan balance drawn by Company A under the bank facility?

              Answer:

              No. The exemption under Rule 14A.89 applies only if the guarantee provided by Listco is in proportion to its interest in Company A and on a several basis.

              FAQ Series 28, FAQ No. 17
              LR reference: Main Board Rules 14A.89 / GEM Rules 20.87
              Released on 21/3/2014

              Question:

              (1) Does the new exemption for providing directors' indemnity apply if the indemnity relates to the director's liabilities to third parties in connection with negligence, default and breach of duty by directors?
              (2) What if the indemnity covers directors' liabilities which are not limited to those arising from his proper discharge of duties?

              Answer:

              (1) No, because provision of indemnity that relates to such director's liabilities is not allowed under the Hong Kong Companies Ordinance.
              (2) No, because the indemnity does not meet all the conditions set out in the Rule.

              FAQ Series 28, FAQ No. 18
              LR reference: Main Board Rules 14A.91 / GEM Rules 20.89
              Released on 21/3/2014

              Question:

              If a director's service contract covers provision of indemnity or purchase of insurance which is not exempt under Rules 14A.91 and 14A.96, can the issuer apply the directors' service contract exemption under Rule 14A.95?

              Answer:

              No.

              FAQ Series 28, FAQ No. 19
              LR reference: Main Board Rules 14A.91, 14A.95, 14A.96 / GEM Rules 20.89, 20.93, 20.94
              Released on 21/3/2014

              Question:

              Company A is the substantial shareholder of a subsidiary of Listco. It is a connected person of Listco at the subsidiary level.

              Listco proposes to place new shares for cash to Company A. Can Listco apply the exemption for transactions with connected persons at the subsidiary level under Rule 14A.101 to exempt the proposed placing from the independent shareholder approval requirement under Chapter 14A?

              Answer:

              No. Transactions or arrangements involving issuance of new shares by a listed issuer to its connected persons are exempt from the connected transaction Rules only if they fall under the circumstances described in Rule 14A.92. As Company A is a connected person of Listco, the issue of new shares of Listco to it will be subject to the announcement, reporting and shareholder approval requirements under Chapter 14A.

              FAQ Series 28, FAQ No. 21B
              LR reference: Main Board Rules 14A.92, 14A.101, Note 1 to 13.36(2)(b) / GEM Rules 20.90, 20.99, Note to 17.41(2)
              Released on 29/5/2015

              Question:

              An issuer proposes a right issue which will be underwritten by its controlling shareholder. The underwriting fee will be charged at the market rate.

              Will the underwriting arrangement be exempt from the connected transaction Rules?

              Answer:

              The issue of shares to the controlling shareholder in his capacity as the underwriter will be fully exempt from the connected transaction Rules if the issuer has complied with Rule 7.21.

              The payment of fee to the controlling shareholder may be exempt from the announcement, reporting and shareholder approval requirement only if the underwriting fee is below the de minimis thresholds under Rule 14A.76.

              FAQ Series 28, FAQ No. 21A
              LR reference: Main Board Rules 14A.92(2), 14A.76 / GEM Rules 20.90(2), 20.74
              Released on 1/7/2014

              Question:

              Mr. A is a director of Listco. Under his director service contract, he may be entitled to receive share awards to be granted under Listco's share award scheme.

              Can Listco apply the directors' service contract exemption under Rule 14A.95 if the share awards are granted to Mr. A in form of new shares of Listco?

              Answer:

              No. Transactions or arrangements involving issuance of new shares by a listed issuer to its connected persons are exempt from the connected transaction Rules only if they fall under the circumstances described in Rule 14A.92. Therefore, the grant of share awards in form of new shares to Mr. A will be subject to the announcement, reporting and shareholder approval requirements under Chapter 14A.

              FAQ Series 28, FAQ No. 20
              LR reference: Main Board Rules 14A.95, Note 1 to 13.36(2)(b) / GEM Rules 20.93, Note to 17.41(2)
              Released on 21/3/2014

              Question:

              Listco proposes to purchase insurance for Mr. A against liabilities to third party that may be incurred in the course of performing his duties as a director of Listco as well as the manager of certain subsidiaries of Listco.

              Does the new exemption for purchasing directors' insurance apply to the above insurance arrangement?

              Answer:

              Yes, provided that the arrangement is in the form permitted under the laws of Hong Kong and Listco's place of incorporation.

              FAQ Series 28, FAQ No. 21
              LR reference: Main Board Rules 14A.96 / GEM Rules 20.94
              Released on 21/3/2014

              Question:

              Listco's businesses include constructing and operating toll roads. It proposes to employ a connected person to develop a computer system for toll fee collection and provide technical support for the system.

              Is the proposed transaction eligible for the consumer goods or services exemption?

              Answer:

              No. The service to be provided to Listco is not of a type ordinarily supplied for private use or consumption, and does not fall within the scope of Rule 14A.97.

              FAQ Series 20, FAQ No. 19
              LR reference: Main Board Rules 14A.97 / GEM Rules 20.95
              Released on 28/2/2013 (Updated on 1/7/2014)

              Question:

              An issuer is principally engaged in provision of financial services including sale of wealth management products to retail customers.

              Does the consumer goods or service exemption under Rule 14A.97 apply to sale of wealth management products by the issuer to its director for his personal investment?

              Answer:

              The issuer may apply the consumer goods or service exemption if the same products are made available for sale to other independent customers and the transaction with the director is conducted on normal commercial terms.

              FAQ Series 28, FAQ No. 21D
              LR reference: Main Board Rules 14A.97 / GEM Rules 20.95
              Released on 1/7/2014

              Question:

              The new Rule allows an issuer to acquire consumer goods or services in connection with its business provided that there is an open market and transparency in the pricing of the goods or services.

              How does the issuer determine whether there is a "transparency in the pricing of the goods or services"?

              Answer:

              It would depend on individual cases. For example, the price labels / price lists are on display at retail stores or the prices are published or publicly quoted.

              FAQ Series 10, FAQ No. 11
              LR reference: Main Board Rules 14A.97(2)(b) / GEM Rules 20.95(2)(b)
              Released on 20/5/2010 (Updated on 1/7/2014)

              Question:

              To qualify for the "passive investor" exemption, the passive investor must not have any representatives on the board of directors of the issuer or its subsidiaries.

              Can the passive investor have any board seat(s) at an insignificant subsidiary of the issuer?

              Answer:

              No.

              FAQ Series 28, FAQ No. 22
              LR reference: Main Board Rules 14A.99 / GEM Rules 20.97
              Released on 21/3/2014

              Question:

              An issuer proposes to provide a guarantee to a third party creditor for the obligations of a connected subsidiary under a government contract awarded by tender.

              While the other shareholders of the connected subsidiary will not give a similar guarantee to the creditor, they agree to provide a counter-indemnity to the issuer in proportion to their interest in the subsidiary.

              Does the issuer qualify for applying the waiver under Rule 14A.104?

              Answer:

              No. Rule 14A.104 only applies if the issuer can meet all the three conditions under the Rule. In this case, the issuer fails to meet the condition that the other shareholders of the connected subsidiary must also give similar joint and several guarantee to the creditor.

              FAQ Series 28, FAQ No. 23
              LR reference: Main Board Rules 14A.104 / GEM Rules 20.102
              Released on 21/3/2014

              Question:

              Do the provisions on financial assistance in the New CO affect the Rules relating to financial assistance for issuers incorporated in Hong Kong?

              Answer:

              No. As is the case under the Existing CO, the provisions on financial assistance in the New CO relate to the provision of financial assistance by a company or its subsidiaries for the acquisition of its own shares only. The Rules govern the provision of financial assistance by issuers (whether for the acquisition of their own shares or otherwise) and, as such, issuers incorporated in Hong Kong must comply with any applicable financial assistance provisions under both the New CO and the Rules.

              FAQ Series 26, FAQ No. 13
              LR reference: Main Board Rules Chapters 14 and 14A / GEM Rules Chapters 19 and 20
              Released on 21/2/2014

            • Chapter 15

              View Current PDF

              Question:

              A listed issuer proposes a bonus issue of warrants to its existing shareholders on a pro-rata basis.

              Main Board Rule 13.36(2)(a) / GEM Rule 17.41(1) provides that no shareholders' approval is required for an offer of securities to shareholders on a pro-rata basis. Can the listed issuer apply this rule in respect of its proposed bonus issue of warrants?

              Answer:

              The circumstances described involves issue of warrants and the listed issuer must also comply with Main Board Rule 15.02 / GEM Rule 21.02 which requires that all warrants must be approved by shareholders in general meeting unless they are issued by the directors under the authority of a general mandate granted to them by shareholders in accordance with Main Board Rule 13.36(2)/ GEM Rule 17.41(2).

              Accordingly, the listed issuer must have sufficient headroom under its general mandate to issue the bonus warrants, and if not shareholders' approval in a general meeting will be required.

              FAQ Series 7, FAQ No. 65
              LR reference: Main Board Rules 15.02, 13.36(2)(a) / GEM Rules 21.02, 17.41(1)
              Released on 28/11/2008

              Question:

              Listco Y is a PRC issuer whose H shares are listed on the Exchange. Listco Y has also issued A shares which are listed a PRC stock exchange. Listco Y proposes to issue some bonds in the PRC with bonus warrants that allow the warrant holders to subscribe for new A shares of Listco Y.

              Is such issue of warrants subject to Chapter 15 of the Main Board Rules / Chapter 21 of the GEM Rules?

              Answer:

              Yes, because equity securities of Listco Y will be issued upon exercise of the warrants.

              Pursuant to Main Board Rule 15.01/ GEM Rule 21.01, Chapter 15 of the Main Board Rules / Chapter 21 of the GEM Rules applies to warrants (including options and other similar rights) issued by a listed issuer to subscribe or purchase equity securities of that issuer. The chapter mainly sets out the shareholders' approval requirements for the issue of warrants, and the requirements on the number and term of warrants to prohibit a listed issuer from issuing warrants with a material dilution effect on its shareholding.

              FAQ Series 7, FAQ No. 66
              LR reference: Main Board Rules Chapter 15 / GEM Rules Chapter 21
              Released on 28/11/2008

            • Chapter 17

              View Current PDF

              Question:

              For an announcement published pursuant to Main Board Rule 17.06A / GEM Rule 23.06A regarding the granting of an option under a share option scheme, which headline category should a listed issuer use when submitting the announcement for publication?

              Answer:

              The listed issuer should choose the Tier 2 headline category "Share Option Scheme" under the heading "Securities/Share Capital" under the Tier 1 headline category "Headline Categories for Announcements and Notices".

              FAQ Series 8, FAQ No. 8. Issue 8
              LR reference: Main Board Rules 2.07C(3), 17.06A / GEM Rules 16.18(2), 23.06A
              Released on 28/11/2008

              Question:

              A listed issuer has adopted a share option scheme pursuant to Chapter 17 of the Main Board Rules / Chapter 23 of the GEM Rules.

              Is the listed issuer required to comply with Main Board Rule 13.28 / GEM Rule 17.30 in the following circumstances:

              (i) the granting of an option by the listed issuer under the share option scheme; and
              (ii) a person exercising the option granted to him under the share option scheme?

              Answer:

              Main Board Rule 13.28 / GEM Rule 17.30 sets out specific disclosure requirements for fund raising exercises of listed issuers through issues of securities. Whilst the policy intent of the Rule is not to apply to any grant of options or issue of securities pursuant to a share option scheme which complies with Chapter 17 of the Main Board Rules / Chapter 23 of the GEM Rules, the actual wording might be interpreted otherwise. We will address this ambiguity in the Rules at the next opportunity.

              In the circumstances described, the listed issuer should observe the announcement requirement under Main Board Rule 17.06A / GEM Rule 23.06A and the disclosure obligations under Main Board Rules 13.25A and 13.25B / GEM Rules 17.27A and 17.27B.

              FAQ Series 8, FAQ No. 28 Issue 9
              LR reference: Main Board Rules 13.28, 17.06A; see also: 13.25A, 13.25B / GEM Rules 17.30, 23.06A; see also: 17.27A, 17.27B
              Released on 28/11/2008

              Question:

              Should the announcement be made when a share option is granted or when it is accepted?

              Answer:

              Main Board Rule 17.06A/ GEM Rule 23.06A requires an issuer to publish an announcement as soon as possible upon the granting of an option under a share option scheme. Under Main Board Rule 17.01(3)/ GEM Rule 23.01(3), "grant" is defined to include "offer". The issuer should therefore publish its announcement as soon as possible upon the offer of the option, whether or not it has been accepted. The intention of new Rule 17.06A is to minimise opportunities to backdate share option awards.

              FAQ Series 8, FAQ No. 49 Issue 8
              LR reference: Main Board Rules 17.06A / GEM Rules 23.06A
              Released on 28/11/2008 (Updated on 13/3/2009)

            • Chapter 18

              View Current PDF

              Question:

              Are processing and refining (and possibly marketing) activities to be included under operating costs in the class tests used to determine the 25% threshold to define a Mineral Company?

              Answer:

              We will deal with these issues on a case by case basis. We consider that refining costs should only be factored into total operating costs if refining activities are an integral part of a company's operations. Where a Mineral Company is involved in the exploration, extraction and subsequent processing of Reserves it is reasonable that its processing and marketing activities (and associated costs) are a part of its overall operations. Companies that are only engaged in refining activities may not be regarded as Mineral Companies in the true sense and are unlikely to be considered favourably for waivers from the financial standard requirements.

              FAQ Series 12, FAQ No. 1
              LR reference: Main Board Rule 18.01(3) Definition of Mineral Company, Major Activity / GEM Rule 18A.01(3) Definition of Mineral Company, Major Activity
              Released on 26/5/2010

              Question:

              Is production an activity that falls within the definition of Mineral Company?

              Answer:

              Use of the word "extraction" includes "production". Other international exchanges often use the terms extraction and production interchangeably. A company that is engaged in production may not however be considered favourably for a waiver from the financial standard requirements, unless it also has development activities.

              FAQ Series 12, FAQ No. 2
              LR reference: Main Board Rules 18.01(3) / GEM Rules 18A.01(3)
              Released on 26/5/2010

              Question:

              Where a Mineral Company is involved in the acquisition of another Mineral Company that reports its Reserve and Resource information using a different mineral reporting code, would the Exchange accept both mineral Reporting Standards?

              Answer:

              For comparability, we will require reconciliation to one of the accepted Reporting Standards. The JORC-type Codes are widely accepted as they evaluate Reserves and Resources on the basis of what is commercially extractable whilst some standards focus on "in-situ" estimates. We will consider whether other standards may be accepted from time to time.

              FAQ Series 12, FAQ No. 18
              LR reference: Main Board Rules 18.01(3) definition of Reporting Standard, 18.28 to 18.33 / GEM Rules 18A.01(3) definition of Reporting Standard, 18A.28 to 18A.33
              Released on 26/5/2010

              Question:

              If the target of an acquisition reports its Reserve and Resource information using Canadian NI 43-101, whilst the Mineral Company reports using the JORC Code, would the Exchange accept both Reporting Standards?

              Answer:

              Yes, because differences in presentation of Reserves and Resources under the JORC-type Codes are only minor. The Mineral Company or listed issuer must, however, highlight any material differences in these Reporting Standards in the shareholder circular discussing the Relevant Notifiable Transaction.

              FAQ Series 12, FAQ No. 19
              LR reference: Main Board Rules 18.01(3) definition of Reporting Standard, 18.28 to 18.33 / GEM Rules 18A.01(3) definition of Reporting Standard, 18A.28 to 18A.33
              Released on 26/5/2010

              Question:

              For new listing applicants, what 'rights' are acceptable to demonstrate that companies have adequate rights to participate in the exploration for and/or extraction of Natural Resources under Rule 18.03(1)?

              Answer:

              Companies may rely on exploration and extraction rights held by third parties if they participate in mineral and/or exploration activity under joint ventures, product sharing agreements or other valid arrangements if they can demonstrate the agreements give them sufficient influence over the exploration for and extraction of Resources and Reserves. Ordinarily we would expect that applicants have an interest of at least 30% in assets relevant to extraction of Reserves. However, we will consider other arrangements where companies have interests smaller than 30% but actively operate mining projects. Rights granted under specific government mandates will be recognized. Companies yet to commence production may not be able to demonstrate rights relevant to extraction until closer to the actual time of extraction. In these instances, the New Rules specify that risks relevant to obtaining such rights must be disclosed. If there are novel arrangements, applicants should consult the Listing Division in advance.

              FAQ Series 12, FAQ No. 3
              LR reference: Main Board Rules 18.03(1), 18.07 / GEM Rules 18A.03(1), 18A.07
              Released on 26/5/2010

              Question:

              What assets should be taken into account for the purposes of the control of assets test in Rule 18.03(1)(a)?

              Answer:

              To satisfy the control of assets test in Rule 18.03(1)(a), a Mineral Company must have an interest greater than 50% (by value) in its total assets, together with sufficient rights over the exploration for and/or extraction of Natural Resources.

              In this context, the Exchange will apply the total assets definition in Rule 14.04(12).

              FAQ Series 12, FAQ No. 4
              LR reference: Main Board Rules 18.03(1)(a), 14.04(12) / GEM Rules 18A.03(1)(a), 19.04(12)
              Released on 26/5/2010

              Question:

              In terms of cash operating costs in Rule 18.03(3), what is meant by a cost item that should be highlighted to investors?

              Answer:

              An example would be favourable tax treatment where this may continue for a limited time only or may be subject to challenge. A disruption to transport routes is another example of a scenario where increased costs may continue only for a limited time.

              FAQ Series 12, FAQ No. 5
              LR reference: Main Board Rules 18.03(3) / GEM Rules 18A.03(3)
              Released on 26/5/2010

              Question:

              How to (i) work out the 125% working capital analysis to determine whether a new applicant meets the 125% working capital requirement for at least the next 12 months from the date of its listing document given that Rule 18.03(4) states that the available working capital must include, among other things, the cost of any proposed exploration and/or development whereas the note to that Rule states that capital expenditures do not need to be included in working capital requirements; and (ii) deal with refinancing of loan repayments in the working capital analysis?

              Answer:

              The cost of proposed exploration and/or development mentioned under Rule 18.03(4) related to new applicants' daily operation (i.e. working capital) such as contracting fees for excavating the minerals and transportation fees for delivering the minerals, whereas the capital expenditures mentioned in the note to that Rule related to the expenditures associated with development of infrastructure of the mines and expansion of the processing facilities, etc.

              If loan repayment is required during the 12-month period, new applicants should include the repayment to demonstrate that they can fulfill the 125% working capital requirement.

              Below is a simplified illustration of the 125% working capital analysis, assuming that the borrowings will be drawn down and repaid within the 12-month period, and the proceeds from the borrowings will be fully used to finance the capital expenditures in the case with external financing:

                Without external financing With external financing
              Cash at the beginning of the period 300 300
              Operating cash inflow2 1,300 1,300
              Proceeds from borrowings - 500
              Total working capital available (A) 1,600 2,100
              Operating cash outflow3 1,000 1,000
              Repayment of borrowings - 500
              Interest payments - 40
              Total working capital required (B) 1,000 1,540
              Sufficiency of working capital (A/B) 160% 136%

              Notes:

              1. We have noted that although the note to 18.03(4) states that capital expenditures do not need to be included in working capital requirements, new applicants have normally included capital expenditures to demonstrate the 125% working capital requirement for prudence sake.
              2.Operating cash inflow mainly represents cash receipt from sales.
              3. Operating cash outflow includes, among others, payment for mining, transportation and utility expenses, and workforce.

              FAQ Series 12, FAQ No. 5A
              LR reference: Main Board Rules 18.03(4), 18.03(5) / GEM Rules 18A.03(4), 18A.03(5)
              Released on 4/2/2013

              Question:

              What relevant experience must management demonstrate to be considered eligible for listing under Listing Rule 18.04?

              Answer:

              To obtain the benefit of the waiver in rule 18.04, directors and senior managers taken together must have sufficient experience relevant to the exploration for and/or extraction activity that the Mineral Company is pursuing. Individuals relied on must have a minimum of five years relevant industry experience. Details of that experience must be disclosed in the listing document.

              FAQ Series 12, FAQ No. 6
              LR reference: Main Board Rules 18.04, 8.05 / GEM Rules 18A.04, 11.12A
              Released on 26/5/2010

              Question:

              Can a waiver from Rule 18.04 be sought for the management and ownership continuity requirements apart from the profit requirement as Rule 18.04 only refers to the profit test under Rule 8.05(1), the market capitalisation/ revenue/ cash flow test under Rule 8.05(2) and market capitalisation/ revenue test under Rule 8.05(3)?

              Answer:

              Yes, as Rule 18.04 covers the profit test, the market capitalisation/ revenue/ cash flow test and the market capitalisation/ revenue test, and these include the management and ownership continuity requirements.

              FAQ Series 12, FAQ No. 6A
              LR reference: Main Board Rules 18.04 / GEM Rules 18A.04
              Released in February 2013

              Question:

              What is meant by "primary activity" referred to in the note to Listing Rule 18.04?

              Answer:

              The purpose of this note is to ensure that Mineral Companies relying on the exemption from the financial standard requirements in Listing Rule 8.05 focus on Natural Resource exploration and/or extraction.This does not have to be their sole activity but should be their main business activity.

              FAQ Series 12, FAQ No. 7
              LR reference: Main Board Rules 18.04, 18.01(3), Definition of Mineral Company / GEM Rules 18A.04, 18A.01(3), Definition of Mineral Company
              Released on 26/5/2010

              Question:

              What relevant experience must management demonstrate to be considered eligible for listing under Listing Rule 18.04?

              Answer:

              To obtain the benefit of the waiver in rule 18.04, directors and senior managers taken together must have sufficient experience relevant to the exploration for and/or extraction activity that the Mineral Company is pursuing. Individuals relied on must have a minimum of five years relevant industry experience. Details of that experience must be disclosed in the listing documents.

              It is expected that a Mineral Company should have a spread of experience in various aspects amongst the board members and the senior management relevant to the mining business, including exploration, construction, mining, processing and marketing.

              FAQ Series 20, FAQ No. 25
              LR reference: Main Board Rules 18.04, 8.05 / GEM Rules 18A.04, 11.12A
              Released on 28/2/2013

              Question:

              When are CPRs required?

              Answer:

              A CPR is required in the following circumstances:

              (i) For IPOs
              •   at the IPO stage for new applicant Mineral Companies (rule 18.05).
              (ii) For Relevant Notifiable Transactions
              •   where a Mineral Company proposes to acquire or dispose of assets which are solely or mainly Mineral or Petroleum Assets as part of a Relevant Notifiable Transaction (rule 18.09);
              •   where an existing listed issuer proposes to acquire assets which are solely or mainly Mineral or Petroleum Assets as part of a Relevant Notifiable Transaction (rule 18.10). In this case, a Valuation Report will also be required.
              (iii) For Connected Transactions which are also Relevant Notifiable Transactions

              For clarity, a Relevant Notifiable Transaction is a transaction that falls into one of the classifications set out in rules 14.06(3) to (6), namely a major transaction, very substantial disposal, very substantial acquisition, or a reverse takeover.

              Companies' internal experts (who are likely to be qualified geologists and Competent Persons) may prepare estimates of Reserves at other times, such as updates of details of Reserves and Resources in annual reports. Updates on exploration, mining production and development activities in interim and annual reports may also include statements of Reserves and Resources.

              FAQ Series 12, FAQ No. 17
              LR reference: Main Board Rules 18.05, 18.09, 18.10 / GEM Rules 18A.05, 18A.09, 18A.10
              Released on 26/5/2010

              Question:

              Can a Valuation Report or an economic analysis be included in a Competent Person's Report?

              Answer:

              Yes. Information not expressly prohibited under the Rules can be disclosed in the Competent Person's Report, subject to compliance with other applicable Rules. As such, a valuation report or an economic analysis on the valuation of reserves/resources under relevant industry standards can be included in a Competent Person's Report provided that the Competent Person is also a Competent Evaluator as explained in the note to Rule 18.23. Rule 18.01 also states that a Valuation Report may form part of a Competent Person's Report.

              FAQ Series 12, FAQ No. 10A
              LR reference: Main Board Rules 18.05(1) / GEM Rules 18A.05(1)
              Released on 4/2/2013

              Question:

              Are Mineral Companies required to comply with the risk analysis referred to in Rule 18.05(5)?

              Answer:

              This is not compulsory but Mineral Companies should have regard to the Guidance Note in disclosure on risks to investors. We consider that a framework under which all companies rate risks from likely to unlikely and low to high based on likelihood and consequence is desirable as it provides a common reference point for investors.

              FAQ Series 12, FAQ No. 8
              LR reference: Main Board Rules 18.05(5), Guidance Note 7 / GEM Rules 18A.05(5), Practice Note 4
              Released on 26/5/2010

              Question:

              A Scoping Study is required to be substantiated by the opinion of a Competent Person under Listing 18.07. Is this additional to requirements for a CPR?

              Answer:

              Rule 18.07 requires a Mineral Company which has not yet begun production to disclose its plans to proceed to production with indicative dates and costs, which must be supported by at least a Scoping Study, substantiated by the opinion of a Competent Person.

              Where a Scoping Study is required under Chapter 18, it should either form part of the CPR or be supported by a CPR.

              FAQ Series 12, FAQ No. 9
              LR reference: Main Board Rules 18.07 / GEM Rules 18A.07
              Released on 26/5/2010

              Question:

              How will the Exchange determine whether an acquisition or disposal relates to assets which are solely or mainly Mineral or Petroleum Assets?

              Answer:

              Whether assets that are the subject of a transaction are solely or mainly Mineral or Petroleum Assets will be determined on a case by case basis, taking account of the specific circumstances of transactions.

              FAQ Series 12, FAQ No. 11
              LR reference: Main Board Rules 18.09, 18.10 / GEM Rules 18A.09, 18A.10
              Released on 26/5/2010

              Question:

              Are all connected transactions involving the acquisition or disposal of Mineral or Petroleum Assets which require shareholder approval covered by Chapter 18?

              Answer:

              Where a Mineral Company proposes to acquire or dispose of assets which are solely or mainly Mineral or Petroleum Assets as part of a connected transaction which is also a Relevant Notifiable Transaction (i.e. a Major transaction or above) as defined in Chapter 18, the Mineral Company must comply with Chapter 14A and Listing Rule 18.09, i.e. provide a CPR. Some connected transactions below the major (i.e. 25%) threshold still require shareholder approval.These transactions are not required to be supported by a CPR.

              Valuations are required in certain cases under the connected transaction rules (see Listing Rule 14A.70(8) and FAQ Series 7 Item 55). In these cases, they must be provided by a Competent Evaluator in accordance with a Reporting Standard.

              FAQ Series 12, FAQ No. 15
              LR reference: Main Board Rules 18.09, 14A.70(8) Chapter 14A / GEM Rules 18A.09, 20.68(8) Chapter 20
              Released on 26/5/2010 (Updated on 1/7/2014)

              Question:

              In what circumstances is the Exchange likely to dispense with the requirement for a CPR on a disposal which is also a Relevant Notifiable Transaction?

              Answer:

              Mineral Companies must demonstrate to us on a case by case basis that shareholders have sufficient information on the Mineral or Petroleum Assets being disposed of. By way of example, however, we may be able to dispense with the requirement where a Mineral Company has Mineral or Petroleum Assets that have been the subject of a CPR in the past and they are accounted for on a Mineral Company's balance sheet.

              FAQ Series 12, FAQ No. 12
              LR reference: Main Board Rule 18.09(2) / GEM Rule 18A.09(2)
              Released on 26/5/2010

              Question:

              If a major acquisition of Mineral or Petroleum Assets is made from a company which already has an independent Competent Person's Report, is it necessary for the listed issuer to obtain a new Competent Person's Report?

              Answer:

              The Exchange may waive the requirement to produce a new Competent Person's Report or Valuation Report required under Listing Rules 18.05(1), 18.09(2), or 18.09(3) if the issuer has available a previously published Competent Person's Report (or equivalent) which complies with rules 18.18 to 18.34, provided that report is no more than six months old. The issuer must provide this document together with an up-to-date no material change statement in the listing document or circular.

              Listing documents or circulars must include consent statements by Competent Persons and Competent Evaluators, whether or not they are retained directly by the issuer.

              FAQ Series 12, FAQ No. 14
              LR reference: Main Board Rules 18.12, 18.13, 18.05(1), 18.09(2), 18.09(3) / GEM Rules 18A.12, 18A.13, 18A.05(1), 18A.09(2), 18A.09(3).
              Released on 26/5/2010

              Question:

              Does the requirement for a listed issuer to update details of its Resources and/or Reserves in its annual report have retrospective effect?

              Answer:

              The New Rules are not intended to have retrospective effect. A listed issuer that publicly discloses details of its Resources and/or Reserves after the New Rules are effective will be required to update information on its Resources and/or Reserves once a year in its annual report, in accordance with the reporting standard under which they were previously disclosed or a Reporting Standard.

              A listed issuer which is classified as a Mineral Company, however, must include an update of its Resources and/or Reserves in its annual report in accordance with a Reporting Standard. This annual update of Resources and/or Reserves must comply with Listing Rule 18.17.

              FAQ Series 12, FAQ No. 16
              LR reference: Main Board Rules 18.15 to 18.18 / GEM Rules 18A.15 to 18A.18
              Released on 26/5/2010

              Question:

              Rule 18.15 requires a listed issuer that publicly discloses details of Resources and/or Reserves to give an annual update of those Resources and/or Reserves once a year in its annual report. Does the annual update need to comply with Rule 18.18?

              Answer:

              Yes.

              Rule 18.17 states that annual updates of Resources and/or Resources must comply with Rule 18.18. This applies to listed issuers that publicly disclose details of Resources and/or Reserves (Rule 18.15) and Mineral Companies (Rule 18.16).

              FAQ Series 20, FAQ No. 26
              LR reference: Main Board Rules 18.15, 18.17, 18.18 / GEM Rules 18A.15, 18A.17, 18A.18
              Released on 28/2/2013

              Question:

              What information does the Exchange require when assessing whether a person has the relevant experience to act as the Competent Person for a Relevant Notifiable Transaction involving acquisition or disposal of mineral or petroleum assets?

              Answer:

              When the person submits his historical experience to the Exchange, he should ensure there are sufficient details to demonstrate that the experience is relevant to the mineral or petroleum assets being acquired or disposed of. In general the person is expected to provide a list of engagements showing his relevant experience with the following information:

              •   the period of each engagement;
              •   a description of each project undertaken, including the location and the type of resources involved, and the relevance to the resources being acquired or disposed of;
              •   details of any technical reports on the resources of the project, including the reporting standards and the use of the reports;
              •   details of his role and responsibilities in the project and the preparation of any technical reports.

              FAQ Series 20, FAQ No. 24
              LR reference: Main Board Rules 18.21(1) / GEM Rules 18A.21(1)
              Released on 28/2/2013

              Question:

              From which point of time does the six-month period commence in respect of the validity of the contents of a Competent Person's Report/Valuation Report under Rule 18.24 which states that a Competent Person's Report/Valuation Report must have an effective date less than six months before the date of publishing the listing document or circular?

              Answer:

              The valid date should be the date of appraisal (i.e. the date when Resources and Reserves are estimated or valued), but not the date when the Competent Person's Report/Valuation Report is signed.

              FAQ Series 12, FAQ No. 10B
              LR reference: Main Board Rules 18.24(2) / GEM Rules 18A.24(2)
              Released on 4/2/2013

              Question:

              Will the Exchange allow Competent Persons to obtain indemnities from the entity that commissioned the public report?

              Answer:

              We consider Competent Persons should be entitled to protect themselves from liability to an extent consistent with market practice. As a guide, paragraph 39 of the VALMIN Code, states "a Competent Person should obtain from the Commissioning Entity an indemnity under which they will be compensated for any liability: (a) resulting from their reliance on information provided by the Commissioning Entity that is materially inaccurate or incomplete. (Such an indemnity does not absolve Competent Persons from critically examining the information provided); or (b) relating to any consequential extension of workload through queries, questions or public hearings arising from the Competent Person's Report". Listing Rule 18.25 expressly permits a Competent Person to disclaim responsibility if he relied on other experts who are not Competent Persons on areas relevant to the CPR that are not within the Competent Person's area of expertise.

              FAQ Series 12, FAQ No. 22
              LR reference: Main Board Rules 18.25, 18.26, 18.22 / GEM Rules 18A.25, 18A.26, 18A.22
              Released on 26/5/2010

              Question:

              What is the role of the Sponsor in relation to Mineral Companies?

              Answer:

              The obligations of sponsors are set out in Chapter 3A of the Listing Rules. For companies that fall within Chapter 18, Rule 18.27 requires that sponsors ensure that the Competent Person and/or Competent Evaluator satisfies the requirements of a Competent Person and/or a Competent Evaluator in Chapter 18, including whether the Competent Person and/or Competent Evaluator is independent, professionally qualified, and a member of an RPO.

              Reference should be made to Paragraphs 5 and 14 of Practice Note 21 (Due Diligence by Sponsors in respect of Initial Listing Applications) which sets out the typical due diligence inquiries a sponsor should undertake for the expert sections of the listing document.

              FAQ Series 12, FAQ No. 23
              LR reference: Main Board Rules Chapter 3A, Rule 18.27, Practice Note 21 / GEM Rules Chapter 6A, Rule 18A.27, Practice Note 2
              Released on 26/5/2010

              Question:

              Consistency in statements made about Reserves and Resources in the listing document (or circular) and the related CPR

              Answer:

              The new applicant or listed issuer must ensure that disclosures in the listing document or circular for the Relevant Notifiable Transaction are consistent with the related Competent Person's Report. In particular, the directors should ensure there is no mismatch between statements about Reserves and Resources in the listing document (or circular for the Relevant Notifiable Transaction) and statements about Reserves and Resources in the independent Competent Person's Report. Descriptions of Reserves and Resources must correspond to the specific categories in the Reporting Standards.

              FAQ Series 12, FAQ No. 10
              LR reference: Main Board Rules 18.28 to 18.33 / GEM Rules 18A.28 to 18A.33
              Released on 26/5/2010

              Question:

              Does the Exchange accept both "deterministic" and "probabilistic" methods of estimating Reserves?

              Answer:

              Yes, it is for Competent Persons and issuers to decide whether to estimate Reserves under the deterministic or probabilistic method. The reason for their choice should be disclosed to investors. Under Rule 18.33(1), where estimates of Reserves are disclosed using the probabilistic method, the Competent Person must state the underlying confidence levels applied.

              FAQ Series 12, FAQ No. 20
              LR reference: Main Board Rule 18.33(1) / GEM Rule 18A.33(1)
              Released on 26/5/2010

              Question:

              Will valuations of Natural Resource assets (i.e. Reserves) based on discounted cash flows (DCF) be regarded as profit forecasts under Rule 14.61?

              Answer:

              Where a new applicant Mineral Company or listed issuer provides a valuation of Natural Resource assets (i.e. Reserves) based on DCF, the Exchange will not regard the DCF as a profit forecast requiring review by an independent accountant. However, issuers must disclose all relevant assumptions and the reason why a particular valuation method is chosen.

              FAQ Series 12, FAQ No. 21
              LR reference: Main Board Rules 14.61, 11.17, 18.34, Appendix 1A(34)(2), Appendix 1B(29)(2) / GEM Rules 19.61, 14.29, 18A.34
              Released on 26/5/2010

            • Chapter 19

              View Current PDF

              Question:

              What companies are affected by the Revised JPS and these FAQs?

              Answer:

              The Revised JPS and these FAQs, are relevant to companies that:

              (a) are incorporated outside of Hong Kong, the People's Republic of China, Bermuda and the Cayman Islands and have, or are seeking, a primary or dual primary listing on the Exchange's markets; or
              (b) are incorporated outside Hong Kong with a centre of gravity outside Greater China that have, or are seeking, a secondary listing on the Exchange's markets.

              FAQ Series 25, FAQ No. 1
              LR reference: Main Board Rules Chapter 19, Revised JPS paragraphs 16, 94 and 95. / GEM Rules Chapter 24, Revised JPS paragraph 16. [Secondary listing provisions not applicable.]
              Released on 27/9/2013

              Question:

              What 2007 JPS provisions have been retained in the Revised JPS and which have not?

              Answer:

              A destination table, mapping 2007 JPS provisions to the Revised JPS, forms the Appendix to these FAQs.

              FAQ Series 25, FAQ No. 2
              LR reference: Main Board Rules Chapter 19, 2007 Joint Policy Statement Regarding the Listing of Overseas Companies ("2007 JPS") / GEM Rules Chapter 24, 2007 Joint Policy Statement Regarding the Listing of Overseas Companies ("2007 JPS")
              Released on 27/9/2013

              Question:

              Does an overseas company with, or seeking, a secondary listing need to disclose that it has been granted an "automatic waiver"?

              Answer:

              Yes.

              An overseas company seeking a secondary listing must disclose in its listing document the details of the "automatic waivers" it has been granted under the Revised JPS.

              Any overseas company with, or seeking, a secondary listing must also disclose these details in the relevant section of their Company Information Sheet submitted through HKEx-ESS for publication on the HKEx website.

              The disclosures in a listing document and Company Information Sheet mentioned above must include the full details of the waiver including any limitations or restrictions, and state that the company will, instead, follow the relevant foreign laws and regulations that are applicable to it as set out in the summary of foreign laws and regulations section of its Company Information Sheet.

              FAQ Series 25, FAQ No. 3
              LR reference: Main Board Rules Chapter 19, Revised JPS paragraphs 63, 65, 66, 88 and 89 and the Main Board Rule Application Table for Overseas Issuers of Equity Securities ("Rule Application Table") / GEM Rules Chapter 24 [Secondary listing provisions not applicable.]
              Released on 27/9/2013

              Question:

              Will the Exchange grant the "automatic waivers" and "common waivers", set out in the Rule Application Table, to issuers that were listed before 27 September 2013?

              Answer:

              "Automatic Waivers"

              To enjoy "automatic waivers", overseas companies that were secondary listed before 27 September 2013 must:

              (a) confirm to the Exchange that they meet the criteria for these waivers set out in Section 5 of the Revised JPS;
              (b) comply with the limitations and restrictions described for an "automatic waiver" in the Rule Application Table; and
              (c) disclose the details of the "automatic waiver" in the relevant section of their Company Information Sheets submitted through HKEx-ESS for publication on the HKEx website (see Question 5)

              "Common Waivers"

              An overseas company that was listed before 27 September 2013 may apply for the "common waivers" set out in the Rule Application Table. The Exchange will consider such waiver applications on their individual merits and in light of all relevant facts and circumstances. The waiver applicant must meet all the conditions of the waiver.

              An overseas company should not apply for a "common waiver" if it has previously made an unsuccessful application for the same waiver and its circumstances have not materially changed.

              As a condition of granting the waiver, the overseas company must submit through HKEx-ESS for publication on the HKEx website an upto-date Company Information Sheet that meets the requirement of paragraph 65 of the Revised JPS and includes a description of the waiver (see Question 5).

              FAQ Series 25, FAQ No. 4
              LR reference: Main Board Rules Chapter 19, Revised JPS paragraphs 20 to 22, 88 and 89 and the Rule Application Table. / GEM Rules Chapter 24, Revised JPS paragraphs 20 to 21 and the Rule Application Table (to the extent that it applies). [Secondary listing provisions not applicable.]
              Released on 27/9/2013

              Question:

              Do overseas companies that were listed before 27 September 2013 need to publish a Company Information Sheet?

              Answer:

              The Exchange encourages all overseas companies that were listed before 27 September 2013 to submit a Company Information Sheet (that complies with paragraph 65 of the Revised JPS) through HKEx-ESS for publication on the HKEx website at their earliest convenience.

              If an overseas company has not already done so, the Exchange will require an overseas company to submit a Company Information Sheet through HKEx-ESS for publication on the HKEx website when:

              (a) it requests a waiver from the Rules or another Exchange requirement (see Revised JPS, paragraph 63(a) and Question 4);
              (b) there is a material change to the laws and regulations in its home jurisdiction or primary market (see Revised JPS, paragraph 63(b));
              (c) there is a material change to the overseas taxes applicable to its Hong Kong shareholders (see Revised JPS paragraph 63(c)); or
              (d) for Hong Kong Depositary Receipt issuers, there is a material change to the terms and conditions of its depositary agreement or deed poll (see Revised JPS paragraph 63(d)).

              FAQ Series 25, FAQ No. 5
              LR reference: Main Board Rules Chapter 19, Revised JPS, paragraphs 63 to 66. / GEM Rules Chapter 24, Revised JPS, paragraphs 63, 65 and 66.

              Released on 27/9/2013

              Question:

              How often does an overseas company need to update its Company Information Sheet?

              Answer:

              An overseas company must submit an updated Company Information Sheet through HKEx-ESS for publication on the HKEx website after any material change to the information disclosed in the document.

              This requirement supersedes any previous undertaking given by an overseas company to publish its Company Information Sheet on a yearly basis.

              FAQ Series 25, FAQ No. 6
              LR reference: Main Board Rules Chapter 19, Revised JPS, paragraph 65. / GEM Rules Chapter 24, Revised JPS, paragraph 65.
              Released on 27/9/2013

            • Chapter 19B

              View Current PDF

              Question:

              What are the listing requirements for HDR issuers? How do they compare with the requirements for issuers of ordinary shares?

              Answer:

              The listing requirements for HDR issuers are essentially the same as for issuers of shares, ie Chapter 8 of the Listing Rules applies to issuers of HDRs as well as to issuers of shares.

              HDR issuers have to comply with certain additional requirements set out in the new Chapter 19B of the Listing Rules. These additional requirements concern the contents of the deposit agreement and other DR-specific matters.

              FAQ Series 6, FAQ No. B2
              LR reference: Main Board Rules 8.01, 19B.01
              Released on 9/5/2008

              Question:

              Can HDR issuers list by introduction?

              Answer:

              Yes. The methods of listing are the same as for issuers of shares, i.e. Chapter 7 of the Main Board Listing Rules applies to HDR issuers as much as it applies to issuers of shares.

              FAQ Series 6, FAQ No. B12
              LR reference: Main Board Rule 19B.01
              Released on 9/5/2008

              Question:

              Do HDR issuers have to conduct an IPO?

              Answer:

              The Exchange's existing listing regime applies to DR issuers as much as it applies to issuers of shares. Where there is expected to be significant public interest in an issue an IPO is required.

              FAQ Series 6, FAQ No. B13
              LR reference: Main Board Rule 19B.01
              Released on 9/5/2008

              Question:

              Does the definition of "holder of depositary receipts" include a holder evidenced by a book-entry in the HDR register?

              Answer:

              Yes. The definition of "holder of depositary receipts" includes a holder evidenced by a book entry in the HDR register.

              FAQ Series 6, FAQ No. B17
              LR reference: Main Board Rule 19B.02
              Released on 10/9/2008

              Question:

              Do HDR issuers have to be already listed on any exchange?

              Answer:

              No. Any issuers, whether listed on any exchange or not, which can meet the requirements of the Listing Rules are welcome to apply to list as HDRs.

              FAQ Series 6, FAQ No. B3
              LR reference: Main Board Rule 19B.06
              Released on 9/5/2008

              Question:

              Can issuers already listed on the Exchange issue HDRs?

              Answer:

              An issuer cannot have both shares and HDRs listed on the Exchange at the same time. A share issuer wishing to list in HDR form must apply to delist as a share issuer and re-apply to list as a HDR issuer. This process will require the share issuer to comply with its own constitutional requirements and all relevant rules and regulations, including where applicable the consent of its existing shareholders.

              FAQ Series 6, FAQ No. B5
              LR reference: Main Board Rule 19B.06
              Released on 9/5/2008

              Question:

              Can Hong Kong or Mainland issuers apply to list as HDRs?

              Answer:

              Yes. Any issuer which can meet the requirements of the Listing Rules and is in compliance with its local regulatory regime is welcome to apply to list in HDR form.

              FAQ Series 6, FAQ No. B6
              LR reference: Main Board Rule 19B.11
              Released on 9/5/2008

              Question:

              Does a HDR issuer have to apply for 'headroom'?

              Answer:

              It is up to the issuer to decide the amount of DRs in respect of which listing is to be applied for. However, an HDR issuer must ensure that listing approval has been sought for all HDRs traded in Hong Kong from time to time.

              A hypothetical example is as follows. Say an issuer has 100 shares. It wishes to raise capital by issuing the equivalent of 25 new shares in the form of DRs in the Hong Kong market, thus bringing its outstanding share capital to 125 shares. The issuer is free to apply to list whatever number of HDRs it wishes on the Exchange provided that all other listing requirements are met (eg public float — see also B11 below). In this hypothetical case, taking account of shares held by the public in its domestic market, the issuer reckons that it must list a minimum of 25 shares. To allow for possible future inflow, eg as a result of the arbitrage process (see E5 below), the issuer decides to apply for listing of 40 shares in the form of DRs. (The issuer may apply for listing of HDRs in respect of up to 125 shares, but will probably choose not to do so because of the costs involved.) The excess of 40 over 25, ie 15, is called the 'headroom'.

              This means that the issuer can make further issues of HDRs in the Hong Kong market up to the limit of the headroom, ie the equivalent of 15 shares more, without making a further application for listing to the Exchange. Alternatively, inflow of shares into the Hong Kong market up to the limit of the headroom in the form of HDRs is also permitted without application for listing. (Any combination of HDRs issued for capital raising or issued as a result of conversion of underlying shares is permitted and listing approvals will be given for specific purposes and amounts.) However, if the limit of 40 shares will be exceeded, application for listing must be made. It will be the responsibility of the issuer to ensure that the headroom is not exceeded. On a day-to-day basis the depositary will monitor the level of HDRs outstanding, and will not permit shares to be converted into HDRs if to do so would cause the limit to be exceeded.

              The issuer may make new issues of shares in the overseas market and these shares may be converted into HDRs listed on the Exchange. No application for listing need be made to the Exchange in such case unless the headroom is to be exceeded.

              FAQ Series 6, FAQ No. B10
              LR reference: Main Board Rule 19B.07
              Released on 9/5/2008

              Question:

              How is the HDR issuer's public float calculated?

              Answer:

              Exchange Listing Rule 8.08(1)(a), which applies to HDR issuers as it does to issuers of shares, requires that at least 25% of the issuer's total issued share capital must at all times be held by the public. (A lower percentage applies to companies with an expected market capitalisation of over HK$10 billion.)

              Where the HDRs listed in Hong Kong are fungible with the underlying shares, the total shares and shares represented by DRs of the issuer held by the public on both the Exchange and any overseas market(s) concerned will count toward the 25%.

              FAQ Series 6, FAQ No. B11
              LR reference: Main Board Rule 19B.08
              Released on 9/5/2008

              Question:

              Will retail investors be allowed to buy HDRs?

              Answer:

              Yes. There are no restrictions on who may buy or sell HDRs.

              FAQ Series 6, FAQ No. C2
              LR reference: Main Board Rule 19B.09
              Released on 9/5/2008

              Question:

              What are the qualifications for the depositary?

              Answer:

              The depositary is required to be a suitably authorised and regulated financial institution acceptable to the Exchange. In determining acceptability, the Exchange will have regard to the institution's experience of issuing and managing DR programmes in Hong Kong and overseas.

              FAQ Series 6, FAQ No. D1
              LR reference: Main Board Rule 19B.15
              Released on 9/5/2008

              Question:

              How can HDR holders exercise their rights under the deposit agreement?

              Answer:

              A deposit agreement is executed by the depositary and the issuer. Listing Rule 19B.16 sets out the requirements for what should be included in the deposit agreement, including the role and duties of the depositary, and the rights of the HDR holders.

              The HDR holder is not a party to the deposit agreement. However, the issuer and the depositary execute a legal instrument (e.g. a deed poll) in favour of HDR holders so that the HDR holders will be able to enforce the rights set out in the deposit agreement against the issuer and the depositary. HDR holders should read the deposit agreement to understand their rights, and if necessary consider consulting their legal advisers.

              FAQ Series 6, FAQ No. H1
              LR reference: Main Board Rule 19B.16
              Released on 1/12/2010

              Question:

              Can HDRs be issued by a depositary without the issuer's authorisation, i.e. can an HDR programme be 'unsponsored'?

              Answer:

              No. HDRs cannot be issued by the depositary without the issuer's authorization. All HDR programmes must be 'sponsored'.

              FAQ Series 6, FAQ No. A7
              LR reference: Main Board Rule 19B.16(a)
              Released on 10/9/2008

              Question:

              In what currency will dividends on HDR be paid?

              Answer:

              The depositary will receive dividends from the issuer in the original currency and convert the amount into Hong Kong dollars (or US dollars if the issuer so chooses) at the appropriate market rate and remit the proceeds, net of any applicable taxes and the depositary's own fee, to the HDR holder. Where the investor holds the HDRs in CCASS, the dividend will be credited to his CCASS account (in respect of an Investor Participant) or the CCASS account of his broker of custodian, net of CCASS's dividend collection fee in accordance with the existing CCASS tariff.

              FAQ Series 6, FAQ No. C4
              LR reference: Main Board Rule 19B.16(j) / GEM Rules N/A
              Released on 9/5/2008

              Question:

              Can HDR holders vote at the shareholders meeting?

              Answer:

              As with other corporate communications, the depositary, on behalf of the issuer, will pass information from the issuer on resolutions and voting procedures through to the DR holder, and will in turn pass the DR holder's voting instructions back to the issuer. Besides, DR holders can also access shareholders meeting announcements and other corporate communication by issuers on the HKEx website.

              The right of the clearing house to appoint proxies or representatives to attend and exercise statutory rights, including the right to speak, at shareholders meetings is set out in item 3(e) of the Joint Policy Statement.

              FAQ Series 6, FAQ No. C7
              LR reference: Main Board Rule 19B.16(k)
              Released on 9/5/2008

              Question:

              What charges will investors pay in respect of HDRs?

              Answer:

              There are various fees associated with HDRs. The fees charged by the depositary are disclosed in the deposit agreement, which is a public document; investors should read the deposit agreement to inform themselves of these fees. The Exchange does not regulate the fees of the depositaries.

              FAQ Series 6, FAQ No. C8
              LR reference: Main Board Rule 19B.16(q)
              Released on 9/5/2008

              Question:

              How can the deposit agreement be amended?

              Answer:

              The procedures for amendment are set out in the deposit agreement. In order to protect HDR holders' interests, Listing Rule 19B.16(s) provides that any material change to the deposit agreement which affects HDR holders' existing rights and obligations would require prior notice to and the consent of HDR holders. Other amendments to the deposit agreement may become effective after giving an advance notice to HDR holders or by agreement between the issuer and the depositary.

              FAQ Series 6, FAQ No. H3
              LR reference: Main Board Rule 19B.16(s)
              Released on 1/12/2010

              Question:

              Can investors hold HDRs in physical form, ie in scrip?

              Answer:

              Yes. However, if investors wish to trade their HDRs through the Exchange they must first arrange via their broker or custodian for the HDRs to be deposited with CCASS.

              FAQ Series 6, FAQ No. C3
              LR reference: Main Board Rule 19B.19
              Released on 9/5/2008

              Question:

              What are HDRs?

              Answer:

              'HDR' is the informal name for a depositary receipt programme listed on the Exchange.

              FAQ Series 6, FAQ No. A2
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              What is HKEx's depositary receipt framework? And when is it effective?

              Answer:

              Previously, HKEx's Listing Rules would accept issuers listing equity securities only in the form of shares. Now the Listing Rules have been amended to permit issuers to list in the form of DRs (ie HDRs).

              The HDR framework is effective from 1 July 2008.

              There are no changes to the listing regime. Issuers listing in HDR form have to comply with the same listing regime as issuers listing shares. The requirements for admission, the listing process, and the continuing obligations are the same.

              FAQ Series 6, FAQ No. A3
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Are HDRs allowed on GEM?

              Answer:

              Not at this stage. The HDR framework applies to the Main Board only. GEM has recently been subject to a strategic review, as a result of which certain changes have been made to its admission requirements and mode of operation. Once experience has been gathered of the operation of GEM with these changes, consideration will be given to extending the HDR framework to GEM; however, there is no timetable for this.

              FAQ Series 6, FAQ No. A4
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              What are the main rule changes to implement the DR framework?

              Answer:

              A new chapter on depositary receipts, Chapter 19B, has been added to the Listing Rules. Chapter 19B explains that an issuer may choose to list in the form of DRs, and that the Listing Rules will apply in the same manner as to the listing of equity securities; necessary modifications or clarifications are given. The chapter states that the issuer of the shares which are represented by DRs is 'the issuer' for purposes of the Listing Rules. Chapter 19B also requires the depositary to maintain a register of DR holders in Hong Kong via an approved share registrar, provides the qualifications for the depositary, sets out the requirements concerning the deposit agreement, and stipulates the obligations of the issuer on any change of depositary or custodian.

              Minor or consequential amendments have been made to other chapters of the Listing Rules. New parts E and F, modelled on the existing parts A and B, have been added to Appendix 1 of the Listing Rules on the Listing Document.

              Very minor amendments to accommodate DRs have been made to the General Rules of the Clearing and Settlement System (CCASS), the CCASS Operating Procedures and the Terms and Conditions for Investor Participants Procedures.

              FAQ Series 6, FAQ No. A5
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Can warrants be issued on HDRs?

              Answer:

              Yes. Provided the issuer meets the Exchange's criteria for the underlying stock for warrant issuance, warrants may be issued on HDRs.

              FAQ Series 6, FAQ No. A6
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Why should issuers list in the form of HDRs rather than shares?

              Answer:

              An issuer may choose to list either in the form of shares or in the form of HDRs. The choice is the issuer's.

              Some overseas issuers may find the HDR form convenient. Where regulations in the issuer's home jurisdiction discourage the overseas listing of shares, HDRs may offer a practicable alternative. Where the issuer's shares are of a very different size from that customarily used in Hong Kong, the HDR form may provide a convenient means to 'resize' the issue.

              Although well-resourced investors may prefer to buy and hold overseas shares directly, retail investors and smaller institutions usually do not wish to do so since direct holding means dealing with share registration procedures, tax reclaims, currency conversion and possibly investor registration procedures in the overseas jurisdiction. With HDRs, these onerous procedures are handled by the depositary. Accordingly, the use of HDRs may enable an issuer to reach a larger investor base than would be possible in ordinary share form.

              FAQ Series 6, FAQ No. B1
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Which jurisdictions are approved for DR issuance?

              Answer:

              Issuers from any jurisdiction which can meet the requirements set out in the Joint Policy Statement Concerning the Listing of Overseas Companies issued by the Exchange and the SFC on 7 March 2007 and the related requirements of the Main Board Listing Rules are welcome to apply to the Exchange.

              FAQ Series 6, FAQ No. B4
              LR reference: Main Board Rule Chapter 19B / GEM Rules N/A
              Released on 9/5/2008

              Question:

              Do the HDR-related rule amendments affect an issuer which has, or plans to have, a global depositary receipt (GDR) or American depositary receipt (ADR) programme overseas?

              Answer:

              The Exchange's HDR framework applies only to HDR programmes listed in Hong Kong. The rule amendments do not apply to existing or future DR programmes in overseas markets.

              FAQ Series 6, FAQ No. B8
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Can existing or future GDR or ADR programmes be listed on the Exchange?

              Answer:

              Any DR programme to be listed on the Exchange will have to comply with the requirements of Chapter 19B as well as Chapter 8 and the other Main Board Listing Rules and guidelines applying to new listings. Any existing ADR or GDR programme that complies with these requirements will be welcome; however, in practice it might not be practicable for existing programmes designed for overseas markets to comply with the Exchange's rules.

              FAQ Series 6, FAQ No. B9
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Does the requirement for pre-emptive rights (in Listing Rule 13.36) apply to the HDRs or to the issuer's shares?

              Answer:

              The requirements of rule 13.36 apply in respect of the issuer's shares.

              FAQ Series 6, FAQ No. B15
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Can HDRs be issued on products such as GDR, ADR, exchange-traded funds (ETFs), or exchange traded commodities (ETCs)?

              Answer:

              No. The securities underlying the HDRs must be the shares of an issuer and not other products.

              FAQ Series 6, FAQ No. B16
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              How is the HDR ratio (a ratio to show the number of shares that each HDR represents) determined?

              Answer:

              The HDR ratio is determined by the issuer and is disclosed in the listing document as one of the key terms of the deposit agreement. Any change in the HDR ratio is the subject of an announcement by the issuer under the Listing Rules.

              FAQ Series 6, FAQ No. B18
              LR reference: Main Board Rule Chapter 19B
              Released on 10/9/2008 (Updated on 2/1/2013)

              Question:

              What are the benefits of HDRs for Hong Kong investors?

              Answer:

              DRs provide a convenient means for Hong Kong investors to invest in an overseas issuer. Direct investment in shares in some markets entails compliance with onerous procedures on registration, withholding tax reclaims and foreign currency conversion. It may also be difficult for investors to receive corporate communications and entitlements, or to exercise their entitlements. Some overseas issuers may not be able to list their shares in Hong Kong; and in such case the Hong Kong investor wishing to invest in the company would have to do so through the local market via that market's trading, settlement and share custody procedures. With DRs, the above problems are mitigated. DRs are traded in Hong Kong in accordance with the standard trading, settlement and custody procedures of the Hong Kong market. The currency of trading will be Hong Kong dollars (or US dollars if the issuer so chooses); dividends will be converted into Hong Kong dollars (or US dollars), and corporate communications and entitlements will be transmitted to the investor by the depositary, in addition to the requirement that corporate communications must be posted on the HKEx website and the issuer's website. The investor will also be able to transmit his voting instructions to the issuer and exercise his entitlements via the depositary.

              FAQ Series 6, FAQ No. C1
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008 (Updated on 1/12/2010)

              Question:

              What protections are there for Hong Kong investors in HDRs?

              Answer:

              To be admitted to listing on the Exchange, the HDR issuer will have to demonstrate compliance with all the shareholder protection provisions that apply to issuers of shares, as set out in the Listing Rules, the Joint Policy Statement regarding listing of overseas companies (updated on 27 September 2013), the Securities and Futures Ordinance, the prospectus provisions of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32), and the Codes on Takeovers and Mergers and Share Buybacks

              The HDR holder's rights are set out in the deposit agreement, which is subject to approval by the Exchange in accordance with the provisions of Chapter 19B. Investors in HDRs should understand that they are bound by the terms of the deposit agreement. Investors are advised to read the deposit agreement to understand what their rights are and how they may be exercised.

              FAQ Series 6, FAQ No. C5
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008 (Updated on 17/4/2014)

              Question:

              Are the rights of a HDR holder the same as those of a holder of shares?

              Answer:

              The rights of a shareholder and a HDR holder are not identical. For example, the rights of the HDR holder arise from the deposit agreement, which is a contractual document, whereas the rights of the shareholder will be reinforced by local statute. Also, local regulations may prohibit foreign persons from holding shares directly, but no such restriction would apply to HDRs. However, in general, the rights of a HDR holder will be equivalent to those of a shareholder. Subject to compliance with local regulations, HDR holders who want to enforce their rights as shareholders may choose to convert their HDRs into shares of the underlying company.

              FAQ Series 6, FAQ No. C6
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Whether the depositary or custodian of HDR is subject to the disclosure regime (Part XV of the SFO)?

              Answer:

              It will depend very much on the facts of each depositary or custodian's business whether they fall within the exemption or not (in particular section 323 of the SFO). The SFC has issued guidelines on disclosure of interests. In particular, in paragraph 2.12.13.2:

              "2.12.13.2 If a bank retains a discretionary right to set off any other obligations/liabilities of a client against any securities held in custody for that client the bank will not satisfy the requirement in s.323(3)(b) that the corporation "has no authority to exercise discretion in dealing in the interest, or in exercising rights attached to the interest". Similarly, the exemption is not available if a bank retains the discretionary right to take up or retain unclaimed or fractional dividends (cash and/or scrip). The custodian exemption is not establishing a new wide exemption for custodians. It is intended to parallel the regime for a "bare trustee" — simply extending the bare trustee exemption to custodians by contract (before the bare trustee exemption only applied to custodians who were trustees)."

              The depositary or custodian should assess their own circumstances and ensure that laws and regulations are observed.

              FAQ Series 6, FAQ No. D2
              LR reference: Main Board Rule Chapter 19B
              Released on 1/12/2010

              Question:

              What currencies will DRs be traded in?

              Answer:

              At present, the Exchange accepts trading and clearing in Hong Kong dollars and US dollars. The choice between these currencies is up to the DR issuer.

              FAQ Series 6, FAQ No. E1
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              What are the trading and settlement procedures for DRs?

              Answer:

              The trading and settlement arrangements remain the same as for shares. All Stock Exchange Participants are eligible to trade HDRs and investors can trade HDRs through their usual stock accounts. The trading platform for stock trading, the Automatic Order Matching and Execution System (AMS), is used for HDRs. Trades executed in the Stock Exchange's trading system will be settled through CCASS operated by HKSCC on the second settlement day after trading (T+2). Upon settlement, investors' HDR holdings will be credited to or debited from their accounts with CCASS, or the CCASS accounts of their designated custodians or Stock Exchange Participants.

              FAQ Series 6, FAQ No. E2
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              What transaction fees do investors pay to buy or sell HDRs?

              Answer:

              As with buying and selling stocks, investors need to pay brokerage commission, transaction levy, trading fee and stamp duty.

              FAQ Series 6, FAQ No. E3
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Does stamp duty apply to trades in HDRs?

              Answer:

              Yes. Stamp duty applies to trades in HDRs at the rate of 0.1% of the value traded per side, just as in the case of trades in shares.

              FAQ Series 6, FAQ No. E4
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Whether dividend payments on HDR are subject to overseas withholding tax?

              Answer:

              There is no withholding tax in Hong Kong. Whether overseas withholding tax is applicable depends on the laws and regulations of the overseas jurisdiction concerned. HDR holders should refer to the relevant disclosures in the listing documents and, if necessary, seek advice from their tax advisers.

              FAQ Series 6, FAQ No. E5
              LR reference: Main Board Rule Chapter 19B
              Released on 1/12/2010

              Question:

              Will there be fungibility between HDRs and the underlying shares?

              Answer:

              Provided there are no restrictions on the underlying shares, they should be fungible with HDRs. If the underlying shares are listed on an overseas market, arbitrage between the two markets can take place.

              Where an investor or intermediary believes that the price of the HDRs is higher (taking account of the DR ratio) than the price of the underlying shares, it may wish to acquire shares in the overseas market, submit them to the custodian and take delivery of DRs in the Hong Kong market to sell and make a profit. Where the price of the HDRs is lower than that of the underlying shares, the investor/intermediary may submit the HDRs to the depositary for cancellation and take delivery of shares in the overseas market to sell and make a profit. Fees will be payable to the depositary on issuance and cancellation of the HDRs.

              The arbitrage process will tend to bring the price of DRs and the price of the underlying shares into line, subject to the DR ratio. It is a normal commercial process.

              FAQ Series 6, FAQ No. E6
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Are HDRs scripless?

              Answer:

              To trade on the Exchange DRs must be deposited in CCASS and will be traded and settled on a book-entry electronic basis. However, as in the case of shares, DR holders have the option of withdrawing DR scrip from, or depositing DR scrip into, CCASS.

              FAQ Series 6, FAQ No. E7
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Can DRs be sold short?

              Answer:

              DRs are subject to the existing rules on short selling. Where the DR issuer meets the Exchange's criteria and is placed on the list of eligible stocks, short selling in the normal manner will be permitted.

              FAQ Series 6, FAQ No. E8
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Will the trading of HDRs be suspended to keep in line with the suspension of underlying shares in the local market?

              Answer:

              As a practical matter a suspension of the underlying shares of HDRs in the local market will normally, though not necessarily, result in a suspension of trading of HDRs on the Exchange. The trading suspension and resumption of HDRs on the Exchange will be in accordance with the Exchange Listing Rules e.g. whether the issuer is able to keep the Hong Kong market informed of the development in the issuer's activities. Similar to issuers with their equity securities listed on the Exchange, the lack of an announcement in some situations may lead to a concern of establishment of a false market in Hong Kong and hence would require a temporary suspension of dealings in the HDRs pending an appropriate announcement to be made.

              FAQ Series 6, FAQ No. E9
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              What will happen to the HDRs listed in HK if its underlying shares are undergoing a stock split or consolidation?

              Answer:

              A stock split or consolidation of the underlying shares of the HDRs will affect the capital structure of the HDRs and consequently the HDR ratio. Further, a stock split or consolidation in the underlying shares may, or may not, affect the board lot size of the HDRs. The Exchange, in appropriate circumstances, would request for adequate arrangements to be made to enable odd lot holders are to be accommodated and issuers and depositaries are encouraged to consult with the Exchange at the earliest opportunity.

              FAQ Series 6, FAQ No. E10
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              How will international securities identification numbers (ISIN) be allocated to HDRs?

              Answer:

              International standard ISO 6166 provides a uniform structure for a number, the ISIN, that is a unique identifier of securities. National numbering agencies (NNA) are responsible for issuing the ISIN in their respective countries. In the case of depositary receipts, such as HDRs, the relevant country is that of the entity which issued the depositary receipt, i.e. the depositary bank, rather than that of the issuer of the underlying shares. As such, if the HDRs are issued by a depositary bank which is incorporated or established outside Hong Kong, the ISINs of each class of HDR is assigned by the respective NNA of its country of incorporation.

              FAQ Series 6, FAQ No. E11
              LR reference: Main Board Rule Chapter 19B
              Released on 1/12/2010

              Question:

              Are there any changes to depository and nominee services under the DR framework?

              Answer:

              There are some minor changes to the flow of information and instructions between the issuer and the investor (DR holder) because of the intermediation by the depositary. The deposit agreement will stipulate the services which the depositary has to provide to the HDR holder. In respect of HDRs held within CCASS, HKSCC will support the depositary by providing its normal nominee services in relation to the corporate actions or activities affecting HDRs as well as arranging for the distribution of copies of relevant corporate communications to the CCASS Participants concerned.

              FAQ Series 6, FAQ No. F1
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              What are the procedures for deposit and withdrawal of DR certificates into / from CCASS?

              Answer:

              DRs, upon admission as eligible securities of CCASS, can be physically deposited into / withdrawn from CCASS. The deposit and withdrawal procedures are the same as those currently applied to other eligible securities of CCASS.

              FAQ Series 6, FAQ No. F2
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              Will CCASS be involved in the creation and cancellation of DRs?

              Answer:

              No. An investor or intermediary who wishes to create or cancel DRs would need to apply to the relevant depositary direct. For creation, after the DRs are created, the investor or intermediary can physically deposit the DR certificates into CCASS for custody or for settlement of trades. For cancellation, DR certificates can be physically withdrawn from CCASS and surrendered to the issuing depositary for cancellation.

              FAQ Series 6, FAQ No. F3
              LR reference: Main Board Rule Chapter 19B
              Released on 9/5/2008

              Question:

              What are pre-release and pre-cancellation?

              Answer:

              Pre-release is the early creation and release of HDRs by the depositary before it has taken delivery of the underlying shares. Pre-cancellation is the equivalent and opposite transaction, i.e. early cancellation of HDRs by the depositary and release of the underlying shares before the HDRs have been submitted to the depositary.

              Pre-release enables the parties concerned to bridge the gap between the need to settle HDRs and the availability of the local shares for delivery to the local custodian. A gap may arise because of the logistics of communication among the depositary, the broker and the custodian, or differences in the settlement cycles between Hong Kong and the respective local market.

              In order to manage the risk of pre-release, the depositary will enter into a written agreement (the pre-release agreement) with the counterparty (usually a broker) which provides for the rights and responsibilities of the parties concerned. In particular, the broker will commit that it is presently entitled to the shares and will subsequently deliver the shares to the depositary. The HDRs pre-released (i.e. delivered) to the broker will be collateralised and the exposure continuously monitored by the depositary, with margin calls if necessary.

              FAQ Series 6, FAQ No. G1
              LR reference: Main Board Rule Chapter 19B
              Released on 1/12/2010

              Question:

              Can HDR holders attend shareholders' meetings?

              Answer:

              HDR holders are not legally shareholders. They have the contractual rights set out in the deposit agreement, including the right to vote on resolutions, receive dividends and participate in corporate actions; these rights are generally exercised on their behalf by the depositary. HDR holders are not permitted to attend shareholders' meetings in the capacity of shareholders. HDR holders should read the deposit agreement carefully to understand their rights.

              FAQ Series 6, FAQ No. I1
              LR reference: Main Board Rule Chapter 19B
              Released on 1/12/2010

            • Chapter 25

              View Current PDF

              Question:

              Must announcements relating to the implementation and/or suspension of an MMO be vetted by the Exchange?

              Answer:

              No.

              FAQ Series 13, FAQ No. 22
              LR reference: Main Board Rules 12.11A(1), 25.19B(1) / GEM Rules 16.04D, 29.21B(1)
              Released on 26/11/2010

            • Chapter 28

              View Current PDF

              Question:

              A listed issuer has some outstanding convertible bonds that are convertible into new shares of the issuer according to the terms of such bonds. These convertible bonds were issued by the listed issuer two years ago using the general mandate then available.

              Prior to the maturity date of the convertible bonds, the listed issuer and the holders of the convertible bonds propose to extend the maturity date and the conversion period of the bonds for one year and other terms of the bonds will remain unchanged. Is such proposal subject to the requirements relating to pre-emptive rights under Main Board Rule 13.36 / GEM Rules 17.39 to 17.42B?

              Answer:

              Yes. In the circumstances described, the proposed extension of the maturity date and the conversion period of the convertible bonds is effectively a new arrangement with the bond holders that involves issue of new shares of the listed issuer. The listed issuer must obtain shareholders' approval of such proposal at general meeting under Main Board Rule 13.36(1) / GEM Rule 17.39 unless it has an existing general mandate that is sufficient to cover all new shares that may be issued upon conversion of the outstanding convertible notes during the extended period. The listed issuer is also reminded that under Main Board Rule 28.05 / GEM Rule 34.05, any alterations in the terms of convertible debt securities after issue must be approved by the Exchange except where the alterations take effect automatically under the existing terms of such convertible debt securities.

              FAQ Series 7, FAQ No. 72
              LR reference: Main Board Rules 13.36, 28.05 / GEM Rules 17.39 to 17.42B, 34.05
              Released on 28/11/2008

            • Chapter 37

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              Question:

              What is a "false market"?

              Answer:

              The term "false market" refers to a situation where there is material misinformation or materially incomplete information in the market which is compromising proper price discovery. This may arise, for example, where:

              (a) an issuer h