Entire Section

  • Major transaction circulars (19.66-19.67)

    • 19.66

      A circular relating to a major transaction must contain the following:—
       
      (1) a prominent and legible disclaimer on the front cover or inside front cover of the circular in the form set out in rule 2.19;
       
      (2) a statement, at a prominent position in the document, and in bold type, about the characteristics of GEM, in the form set out in rule 2.20
       
      (3) the information regarding the listed issuer specified in the following paragraphs of Appendix 1, Part B
       
        1- name
       
        2- directors' responsibility
       
        5- expert statements
       
        29(2)- requirements if there is a profit forecast
       
        33- litigation statement
       
        35- details of secretary and other officers
       
        36- address of registered office and head office;
       
      (4) information regarding interests of directors and chief executive in the listed issuer required under paragraphs 34, 38 and 38A of Appendix 1, Part B;
       
      (5) information which is required to be included in the announcement under rule 19.60;
       
      (6) information concerning the effect of the transaction on the earnings and assets and liabilities of the listed issuer;
       
      (7) where a company either becomes a subsidiary or ceases to be a subsidiary of the listed issuer:—
       
        (a) the percentage of the company's issued shares (if any) held by the listed issuer after the acquisition or disposal; and
       
        (b) in the case of a disposal, a statement whether the remaining shares are to be sold or retained;
       
      (8) details of any existing or proposed service contracts of directors and proposed directors of the listed issuer, or an appropriate negative statement;
       
        Note: Details of contracts to expire or which may be terminated by the employer within a year without payment of any compensation (other than statutory compensation) need not be included.
       
      (9) information as to the competing interests (if any) of the Compliance Adviser and each of the directors, employees and close associates (as referred to in rule 6A.32) and each of the directors and any proposed director of the issuer (excluding its subsidiaries) and his/her respective close associates (as if each of them were treated as a controlling shareholder under rule 11.04);
       
      (10) any additional information requested by the Exchange;
       
      (11) the information regarding the listed issuer specified in the following paragraphs of Appendix 1, Part B:—
       
        28- indebtedness
       
        29(1)(b)- financial and trading prospects
       
        30- sufficiency of working capital, which must take into account the effect of the transaction
       
        40- directors' and experts' interests in group assets
       
        41- material contracts
       
        42(2)(c), (3) and (4)- documents on display;
       
      (12) where required by Chapter 8, information under that Chapter on the property interest being acquired or disposed of by the listed issuer;
       
      (13) where the circular contains a statement as to the sufficiency of working capital, the Exchange will require a letter from the listed issuer's financial advisers or auditors confirming that:—
       
        (a) the statement has been made by the directors after due and careful enquiry; and
       
        (b)    the persons or institutions providing finance have confirmed in writing that such facilities exist; and
       
      (14)    where applicable, the information required under rule 2.28.
       

    • 19.67

      In addition to the requirements set out in rule 19.66, a circular issued in relation to an acquisition constituting a major transaction must contain:—

      (1) the information required under paragraphs 9 and 10 of Appendix 1, Part B, if the acquisition involves securities for which listing will be sought;
      (2) the information required under paragraph 22(1) of Appendix 1, Part B, if new shares are to be issued as consideration;
      (3) where the consideration for a transaction includes the listed issuer's shares or securities that are convertible into the listed issuer's shares, a statement whether the transaction will result in a change of control of the listed issuer;
      (4) the information regarding the listed issuer required under paragraphs 31 (financial information) and 32 (no material adverse change) of Appendix 1, Part B;
      (5) the information required under paragraph 34 of Appendix 1, Part B, in relation to each new director and member of senior management joining the listed issuer in connection with the transaction;

      Note: The fact that any director or proposed director is a director or employee of a company which has an interest or short position in the shares or underlying shares of the listed issuer which would fall to be disclosed to the listed issuer under the provisions in Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance need not be stated.
      (6)
      (a) on an acquisition of any business, company or companies:
      (i) an accountants' report on the business, company or companies being acquired in accordance with Chapter 7 provided that, where any company in question has not or will not become a subsidiary of the listed issuer, the Exchange may be prepared to relax this requirement. The accounts on which the report is based must relate to a financial period ended 6 months or less before the circular is issued. The financial information on the business, company or companies being acquired as contained in the accountants' report must be prepared using accounting policies which should be materially consistent with those of the listed issuer; and

      Note: Where the accountants can only give a modified opinion in the accountants' report in respect of the acquisition of the business, company or companies, for example because the records of stock or work-in-progress are inadequate, the Exchange will not accept a written shareholders' approval for the transaction, but will require a general meeting to be held to consider the transaction (See rule 19.86). In these circumstances, listed issuers are urged to contact the Exchange as soon as possible.
      (ii) a pro forma statement of the assets and liabilities of the listed issuer's group combined with the assets and liabilities of the business, company or companies being acquired on the same accounting basis. The pro forma financial information must comply with Chapter 7; and
      (b) on an acquisition of any revenue-generating assets (other than a business or company) with an identifiable income stream or assets valuation:
      (i) a profit and loss statement and 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 which must be reviewed by the auditors or reporting accountants to ensure that such information has been properly compiled and derived from the underlying books and records. The financial information on which the profit and loss statement is based must relate to a financial period ended 6 months or less before the circular is issued. The financial information on the assets being acquired as contained in the circular must be prepared using accounting policies which should be materially consistent with those of the listed issuer; and
      (ii) a pro forma statement of the assets and liabilities of the listed issuer's group combined with the assets being acquired on the same accounting basis. The pro forma financial information must comply with Chapter 7; and
      (7) a discussion and analysis of results of the business, company or companies being acquired covering all those matters set out in rule 18.41 for the period reported on in the accountants' report.