Chapter 8

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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:

What are the changes to the Main Board Listing Rules?

Answer:

The minimum market capitalisation at the time of listing will increase from HK$200 million to HK$500 million.

The minimum public float value at the time of listing will increase from HK$50 million to HK$125 million.

FAQ Series N/A, FAQ No. 010-2017
LR reference: Main Board Rules 8.08(1)(b), 8.09(1), 8.09(2)
Released on 15/12/2017

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