Chapter 10

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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:

Yes. 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 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 5 Forms
Released on 21/2/2014 (Updated on 01/01/2022)

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
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/ issuance of shares or fund-raising activities for a GEM issuer during its transfer application process?

Answer:

No, unless such activities would lead to market disruption or unfairness.

Issuers should note that the requirements under Main Board Rules 10.07(1) and 10.08 are not applicable to GEM transfer as provided 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 (Updated in February 2020)

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 (GEM: 12) 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 (Updated on 15/2/2018)

Question:

What are the facilitative measures for GEM transfer applicants after the removal of the GEM streamlined process?

Answer:

Facilitative measures are as follows:

(a)    Dispensation from the following requirements for GEM transfer applicants which follow Chapter 9 application procedures (see new Main Board Rule 9A.03(1A) and Main Board Rule 9A.03(1B)):
  - Main Board Rule 9.11(17a): production of certificate of incorporation;
  - Main Board Rule 9.11(30): production of a HKSCC notice that the securities to be listed are Eligible Securities; and
  - Main Board Rule 12.01B: publication of Post Hearing Information Pack requirement.
(b)    Dispensation from the post-IPO lock-up on controlling shareholders requirement is maintained (Main Board Rule 10.07(4)), provided that any plan by the controlling shareholders of the issuer to dispose of their interests in the issuer in the next 12 months has been prominently disclosed in the listing document.
(c)    Dispensation from the restriction on post-listing fund-raising is maintained (Main Board Rule 10.08(5)), provided that any plan to raise funds within six months from the date of the transfer of the issuer's listing to the Main Board has been prominently disclosed in the listing document.
(d)    Dispensation from the compliance adviser requirement under Main Board Rule 3A.19 is maintained (Main Board Rule 9A.13 and new Main Board Appendix 28, paragraph 16).
(e)    The GEM delisting procedures under Chapter 9 of the GEM Rules do not apply to GEM transfer applications.

FAQ Series N/A, FAQ No. 018-2017
LR reference: Main Board Rules 3A.19, 9.11(17a), 9.11(30), 9A.13, 10.07(4), 12.01B / GEM Rule 9.20
Released on 15/12/2017