Chapter 11

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Question:

What are the disclosure requirements under Section 436 of the New Companies Ordinance for a Hong Kong incorporated issuer in relation to the publication of non-statutory accounts in its:

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

Answer:

The issuer must 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 Companies 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.

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:
https://www.hkicpa.org.hk/-/media/HKICPA-Website/Members-Handbook/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 (Updated the hyperlink to Accounting Bulletin 6 in October 2019) (Updated in February 2020)

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.

HKEX-GL81-15, FAQ No. 23
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 which is required to be reviewed by the reporting accountants?

Answer:

No. However, issuers must disclose all relevant assumptions and the reason DCF was chosen as a valuation method.

GL52-13 Appendix 1, FAQ No. 20
LR reference: Main Board Rules 11.17, 14.61, 18.34, Appendix 1A(34)(2), Appendix 1B(29)(2) / GEM Rules 14.29, 19.61, 18A.34, Appendix 1A(34)(2), Appendix 1B(29)(2)
Released on 26/5/2010 (Updated in February 2020)

Question:

Will trading halt or suspension be required pending the announcement/ listing document 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 GEM Rule 17.10, having considered its particular circumstances. A trading halt or suspension would be necessary in any of the circumstances described in GEM Rules 17.11A(1) to (3) where an announcement cannot be made.

FAQ Series 5, FAQ No. 27
LR reference: Main Board Rule 11.04, Paragraph 11 of Appendix 28
Released on 2/5/2008 (Updated in February 2020)