Chapter 15

View Current PDFView Current PDF


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?


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


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?


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