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Appendix 3 Core Shareholder Protection Standards

An issuer must demonstrate how the domestic laws, rules and regulations to which it is subject and its constitutional documents, in combination, provide the shareholder protection standards set out in this appendix. For this purpose, the Exchange may require the issuer to amend its constitutional documents to provide them. An issuer must further monitor its on-going compliance with these standards and notify the Exchange if it becomes unable to comply with any of these after listing.
 
Note:   Transitional arrangements for existing issuers listed on the Exchange’s markets as at 31 December 2021 are as follows: they would have until their second annual general meeting following 1 January 2022 to make necessary changes to their constitutional documents to conform to the core shareholder protection standards set out in this Appendix.
 
1. [Repealed 1 January 2022]
 
2. [Repealed 1 January 2022]
 
3. [Repealed 1 January 2022]
 
As regards Directors
 
4. (1) [Repealed 1 January 2022]
 
  (2) That any person appointed by the directors to fill a casual vacancy on or as an addition to the board shall hold office only until the first annual general meeting of the issuer after his appointment, and shall then be eligible for re-election.
 
  (3) That, where not otherwise provided by law, members in general meeting shall have the power by ordinary resolution to remove any director (including a managing or other executive director, but without prejudice to any claim for damages under any contract) before the expiration of his term of office.
 
  (4) [Repealed 1 January 2022]
 
  (5) [Repealed 1 January 2022]
 
5. [Repealed 1 January 2022]
 
6. [Repealed 1 January 2022]
 
7. [Repealed 1 January 2022]
 
8. [Repealed 1 January 2022]
 
9. [Repealed 1 January 2022]
 
10. [Repealed 1 January 2022]
 
11. [Repealed 1 January 2022]
 
12. [Repealed 1 January 2022]
 
13. [Repealed 1 January 2022]
 
As regards Proceedings at General Meetings
 
14. (1) That an issuer must hold a general meeting for each financial year as its annual general meeting.
 
  Note: Generally, an issuer must hold its annual general meeting within six months after the end of its financial year.
 
  (2) That an issuer must give its members reasonable written notice of its general meetings.
 
  Note: “Reasonable written notice” normally means at least 21 days for an annual general meeting and at least 14 days for other general meetings. This is unless it can be demonstrated that reasonable written notice can be given in less time.
 
  (3) That members must have the right to (a) speak at a general meeting; and (b) vote at a general meeting except where a member is required, by these GEM Listing Rules, to abstain from voting to approve the matter under consideration.
 
Notes:
 
1.    An example of such a circumstance is where a member has a material interest in the transaction or arrangement being voted upon.
 
2. If an issuer is subject to a foreign law or regulation that prevents the restriction of a member’s right to speak and/or vote at general meetings, the issuer can enter into an undertaking with the Exchange to put in place measures that achieve the same outcome as the restriction under this paragraph (e.g. any votes cast by or on behalf of a member in contravention of the rule restriction must not be counted towards the resolution).
 
  (4) That, where any shareholder is, under these GEM Listing Rules, required to abstain from voting on any particular resolution or restricted to voting only for or only against any particular resolution, any votes cast by or on behalf of such shareholder in contravention of such requirement or restriction shall not be counted.
 
  (5) That members holding a minority stake in the total number of issued shares must be able to convene an extraordinary general meeting and add resolutions to a meeting agenda. The minimum stake required to do so must not be higher than 10% of the voting rights, on a one vote per share basis, in the share capital of the issuer.
 
As regards Variation of Rights
 
15. That a super-majority vote of the issuer’s members of the class to which the rights are attached shall be required to approve a change to those rights.
 
  Notes:
 
  1. A “super-majority vote” means at least three-fourths of the voting rights of the members holding shares in that class present and voting in person or by proxy at a separate general meeting of members of the class where the quorum for such meeting shall be holders of at least one third of the issued shares of the class. This is unless it can be demonstrated that shareholder protection will not be compromised by a lower voting threshold (e.g. simple majority votes in favour of the relevant resolutions with a higher quorum requirement) and in such case a “super-majority vote” is deemed to be achieved.
 
  2. For PRC issuers, the Exchange will consider a resolution passed by members representing at least two-thirds of the voting rights of the members who are present at the classified members’ meeting and have voting rights to amend class rights as satisfying the threshold of a “super-majority”.
 
As regards Amendment of Constitutional Documents
 
16. That a super-majority vote of the issuer’s members in a general meeting shall be required to approve changes to an issuer’s constitutional documents, however framed.
 
  Notes:
 
  1. A “super-majority vote” means at least three-fourths of the total voting rights of the members present and voting in person or by proxy at the general meeting. This is unless it can be demonstrated that shareholder protection will not be compromised by a lower voting threshold (e.g. simple majority votes in favour of the relevant resolutions with a higher quorum requirement) and in such case a “super-majority vote” is deemed to be achieved.
 
  2. For PRC issuers, the Exchange will consider a resolution passed by members representing at least two-thirds of the total voting rights of the members present and voting in person or by proxy at the meeting as satisfying the threshold of a “super-majority”.
 
As regards Appointment, Removal and Remuneration of Auditors
 
17. That the appointment, removal and remuneration of auditors must be approved by a majority of the issuer’s members or other body that is independent of the board of directors.
 
  Note:   An example of such an independent body is the supervisory board in systems that have a two tier board structure.
 
As regards Proxies and Corporate Representatives
 
18. That every member shall be entitled to appoint a proxy who needs not necessarily be a member of the issuer and that every shareholder being a corporation shall be entitled to appoint a representative to attend and vote at any general meeting of the issuer and, where a corporation is so represented, it shall be treated as being present at any meeting in person. A corporation may execute a form of proxy under the hand of a duly authorised officer.
 
As regards HKSCC’s Right to Appoint Proxies or Corporate Representatives
 
19. That HKSCC must be entitled to appoint proxies or corporate representatives to attend the issuer’s general meetings and creditors meetings and those proxies or corporate representatives must enjoy rights equivalent to the rights of other shareholders, including the right to speak and vote.
 
  Note: Where the laws of an overseas jurisdiction prohibit HKSCC from appointing proxies or corporate representatives enjoying the rights described by this paragraph, the issuer must make the necessary arrangements with HKSCC to ensure that Hong Kong investors holding shares through HKSCC enjoy the right to vote, attend (personally or by proxy) and speak at general meetings.
 
As regards Inspection of Branch Register
 
20. That the branch register of members in Hong Kong shall be open for inspection by members but the issuer may be permitted to close the register on terms equivalent to section 632 of the Companies Ordinance.
 
As regards Voluntary Winding Up
 
21. A super-majority vote of the issuer’s members in a general meeting shall be required to approve a voluntary winding up of an issuer.
 
  Notes:
 
  1. A “super-majority vote” means at least three-fourths of the total voting rights of the members present and voting in person or by proxy at the general meeting. This is unless it can be demonstrated that shareholder protection will not be compromised by a lower voting threshold (e.g. simple majority votes in favour of the relevant resolutions with a higher quorum requirement) and in such case a “super-majority vote” is deemed to be achieved.
 
  2. For PRC issuers, the Exchange will consider a resolution passed by members representing at least two-thirds of the total voting rights of the members present and voting in person or by proxy at the meeting as satisfying the threshold of a “super-majority”.