HKEx LISTING DECISION
HKEx-LD102-1 (August 2010) (Updated in March 2011)
Company A — a Main Board issuer, also listed on a Mainland stock exchange
The Appraiser — a Mainland real estate appraising company
Mr X and Mr Y — two real estate appraisers employed by the Appraiser
|Issue||Whether Mr X and Mr Y who were not HKIS or RCIS members were qualified valuers for Mainland properties|
|Listing Rules||Main Board Rule 5.08(2)(b), paragraph 4.1 of Practice Note 12|
|Decision||Mr X and Mr Y were qualified valuers for Mainland properties|
1. Company A announced a disposal of its property, a commercial building, in Beijing (the Property) to its parent company. This was a connected transaction which required independent shareholder approval. The circular would include a valuation report on the Property issued by the Appraiser and prepared by Mr X and Mr Y.
2. Mr X and Mr Y were the Appraiser's employees but were not members of the Hong Kong Institute of Surveyors (HKIS) or the Royal Institution of Chartered Surveyors.
3. Company A submitted that Mr X and Mr Y were qualified to prepare the report under Rule 5.08(2)(b) and paragraph 4.1 of Practice Note 12 because:
(1) The Appraiser was a member of China Institute of Real Estate Appraisers and Agents (CIREA) and subject to its professional discipline.
(2) CIREA was a national self-disciplined professional body of real estate appraisers and real estate brokers in the Mainland. Its responsibilities include: promoting academic research and education, preparing and reviewing professional standards and ethics, holding national examinations for professional qualification of appraisers and brokers, and organizing continuing professional development activities for its members. CIREA may take disciplinary actions against members who breach its rules or practicing standards including a warning, public censure, or suspension or cancellation of membership. CIREA's practicing members are real estate appraisers registered under the Mainland regulations which require the appraisers to have relevant qualifications and experience and comply with certain continuing professional development standards.
(3) CIREA and HKIS had signed a reciprocity agreement in relation to the recognition of qualifications of Mainland real estate appraisers and Hong Kong surveyors. Under the agreement, each institute's individual members who meet certain eligibility criteria and are nominated by the institute can apply for the other institute's membership through an examination organized by the other institute. Company A considered that CIREA was a professional body of similar standing to HKIS.
(4) Mr X and Mr Y were not members of CIREA. The Appraiser, as a CIREA member, required its employees to comply with the professional discipline of CIREA when preparing a property valuation report.
(5) Mr X and Mr Y were registered with the Ministry of Construction (MOC) as certified real estate appraisers and hence qualified to provide property valuation reports in the Mainland. They were required under the MOC rules and regulations to comply with the professional discipline and ethics regulations of the real estate appraisal industry in the Mainland (including those issued by CIREA), although membership of CIREA was not required for a certified real estate appraiser to provide property valuation reports.
(6) Under the rules and regulations mentioned in (4) and (5) above, Mr X and Mr Y had to comply with the Code for Real Estate Appraisal issued by MOC. The Code was the main professional discipline of CIREA. It was also the highest national standard and comparable with the HKIS property valuation standards referred to in Rule 5.05.
(7) Both Mr X and Mr Y had been working in Beijing as certified real estate appraisers and valuing commercial buildings for more than 10 years. They also attended continuous training on the CIREA standards as required under the relevant regulations.
APPLICABLE LISTING RULES
4. Rule 5.05 states that:
All valuation reports must contain all material details of the basis of valuation which must follow the "Hong Kong Guidance Notes on the Valuation of Property Assets" published by The Royal Institution of Chartered Surveyors (Hong Kong Branch) and The Hong Kong Institute of Surveyors.
5. Rule 5.08 states that
Unless dispensation is obtained from the Exchange, all valuations of properties must be prepared by an independent qualified valuer and for this purpose:-(1) ...(2) a valuer is a qualified valuer only if:-(a) ...(b) for the purposes of valuation of properties situated outside Hong Kong, the valuer has the appropriate professional qualifications and experience of valuing properties in the same location and category to carry out the valuation.
6. Para 4.1 of PN12 states that:
for the purpose of valuing properties in developing property markets, a valuer would normally be regarded as having the appropriate professional qualifications and experience for valuing properties in developing property markets if he is subject to the discipline of the RICS or the HKIS (i.e. Hong Kong Institute of Surveyor) or professional body of similar standing to the RICS or HKIS and has a minimum of 2 years experience in valuing properties in the relevant location or has relevant experience to the satisfaction of the Exchange.
7. Under paragraph 4.1 of PN12, the Exchange would regard a valuer as having appropriate qualifications if he is subject to the discipline of the RICS or the HKIS or a professional body of similar standing to either of them. The Exchange was satisfied that Mr X and Mr Y had the required qualifications because:
a. It considered that CIREA was a professional body of similar standing to the HKIS.
b. The Appraiser was a CIREA member.
c. Mr X and Mr Y were certified real estate appraisers in the Mainland. Although they were not CIREA members, they were required under the Appraiser's internal regulations and MOC rules and regulations to comply with the professional discipline of CIREA.
8. Given their property valuation experience, the Exchange also considered that they had the experience required under paragraph 4.1 of PN12.
9. Mr X and Mr Y were qualified to prepare the valuation report for Company A's circular.