Monday July 2 2018

News Source: Global Exchanges

Focus: Listing Rules

Type: General




The Stock Exchange of Hong Kong Limited (the Exchange), a wholly owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), have published on 29th June 2018 (i) the consultation paper on backdoor listing, continuing listing criteria and other Rule amendments; and (ii) the guidance letter on listed issuer’s suitability for continued listing (GL96-18).

The consultation paper seeks market views on proposed changes to the Listing Rules to address concerns over backdoor listings and “shell” activities.  This forms part of the Exchange’s ongoing holistic review of its Rules to tackle problematic corporate behaviour with a view to maintaining the quality and reputation of the Hong Kong market.

In recent years, the Exchange has noted an increase in market activities related to the trading of, and the creation of “shell companies”.  These activities are driven by the demand for “shell companies” for backdoor listings.  To maintain a quality market, the Exchange has taken a robust approach in applying the Rules to address evolving backdoor listing structures, corporate actions to strip out operations from listed issuers, and issuers conducting very low levels of operations.  The Exchange has published guidance materials in these areas.

The Exchange has also issued guidance letter GL96-18 on listed issuer’s suitability for continued listing, citing examples of circumstances where the Exchange may raise concerns whether a listed issuer or its business continues to be suitable for listing.  As an example, the Exchange may question an issuer’s suitability for listing if it has concerns that the issuer may be carrying on its business for the purpose of maintaining a listing status, rather than genuinely operating a business of substance.

The Consultation Paper and Questionnaires on Backdoor Listing, Continuing Listing Criteria and other Rule amendments and the Guidance Letter on Listed Issuer’s Suitability for Continued Listing can be downloaded from the HKEX website.

The Exchange invites market feedback on the proposals contained in the consultation paper.  The deadline for responses is 31 August 2018.

Please click on the above link for more information.