HONG KONG: HKEX Publishes Guidance Letter on Bonus Issues of Shares

Wednesday April 27 2016

On 27^th April 2016, the Stock Exchange of Hong Kong issued a guidance letter on bonus issues of shares by listed companies.

The Exchange has noted recent increases in listed companies conducting bonus issues with a large distribution ratio, and significant price and volume fluctuations in the trading of their shares during the ex-entitlement period in a number of these cases. The guidance letter reminds listed companies to properly plan their bonus issues to avoid disorderly trading.

Under the Rules, listed companies must ensure that their issues of securities are conducted in a fair and orderly manner. The Exchange may not grant listing approval for large-scale bonus issues where there is reasonable likelihood of disorderly trading during the ex-entitlement period

Generally, the Exchange is likely to raise concern about the operation of an orderly market when a company proposes a bonus issue of 200 per cent or more of its existing issued shares.  The Exchange may raise the same concern after considering the relevant facts and circumstances of a proposed bonus issue of a smaller scale.

Click here for Guidance Letter.

Click on the link above for further details.