Hong Kong Stock Exchange to Amend Listing Rules Following Mainland China Regulation Updates

The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), last Friday published conclusions to its consultation paper on rule amendments following Mainland China regulation updates and other proposed rule amendments relating to PRC issuers (Consultation Conclusions).

Having considered the responses, the Exchange will adopt all the rule amendments outlined in the consultation paper, with minor modifications, as set out in the Consultation Conclusions.

HKEX's Head of Listing, Katherine Ng, said: "The Exchange seeks to provide a consistent investor protection framework in respect of all issuers regardless of their place of incorporation. The new Listing Rule amendments build upon our Listing Rule reforms of 2021, enhancing and streamlining the listing regime for overseas issuers. Looking forward we will continue our commitment to elevate and enhance the quality of our markets, providing a transparent, robust and resilient platform for our investors from around the world."

Consequential rule amendments

In connection with the implementation of the New Regulations on overseas listing and the repeal of the Special Regulations and the Mandatory Provisions, the Exchange will make consequential rule amendments to:

(a) remove the rule requirements that reflect the requirements set out in the Mandatory Provisions. They include:

    (i) the class meeting and related requirements for the issuance and repurchase of shares by PRC issuers;

    (ii) the requirements for disputes involving H shareholders to be resolved through arbitration; and

    (iii) the requirements for PRC issuers' articles of association to include the Mandatory Provisions and other ancillary provisions; and

(b) amend the documentary requirements for new listing applications to reflect Mainland China's new filing requirements for overseas listings of Mainland-based companies.

Other rule amendments

The Exchange will also make other rule amendments to align the requirements for PRC issuers with those applicable to other issuers, as follows:

(a) allow the limits on general mandate for issuance of new shares and scheme mandate for share schemes to be calculated with reference to a PRC issuer's total issued shares (instead of referencing to each of domestic shares and H shares);

(b) remove the requirements for directors, officers and supervisors of PRC issuers to provide undertakings to the issuers and their shareholders to comply with the PRC Company Law and the articles of association;

(c) align minor requirements on compliance advisers under Chapter 19A (for PRC issuers) with those in Chapter 3A (for all issuers); and

(d) remove certain requirements in Chapter 19A relating to (i) online display or physical inspection of documents and (ii) disclosure in listing documents of new applicants.

Certain housekeeping rule amendments are also made to remove duplicated provisions, update outdated references, correct clerical errors or address inconsistencies.

Implementation

The Listing Rule amendments will come into effect on 1 August 2023.

PRC issuers must still adhere to their existing articles of association concerning class meetings and other provisions that were originally formulated based on the Mandatory Provisions until and unless they amend their articles of association to remove such provisions. In general, where PRC issuers voluntarily propose to amend their articles of association to remove the class meeting requirements, they should obtain approvals of domestic shareholders and H shareholders at separate class meetings based on their existing articles of association.