Hong Kong's New Paperless Listing Regime
The Situation: In the past few years, the Stock Exchange of Hong Kong Limited (the "Stock Exchange") has taken initiatives to introduce a paperless listing regime and make changes to documentary requirements.
The Results: The Stock Exchange recently decided to expand its paperless listing regime with effect from 31 December 2023.
Looking Ahead: The new paperless listing regime will simplify administrative procedures and reduce the use of paper.
In the past few years, Hong Kong's Stock Exchange has taken initiatives to introduce a paperless listing regime and make changes to documentary requirements.
With effect from 31 December 2023, the Stock Exchange will make the following key amendments to the Listing Rules to expand its paperless listing regime:
- The reduction in the number of submission documents and mandatory submission by electronic means;
- The mandatory electronic dissemination of corporate communications by listed issuers to the extent permitted by the laws and regulations; and
- The simplification of the appendices to the Listing Rules.
The new regime will significantly reduce the use of paper and improve the efficiency of the regulatory processes.
The above amendments are described in detail below.
REDUCE SUBMISSION DOCUMENTS AND MANDATE SUBMISSION BY ELECTRONIC MEANS
Reducing Submission Requirements
Removing Unnecessary Submission Documents. The Stock Exchange will adopt the proposal to remove the requirements for the new applicants/listed issuers to submit the following seven types of documents (including CD-ROMs containing Form A1 documents):
- Undertakings or confirmations regarding compliance with requirements which are currently set out in the Listing Rules or Guidance Materials;
- Documents providing information which overlaps with existing or proposed disclosure requirement for listing documents, announcements or annual/ interim reports;
- Documents which are currently required or proposed to be required to be published or displayed on the Stock Exchange's website;
- Documents evidencing the accuracy of information provided to the Stock Exchange;
- Documents evidencing the due authorisation of issuer's actions;
- Documents evidencing performance of sponsor's due diligence and other obligations; and
- Documents which are otherwise no longer required.
Codifying Undertakings, Confirmations and Declarations. The Stock Exchange will adopt the proposal to codify obligations contained in certain undertakings, confirmations and declarations into the Listing Rules and Guidance Materials instead of requiring the submission of these documents.
Codifying Listing Agreements. The Stock Exchange will adopt the proposal to repeal the requirement for listing agreements for the listing of debt securities (except for debt issues to professional investors), structured products and interests in CIS and investment companies by codifying the relevant obligations.
Authorisation and Consent. The Stock Exchange will adopt the proposal to codify in the Listing Rules the obligations of an issuer and other relevant parties to obtain necessary authorisations and consents for its actions.
Consolidating Sponsors' and New Applicant's Obligations Into Overarching Undertakings. The Stock Exchange will adopt the proposal to include, in Form A1, a consolidated set of overarching obligations that new applicants and sponsors must undertake to comply with.
Consolidating the Requirement for Personal Particulars of Directors/Supervisors in Form FF004. The Stock Exchange will adopt the proposal to: (i) consolidate the submission requirements for personal particulars of directors/supervisors (by combining Part 1 of the DU Form with Form FF004), and rename the form "Personal Details Form"; and (ii) for a new listing of equity interests and a listing of debt securities, move forward the relevant submission deadline so that the form must be provided together with the listing application form.
Removing Unnecessary Signature or Certification Requirements
The Stock Exchange will adopt the proposal to remove signature and certification requirements for certain submission documents.
Mandatory Electronic-Only Submission
The Stock Exchange will adopt the proposal to mandate electronic means as the only mode of submission to the Stock Exchange, unless otherwise specified in the Listing Rules or required by the Stock Exchange. In this connection, the Stock Exchange will establish the Issuer Platform as a designated channel for two-way communication between the Listing Division and new applicants/listed issuers for this purpose. In addition, the Stock Exchange will adopt the proposal to replace requirements for the submission of multiple copies of certain documents in hard copy with a requirement for the submission of one electronic copy of those documents.
Digitalisation of the Stock Exchange's Authorisation of Prospectus Registration
The Stock Exchange will adopt the proposal to: (i) mandate the digitalisation of its authorisation of prospectus process; and (ii) provide issuers with a Certificate of Authorisation and the Authorised Prospectus Documents signed and certified by the Stock Exchange with digital signatures so that new applicants/issuers can make onward electronic submission to the Companies Registry for registration.
In this connection, new applicants/issuers or their advisers would be expected to electronically submit to the Stock Exchange for authorisation: (i) copies of a prospectus signed by the directors or their authorised agents with their digital signatures; and (ii) copies of the accompanying documents certified as true copies with digital signatures of the person recognized under section 39C(b) or/and section 342CC(b) under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32, Laws of Hong Kong).
The Stock Exchange will explore further with the Companies Registry the digitalisation of the prospectus authorisation and registration processes, and issue guidance to inform the market of the final arrangements. As far as the Listing Rules are concerned, the Stock Exchange expects to provide a transitional period during which market participants can submit documents for prospectus authorisation process physically or electronically, before a mandatory electronic submission regime is adopted. Market participants should follow the current process and continue to submit physical documents for prospectus authorisation and registration purposes before a digital solution is introduced.
ELECTRONIC DISSEMINATION OF CORPORATE COMMUNICATIONS BY LISTED ISSUERS
Mandating Electronic Dissemination of Corporate Communications
The Stock Exchange will adopt the proposal to amend the Listing Rules to mandate the following matters:
- Listed issuers must disseminate corporate communications to their securities holders electronically if this is permitted by their applicable laws and regulations;
- A listed issuer only send corporate communications in printed form to a securities holder upon the request of that holder, and each listed issuer must disclose, on its website, the relevant arrangements for holders to make such a hard copy request; and
- Listed issuers that intend to implement any new arrangements on dissemination of corporate communications (e.g., changing the mode of dissemination or changing the consent mechanism) should send a one-time notification to their holders individually in hard copy or electronically to: (i) inform them of the new arrangements (before implementation); and (ii) solicit the email addresses of securities holders.
Implied Consent for Electronic Dissemination of Corporate Communications Proposal
The Stock Exchange will adopt the proposal to remove the current Listing Rules provisions concerning the arrangements a listed issuer must make to avail itself of the consent mechanism for disseminating corporate communications electronically. This would enable listed issuers (to the extent permitted by the laws and regulations applicable to them) to rely on implied consent for electronic dissemination of corporate communications.
Currently, the Companies Ordinance (Cap. 622, Laws of Hong Kong) does not permit implied consent for electronic dissemination of corporate communications. The Stock Exchange will work with relevant parties to consider the issue of implied consent for the corporate communications of listed issuers incorporated in Hong Kong.
Mandating Actionable Corporate Communications to Be Sent to Securities Holders Individually and in Electronic Form
The Stock Exchange will adopt the proposal to require an issuer to send Actionable Corporate Communications to securities holders individually and in electronic form if functional electronic contact details have been provided to the issuer. Issuers would not be able to satisfy this requirement by publishing Actionable Corporate Communications on their websites and the Stock Exchange's website only.
Dissemination of Actionable Corporate Communications Where No Functional Electronic Contact Details Have Been Provided
The Stock Exchange will adopt the proposal that where a listed issuer does not have functional electronic contact details of a securities holder, an Actionable Corporate Communication must be sent to the holder in hard copy form (including a request for the security holder's electronic contact details to facilitate electronic dissemination of Actionable Corporate Communications in the future).
Definition of "Actionable Corporate Communications"
The Stock Exchange will adopt the proposal that Actionable Corporate Communications should be defined as "any corporate communication that seeks instructions from issuer's securities holders on how they wish to exercise their rights or make an election as the issuer's securities holders".
Prior to the effective date (i.e., 31 December 2023), new applicants/listed issuers must ascertain whether their constitutional documents contain any provision that may prohibit them from disseminating corporate communications to their securities holders electronically in accordance with the relevant Listing Rules.
These issuers will be required to amend their constitutional documents only if their constitutional documents contain any restriction to that effect (e.g., any provision that mandates hardcopy dissemination as the only means of dissemination of corporate communications). If such restriction is due to a requirement under the applicable laws and regulations the issuer is subject to, the issuer will be required to amend its constitutional documents to facilitate its compliance with the relevant Listing Rules if and when the relevant restriction is removed from the applicable laws and regulations.
If it is necessary for issuers to amend their constitutional documents under the circumstances specified above, the following transitional arrangements will apply to issuers that are listed on the Stock Exchange before 31 December 2023:
- Issuers that are not prohibited by applicable laws and regulations from complying with the relevant amended Listing Rules will have until their first annual general meeting following 31 December 2023 to make necessary amendments (if any) to their constitutional documents to facilitate electronic dissemination of corporate communications; and
- Issuers that are unable to comply with the requirements set out in the amended Listing Rules due to any restriction under any applicable laws and regulations would have until their first annual general meeting following the date on which the relevant restrictions are removed from the applicable laws and regulations to make the necessary amendment to their constitutional documents to facilitate their compliance with the relevant Listing Rules.
Listing applicants that are to be listed on the Stock Exchange on or after 31 December 2023 will be required to comply with the amended Listing Rules upon listing to the extent permitted under their applicable laws and regulations.
SIMPLIFICATION OF THE CURRENT APPENDICES TO THE LISTING RULES
To enhance the online experience for Listing Rules users, the Stock Exchange will adopt the proposal to restructure the current appendices by:
- Moving appendices that are fee-related and forms that set out mandatory requirements (the "Regulatory Forms") to new sections on the Stock Exchange's website, specifying in the new locations that these still form part of the Listing Rules, and displaying Regulatory Forms in the same location as other forms on the Stock Exchange's website by consolidating them into one section;
- Repealing appendices that are administrative in nature and separately displaying their contents on the HKEX's website outside the Listing Rules section;
- Deleting appendices that have already been superseded, repealed or are otherwise unnecessary to be set out in the Listing Rules; and
- Reorganising the remaining appendices by theme.
Three Key Takeaways
- Hong Kong's new paperless listing regime will significantly reduce the use of paper and improve the efficiency of the regulatory processes.
- Under new paperless listing regime, new applicants/listed issuers shall comply with new documentary requirements and submit documents to the Stock Exchange through electronic means, and listed issuers shall disseminate corporate communications to their securities holders electronically if this is permitted by their applicable laws and regulations.
- New applicants/listed issuers shall, within the deadline set by the Stock Exchange, amend their constitutional documents by removing any provision that may prohibit them from disseminating corporate communications to their securities holders electronically if this is permitted by their applicable laws and regulations.
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