- Listing Rule amendments introduced to reflect new requirements of the SFC Code of Conduct regarding the conduct of issuers and intermediaries involved in bookbuilding and placing activities
- New requirements resulting from the Rule changes will apply to new applicants and listed issuers submitting or re-filing their listing applications for IPOs or other specified types of placings on or after 5 August 2022
The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published an information paper (Information Paper) outlining the consequential amendments to the Listing Rules which will complement the new requirements of the Securities and Futures Commission (SFC) Code of Conduct1 regarding the conduct of issuers and intermediaries involved in bookbuilding and placing activities. New requirements resulting from the Rule changes will apply to listing applications submitted on or after 5 August 2022 (Effective Date) for specified types of placings.
The SFC published the “Consultation Paper on (i) the Proposed Code of Conduct on Bookbuilding and Placing Activities in Equity Capital Market and Debt Capital Market Transactions and (ii) the ‘Sponsor Coupling’ Proposal” on 8 February 2021,2 whereby the SFC proposed new Code of Conduct provisions in relation to the conduct of intermediaries involved in bookbuilding and placing activities (New Code Provisions). The SFC’s proposals received general market support and it concluded on 29 October 2021 that the New Code Provisions will come into effect on 5 August 2022. As stated in the SFC’s Consultation Conclusions,3 the SFC and the Exchange will work together to introduce appropriate consequential changes to the Listing Rules (Consequential Rule Amendments) to reflect the requirements on parties involved in bookbuilding, placing or other specified activities under the New Code Provisions and to set out the obligations of issuers primarily with a view to facilitating intermediaries’ discharge of their obligations under the New Code Provisions.
“The Exchange has worked closely with the SFC to reflect the new requirements of the New Code Provisions in the Listing Rules,” said Bonnie Y Chan, HKEX’s Head of Listing. “The objective is to encourage greater discipline in the market and provide more certainty to market participants, which are conducive to upholding market integrity and enhancing the attractiveness of Hong Kong as a listing venue for issuers with quality profiles.”
Consequential Rule Amendments
The scope of the equity offerings to which the Consequential Rule Amendments apply is the same as that under the New Code Provisions. No specific amendments will be made to the Listing Rules relating to the placing of debt securities.
Key amendments
The key amendments to the Listing Rules include, among others:
- In the case of an IPO, engagement of an overall coordinator no later than two weeks following the submission of a listing application; while for a Main Board IPO only, a sponsor-overall coordinator (which must either be the same legal entity as, or a member within the group of companies of, the independent sponsor, with the appointment of both roles being made at the same time) must be engaged at least two months before the submission of its listing application;
- A new applicant must publish an announcement on the Exchange’s website (referred to as an OC Announcement) setting out the name(s) of all overall coordinator(s) appointed on the same date as it files its listing application and publishes the Application Proof.4 Subsequent OC Announcement(s) must be published whenever there is an appointment of an additional overall coordinator or a termination of the engagement of an existing overall coordinator;
- IPO applicants to assist intermediaries in identifying persons to whom the allocation of equity interests will be subject to restrictions or require prior consent from the Exchange under the Listing Rules; and
- Disclosure and reporting requirements, e.g. information on (i) the fixed fees payable to each overall coordinator; (ii) the total fees (as a percentage of the gross proceeds from the IPO) payable to all syndicate capital market intermediaries; and (iii) the ratio of fixed and discretionary fees payable to all syndicate capital market intermediaries (in percentage terms).
Transitional arrangements
The Consequential Rule Amendments will apply to listed issuers and new applicants (as the case may be) which submit (or re-file5) their listing applications on or after the Effective Date in respect of their proposed equity offerings covered under the New Code Provisions.
Main Board new applicants are reminded to observe the transitional arrangements to avoid any delay in their listing timetable. For a listing application submitted by a Main Board new applicant before the Effective Date that will be re-filed on or after the Effective Date, we would accept an existing sponsor or its group company as discharging the role of a sponsor-overall coordinator provided that the following conditions are met: (i) the existing independent sponsor has been appointed before the Effective Date and at least two months before the re-filing, and the Exchange has been notified of the sponsor engagement before the Effective Date; (ii) such independent sponsor or its group company has also been appointed as an overall coordinator (Relevant OC Appointment) before the Effective Date and at least two months before the re-filing; (iii) the engagements of such sponsor and overall coordinator remain valid and effective as at the time of the re-filing; and (iv) the refiling is made within three months from the lapse of the last listing application. For new applicants which anticipate the need to re-file their application after 4 August 2022, they should consider making the Relevant OC Appointment no later than 5 June 2022, in order to take advantage of the foregoing transitional arrangements.
Please refer to details of the transitional arrangements in the Frequently Asked Questions.
Frequently Asked Questions (FAQs)
A series of Frequently Asked Questions has been published on the HKEX website to help market participants understand their respective responsibilities and obligations under the Consequential Rule Amendments.
Housekeeping Rule Amendments
HKEX will also introduce some housekeeping Rule amendments that do not involve a change in policy direction. HKEX is currently unifying the Main Board and GEM websites to align its corporate branding and optimise its technical infrastructure and expects that by the end of May 2022, material information on the GEM website will be substantially migrated and merged with the HKEX website and/or the HKEXnews website. Amendments will be made to the Listing Rules to reflect the Main Board and GEM websites unification, alongside other housekeeping Rule amendments, such as facilitating the payment of listing fee by way of electronic bank transfer as another means of payment and introducing a new headline category to facilitate search of company information sheets published by issuers on the HKEXnews website, as detailed in the Information Paper.
All housekeeping Rule amendments will come into effect on the Effective Date, except for those reflecting the Main Board and GEM websites unification, which are currently expected to be effective on or around 28 May 2022 subject to further announcement by the Exchange.
The Information Paper containing the Consequential Rule Amendments and the housekeeping Rule amendments and the FAQs relating to the Consequential Rule Amendments are available on the HKEX website.
Notes:
- The Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.
- The “Consultation Paper on (i) the Proposed Code of Conduct on Bookbuilding and Placing Activities in Equity Capital Market and Debt Capital Market Transactions and (ii) the ‘Sponsor Coupling’ Proposal” published by the SFC on 8 February 2021.
- The “Consultation Conclusions on (i) the Proposed Code of Conduct on Bookbuilding and Placing Activities in Equity Capital Market and Debt Capital Market Transactions and (ii) the ‘Sponsor Coupling’ Proposal” published by the SFC on 29 October 2021.
- A new applicant permitted to make a confidential filing under the Listing Rules will be required to publish an initial OC Announcement on the same date as it publishes its post hearing information packs, i.e. PHIP, on the Exchange’s website instead.
- This refers to applications which are expected to be re-filed on or after the Effective Date after lapse or withdrawal.
About HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) is one of the world’s major exchange groups, and operates a range of equity, commodity, fixed income and currency markets. HKEX is the world’s leading IPO market and as Hong Kong’s only securities and derivatives exchange and sole operator of its clearing houses, it is uniquely placed to offer regional and international investors access to Asia’s most vibrant markets.
HKEX is also the global leader in metals trading, through its wholly owned subsidiaries, The London Metal Exchange (LME) and LME Clear Limited. This commodity franchise was further enhanced with the launch of Qianhai Mercantile Exchange (QME), in China, in 2018.
HKEX launched the pioneering Shanghai-Hong Kong Stock Connect programme in 2014, further expanded with the launch of Shenzhen Connect in 2016, and the launch of Bond Connect in 2017.
www.hkexgroup.com
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