The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), will amend the Listing Rules to cease pre-vetting issuers’ announcements for major transactions and connected transactions from 1 January 2010 as Phase 2 of the new post-vetting regime commences.
Phase 1 of the new post-vetting regime commenced on 1 January 2009. Pre-vetting requirements for some categories of announcements, including share/discloseable transactions and issues of securities, were removed from the Listing Rules. Phase 1 of the new regime was implemented following market support in the consultation launched in January 2008. The consultation conclusion of the “Combined Consultation Paper on Proposed Changes to the Listing Rules” was published in November 2008.
The Exchange stated in the 2008 Consultation Conclusion that it would, subject to market readiness and the Securities and Futures Commission (SFC)’s approval, cease pre-vetting all announcements. Based on the proposed timetable, Phase 2 will be implemented on 1 January 2010 and will cover announcements for major transactions and connected transactions. It will take a further 12 months for the final phase to be implemented to cover all remaining categories of announcements.
Since the implementation of Phase 1 of the new post-vetting regime, 8,827 issuers’ announcements were post-vetted between January and September 2009, including 2,014 announcements related to Phase 1. A majority of the post-vetted announcements (96 per cent) required no follow up or no further action given the issuers’ responses to the Exchange’s initial enquiry. Most issuers were able to comply with the Listing Rules when they announced their transactions under the new regime.
Pre-vetted announcements reduced substantially from 16 per cent in 2008 to 5 per cent in 2009 (up to September). The Exchange anticipates a further reduction to 1 per cent after implementation of Phase 2.
“We are very pleased with the market support and issuers’ smooth transition to Phase 1 of the new post-vetting regime,” Mark Dickens, HKEx’s Head of Listing, said. “The change in vetting approach promotes issuers’ self-compliance and facilitates timely dissemination of information to the market.”
From January to September 2009, the Exchange handled 384 written enquiries from issuers on rule interpretation and listing matters (2008: 350). Issuers have sought the Exchange’s guidance on Listing Rules compliance issues before they published their announcements.
The Exchange published a new series of Listing Decisions for notifiable transactions, connected transactions and other specific rules in October 2009. It will continue to provide guidance materials to assist issuers to meet their obligations under the Listing Rules. The Exchange encourages issuers to seek its guidance on rule interpretations in individual cases.
The rule amendments to implement Phase 2 have been approved by the Board of the Exchange and the SFC, and will become effective on 1 January 2010. The rule amendments can be downloaded from the “Regulatory Framework and Rules – Rules and Guidelines on Listing Matters – Listing Rule Update for Main Board Listing Rules” and “Regulatory Framework and Rules – Rules and Guidelines on Listing Matters – Listing Rule Update/Interpretation for GEM Listing Rules” sections of the HKEx website.