Since 2020, The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) has introduced a paperless listing and subscription regime, the online display of documents and a reduction of document types on display, followed with other paperless initiatives in 2021 comprising an online-only book of Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”) and the use of listing e-forms. Recently, the Stock Exchange has also made its plan to roll out FINI, a new settlement platform for initial public offerings.
Recognising the success in improved efficiency and lowered costs for listed issuers and high internet penetration in Hong Kong and other markets where most of our investors are based, on 16 December 2022, the Stock Exchange published a Consultation Paper on Proposals to Expand the Paperless Listing Regime and Other Rule Amendments (the “Consultation Paper”) to invite feedback from the public on its proposals to further streamline the administrative procedures and reduce the use of paper applicable to equity securities, debt securities and other classes of securities, which are expected to apply to the equivalent Rules Governing the Listing of Securities on GEM of the Stock Exchange equally. The Stock Exchange encourages interested parties to provide views and comments on the Consultation Paper by way of a questionnaire available on https://www.hkex.com.hk by 28 February 2023.
The key proposals to expand the paperless listing regime are summarised as follows:
Proposal 1: Reducing the number of documents required to be submitted to the Stock Exchange
I. To remove submission documents which provide no additional value for the Stock Exchange's assessment of listing applications or the regulation of listed issuers.
List of documents to be removed under the proposal are set out in Table 1 in Schedule II of the Consultation Paper. They include (a) undertakings or confirmations regarding compliance with the Listing Rules or guidance materials issued by the Stock Exchange from time to time (the “Guidance Materials”), (b) documents providing information which overlaps with existing or proposed disclosure requirements for listing documents, announcements or annual/ interim reports, (c) copies of documents which are currently already required, or proposed to be required, to be published or displayed on the Stock Exchange's website, (d) documents evidencing the accuracy and completeness of information provided to the Stock Exchange, the due authorisation of listed issuer's actions or performance of sponsor's obligations, and (e) documents which are otherwise no longer necessary.
It is noted that the removal of documents would not change the level of due diligence required of a sponsor under the Listing Rules and the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, particularly the relevant documentary proof should be obtained by sponsors as part of their due diligence and the relevant information should be readily available from sponsors upon the Stock Exchange’s request. The Stock Exchange keeps the power to return a listing application where the application proof of the prospectus and/ or other submission documents are not substantially complete.
II. a. To codify the obligations contained in various undertakings, confirmations and declarations which are currently required to be provided by the directors, sponsors and certain other professionals (e.g. Form B in Appendix 5 to the Listing Rules, Form M110, Sponsor’s Undertaking and Statement of Independence in Appendix 17 to the Listing Rules, Sponsor’s Declaration in Appendix 19 to the Listing Rules and financial adviser’s and independent financial adviser’s undertakings and declarations required for certain transactions) into the Listing Rules or Guidance Materials and to dispense with the submission requirement of these duplicative documents. Table 2 in Schedule II of the Consultation Paper sets out the obligations to be codified and undertakings, confirmations and declarations proposed to be repealed.
b. To repeal the listing agreements for debt securities (except for debt issuers to professional investors), structured products, interests in collective investment scheme and investment companies and to incorporate into the Listing Rules continuing obligations currently set out in those listing agreements and into the relevant listing application forms and formal applications undertakings on Listing Rules compliance. Please see Table 3 in Schedule II of the Consultation Paper for the listing agreements proposed to be removed and the relevant obligations to be codified.
c. To codify obligations to ensure due authorisation and consent for actions of a listing applicant or an issuer in the Listing Rules. Please see Part (e) of Table 1 of Schedule II of the Consultation Paper for details.
III. To consolidate overriding undertakings to be given by listing applicants and sponsors in Form A1 in Appendix 5 to the Listing Rules (“Form A1”). The undertakings by listing applicants on accurate and complete information to be submitted to the Stock Exchange throughout the listing application process and the undertakings by sponsors on compliance with applicable Listing Rules and Guidance Materials on due diligence, and advice and guidance to listing applicants and directors on Listing Rules and Guidance Materials compliance will be included in the Form A1. Table 4 in Schedule II of the Consultation Paper sets out the submission requirements to be removed by incorporating requirements into existing documents.
IV. To eliminate signature and certification requirements in certain submission documents which only evidence the sponsor's approval for contents or certify that the submissions are true copies of the originals. Table 5 in Schedule II of the Consultation Paper sets out the signature and certification requirements proposed to be removed.
V. To mandate all submissions to be made through electronic means unless otherwise specified in the Listing Rules or required by the Stock Exchange and to remove any multiple copies submission requirement. Table 6 in Schedule II of the Consultation Paper sets out the list of documents in respect of which the Stock Exchange proposes to cease requiring multiple copies. A new online platform will also be launched for communication between the Listing Division of the Stock Exchange and listing applicants/ listed issuers so that all documents, emails and e-forms could be submitted through this online platform and electronic signature of the submission documents will be enabled.
VI. To explore with the Companies Registry the viability of digitalising the prospectus authorisation and registration processes so that electronic submission of authorisation documents with the issuer’s or adviser’s digital signatures would be allowed and certificate of authorisation and authorised prospectus documents with Stock Exchange’s digital signatures would be returned to the listing applicants for onward registration by the Companies Registry electronically.
Proposal 2: Directing electronic dissemination of corporate communications to securities holders by listed issuers after listing
Listed issuers are currently required to distribute corporate communications to holders of their securities in paper form unless the holders have been asked for consent and express or deemed consent to electronic communications has been given. Listed issuers are also required to make paper notification to the holders each time new corporate communications are published on their websites where consents have been deemed.
In light of the above, the Stock Exchange proposes to amend the Listing Rules so that to the extent permitted by applicable laws and regulations and their constitutional documents, listed issuers (a) must disseminate corporate communications to their securities holders electronically, (b) are able to choose their own consent mechanism for electronic dissemination of corporate communications, and (c) are required to send actionable corporate communications that seek instructions from securities holders on how they wish to exercise their rights individually in electronic form.
Proposal 3: Reorganising Appendices to the Listing Rules
The Stock Exchange proposes to reorganise the Appendices to the Listing Rules by (a) moving fee-related Appendices and certain forms which still form part of the Listing Rules to sections of the Stock Exchange’s website named “Regulatory Forms” and “Fees Rules”, (b) organising the remaining Appendices by theme, (c) removing the Appendices that are administrative in nature from the Listing Rules and displaying the contents of these Appendices under appropriate sections outside the Listing Rules section of the Stock Exchange’s website, and (d) deleting the Appendices which have been repealed or are unnecessary to be contained in the Listing Rules. Schedule IV of the Consultation Paper sets out the proposed structure of the Appendices.
Other rule amendments proposed include (a) removing the requirement for physical attendance by Listing Committee and Listing Review Committee members to meet the quorum needed for meetings of these committees, and (b) replacing references to "bulk-printing of listed documents" in the Listing Rules by references to "finalisation of listing documents for publication" in order to reflect the further implementation of paperless listing.
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