Hong Kong Stock Exchange publishes consultation conclusions on listing regime for overseas issuers

With a view to continue developing Hong Kong as a listing and capital raising hub for companies, the Hong Kong Stock Exchange (theExchange) conducted a holistic review of the listing regime for overseas issuers (including issuers incorporated in Bermuda, the British Virgin Islands and the Cayman Islands) in early 2021. Last month, conclusions to the consultation on its proposal to enhance and streamline the listing regime were published by the Exchange.

One of the key areas of the consultation is the streamlining of shareholder protection standards into one set of “core standards” that apply to all issuers, regardless of their places of incorporation. New listing applicants seeking to list their shares on the Exchange on or after 1 January 2022 are required to comply with such core standards and to incorporate the same in their constitutional documents, unless the Exchange is satisfied that the domestic laws, rules and regulations to which such applicants are subject provide for the same protection. On the other hand, existing listed issuers are required to ascertain whether or not they are in full compliance with the core standards, otherwise they would have until their second annual general meeting following 1 January 2022 to make any necessary amendments to their constitutional documents to conform with the core standards.

Some aspects of corporate governance covered by the core standards are as follows:

• Notice and conduct of general meetings
  • A listed issuer shall hold an annual general meeting in each financial year, and such meeting shall be held within six months after the end of the previous financial year.
  • Reasonable written notice must be given to shareholders of the general meetings of a listed issuer. This typically means at least 21 days for an annual general meeting and at least 14 days for other general meetings.
  • Unless any shareholder is required to abstain from voting, all shareholders are entitled to speak and vote at general meetings.
• Shareholder’s rights
  • The minimum threshold required for shareholders to make requisitions to convene general meetings shall not be higher than 10 per cent of the voting rights, on a one vote per share basis.
  • Shareholders shall have the power to remove any director by an ordinary resolution.
  • All shareholders (including a corporate shareholder and HKSCC Nominees Limited) are entitled to appoint proxies to attend general meetings.
• Auditors
  • The appointment, removal and remuneration of auditors must be approved by a majority of the shareholders or other body that is independent of the board of directors.
• Re-election of directors
  • Any person appointed by the directors to fill a casual vacancy on or as an addition to the board shall hold office only until the first annual general meeting of the listed issuer after his/her appointment.
• Inspection of branch share register
  • The branch register of members in Hong Kong shall be open for inspection by members without charge.

Our team is available to advise on compliance with the new requirements.