Friday October 27 2023

News Source: Global Exchanges

Focus: Listing Rules

Type: General

Country: Hong Kong

Link: https://tinyurl.com/yy9542wz




On 26th October 2023, the Hong Kong securities market (HKEX) has published Consultation Paper on Proposed Amendments to Listing Rules Relating to Treasury Shares

This paper sets out the proposals on the removal of the Listing Rules requirement to cancel repurchased shares, and the proposed framework to govern the resale of the treasury shares following the removal of the requirement.

The key proposals are summarised as follows:

  • Remove the requirement to cancel repurchased shares so that issuers may hold repurchased shares in treasury subject to the laws of their places of incorporation and their constitutional documents;
  • Govern the resale of treasury shares by an issuer in the same manner as the Rules currently applicable to an issue of new shares;
  • Maintain a fair market and mitigate the risk of market manipulation by imposing a moratorium period of 30 days on (i) a resale of treasury shares (whether on or off-market) after a share repurchase; and (ii) an on-Exchange share repurchase after an on-Exchange resale of treasury shares;
  • Maintain a fair market and mitigate the risk of market manipulation and insider dealing by prohibiting a resale of treasury shares on the Exchange (i) when there is undisclosed inside information; (ii) during the one-month period preceding results announcement; or (iii) if it is knowingly made with a core connected person;
  • Allow new listing applicants to retain their treasury shares upon listing and restrict them from reselling their treasury shares within six months after listing; and
  • Make consequential amendments to (i) require issuers (being holders of treasury shares) to abstain from voting on matters that require shareholders’ approval under the Listing Rules; (ii) exclude treasury shares from an issuer’s issued or voting shares under various parts of the Rules (iii) require an issuer to disclose in the explanatory statement its intention as to whether any shares to be repurchased will be cancelled or kept as treasury shares; and (iv) clarify that a resale of treasury shares by an issuer or its subsidiary includes resale of treasury shares through their agents or nominees.

Click on the above link for further information