Member Article

On 7 August 2020, The Stock Exchange of Hong Kong Limited (Exchange) published a consultation paper on proposed changes in respect of the Exchange’s disciplinary regime.

The proposals have a particular emphasis on strengthening the Exchange’s powers to hold accountable, and impose appropriate sanctions on, individuals responsible for misconduct and breaches of the Listing Rules.

Key proposals are summarised below:

Proposed enhancements to existing disciplinary sanctions and introduction of a new sanction

Relevant parties who may be subject to disciplinary actions

Proposed new parties

The Exchange proposes to expand the disciplinary regime to new parties, including:

• employees of professional advisers of listed issuers and their subsidiaries;
• guarantors of structured products;
• guarantors for an issue of debt securities; and
• parties who give an undertaking to, or enter into an agreement with, the Exchange.

Express obligations on professional advisers

The Exchange proposes to include the following express obligations on professional advisers when acting in connection with Listing Rule matters:

• to use all reasonable efforts to ensure that their clients understand and are advised as to the scope of and their obligations under the Listing Rules; and
• not to knowingly provide information to the Exchange which is false or misleading in a material particular.

Additional circumstances where disciplinary sanctions can be imposed

Secondary liability for Listing Rule breaches

The Exchange proposes to introduce secondary liability for Listing Rule breaches in circumstances where the Exchange determines the person “has caused by action or omission or knowingly participated in a contravention of the Listing Rules”. These persons may include, among others, CFO, COO, company secretary, substantial shareholders and financial advisers.

Failure to comply with requirements imposed by the Listing Division, the Listing Committee or the Listing Review Committee

The Exchange proposes to include an explicit provision permitting the imposition of a sanction in circumstances where there has been a failure to comply with a requirement imposed by the Listing Division, the Listing Committee or the Listing Review Committee of the Exchange, and that sanctions may be imposed on all relevant parties through secondary liability where a party has failed to comply with a requirement imposed by the Listing Division, the Listing Committee or the Listing Review Committee.

Duty to provide accurate, complete and up-to-date information when responding to the Exchange’s enquiries or investigations

The Exchange proposes to explicitly provide in the Listing Rules the obligation to provide complete, accurate and up-to-date information when interacting with the Exchange in respect of its enquiries or investigations.

Consultation will end on 9 October 2020.