Member Article

Each of the Securities and Futures Commission (“SFC”) and the Financial Services and the Treasury Bureau (“FSTB”) has recently published a public consultation paper containing certain legislative proposals to enhance the regulation of listed companies. FSTB Consultation Paper Based on the recommendations outlined in the Government’s Consultation Conclusions on Proposals to Enhance the Regulation of Listing published last year, the FSTB issued the Consultation Paper on Proposed Amendments to the Securities and Futures Ordinance to Give Statutory Backing to Major Listing Requirements. The FSTB Consultation Paper sets out the following specific proposals on how the Securities and Futures Ordinance (“SFO”) might be amended to give certain major listing requirements the necessary enforcement power: • providing the SFC with the power to make rules to prescribe listing requirements and ongoing obligations of the listed corporations, whether incorporated in Hong Kong or elsewhere, under the SFO; • extending the market misconduct regime under the SFO to cover breaches of the statutory listing rules made by the SFC; • empowering the Market Misconduct Tribunal (“MMT”) to impose, in addition to existing sanctions such as disqualification orders and disgorgement orders, new civil sanctions, namely publicly reprimands and civil fines up to HK$8 million, on the primary targets, i.e. issuers, directors and officers, for breaches of the statutory listing rules made by the SFC; and • empowering the SFC to impose civil sanctions, namely public reprimands, disqualification orders, disgorgement orders and civil fines up to HK$5 million, on the primary targets for breaches of the statutory listing rules made by the SFC under the amended SFO. SFC Consultation Paper The Consultation Paper on Proposed Amendments to the Securities and Futures (Stock Market Listing) Rules issued by the SFC proposes new amendments to the Securities and Futures (Stock Market Listing) Rules (“SMLR”) which would codify existing important requirements in the Listing Rules of The Stock Exchange of Hong Kong Limited. The proposed new amendments cover the following three areas: • disclosure of price-sensitive information and specific events, including: - general obligation of disclosure of price-sensitive information; - disclosure of substantial advances to a person or group of persons; - disclosure of substantial amounts due from affiliates; - disclosure of change in directors; - disclosure of change in auditors; - disclosure of issue of shares under general mandate (not including the rules on limits and shareholders’ approval). • disclosure/publication of annual and periodic reports, including: - timing on publication of annual reports (with audited annual accounts), interim reports (with unaudited interim accounts), and preliminary announcements of financial results; - content of the disclosure in annual reports, interim reports, and preliminary announcement of financial results. • disclosure of, and shareholders’ approval for, notifiable transactions and connected transactions, including: - classification of transactions; - disclosure of transactions by announcements and circulars; - content of the disclosure in announcements and circulars; - independent financial advice requirements for certain transactions; - shareholders’ approval requirements for certain transactions; - disclosable transactions (proposed to be included). The SFC has also published the draft Listing Regulatory Handbook which contains guidelines to assist listed companies to comply with the SMLR.