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Listing Russian companies in Hong Kong

Listing Russian companies in Hong Kong

Listing Process for Main Board

The following chart summarises the process for a listing application for shares on the Main Board:

Process

Appointment of Sponsors

  • Appointment of a sponsor at least 2 months before submission of an application and to notify the Exchange

Submission of the Listing Application

  • Submit listing application Form A1, Application Proof (AP) and all other relevant documents under Main Board Listing Rules 9.10A(1)
  • Information must be substantially complete

Accepted

Returned

Detailed Vetting

Qualitative assessment

  • Eligibility
  • Suitability
  • Sustainability
  • Compliance with Listing Rules, Companies (Winding Up and Miscellaneous Provisions) Ordinance and Securities and Futures Ordinance
  • Material disclosure deficiencies

Application may still be returned by SFC or HKEx for not being substantially complete

Timing of Comments

  • First round of comments – within 10 business days from receipt of application
  • Second and further rounds of comments (if any) within 10 business days from receipt of reply to previous comment letter
  • Expect replies from sponsor to be full and complete, otherwise the Exchange will not start to vet (e.g. will not accept replies such as “to be provided in due course”)(except updated financial information under Guidance Letter GL6-09A)
  • Competent persons report is reviewed by an external mining consultant selected from a panel. Although nearly all consultants agreed to the streamlined process, there may be cases where some delay may be expected

Expected Hearing Timetable

Depending on the sponsor’s response time and quality of response

  • Assumes sponsor takes 5 business days to respond to each of the two rounds of comments, an application can be presented to the Listing Committee in around 40 business days from the date of listing application
  • In the case where only one round of comment is raised and sponsor takes 5 business days to respond, an application can be brought to the Listing Committee in around 25 business days
  • Publication of AP-Publication

Accelerated review process

  • Available for reviewing the Listing Division’s decision to return a listing application
  • Applicant and sponsor(s) has the right to have a Listing Division’s decision to return an application and Listing Committee’s decision that endorses the Return Decision reviewed

Two levels of review:

  • a review of the Return Decision by the Listing Committee
  • a review of a Listing Committee’s decision endorsing a Return Decision by the Listing (Review) Committee

Hearing

8 weeks moratorium (after any accelerated review process)

Post-Hearing Information Pack (PHIP)

  • Please view the Guidance on logistical arrangements for publication of Application Proofs, Post Hearing Information Packs and related materials on the Exchange’s website for listing applicants

Dealing of Shares Commences

Annex: Comparison of Russian Law and Hong Kong Regulation in relation to Shareholder Protection

The Exchange does not regard Russian shareholder protection standards as materially different to those of Hong Kong, subject to Russian issuers demonstrating how the practice set out below conforms to the Joint Policy Statement requirements.

The Exchange’s approach to dealing with such differences is as follows:

Auditors’ remuneration

Hong Kong Law (Joint Policy Statement) Russian Law
Auditors’ remuneration must be approved by a majority of an overseas issuer’s members or other body that is independent of the board of directors (Board), such as the supervisory board in systems that have a two tier board structure. Auditors’ remuneration must be determined and approved by the Board of the applicant.
Approach of the Exchange under the Country Guide – Russia The Exchange does not regard the difference between the requirements of the two jurisdictions to be material to shareholder protection subject to the applicant’s full disclosure of the auditors’ remuneration and the applicant adopting practices (either by amending its constitutional documents or internal regulations) requiring the Board’s approval of auditors’ remuneration to be based on the recommendation of an independent body, such as an audit committee comprising wholly of independent non-executive directors and an independent shareholders’ opinion in the form of an “advisory vote”.

Proceedings at general meetings: Right to speak and vote at general meetings

Hong Kong Law (Joint Policy Statement) Russian Law
All members must have the right to speak and vote at a shareholder meeting, except where a member is required under the Listing Rules to abstain from voting to approve the transaction or arrangement. Russian law does not explicitly provide for shareholders’ right to speak at a general meeting. However, in practice, the internal regulations of large Russian companies include this right and relevant procedures.
Approach of the Exchange under the Country Guide – Russia A Russian issuer should establish that its constitutional documents include the right of the shareholders to speak at general meetings.

Proceedings at general meetings: Appoint proxies or corporate representatives to attend general meetings

Hong Kong Law (Joint Policy Statement) Russian Law

A recognised Hong Kong clearing house must be able to appoint proxies or corporate representatives to attend general meetings and creditor meetings.

Overseas issuers must notify the Exchange of any restrictions on a Hong Kong investor’s right to attend general meetings to vote and/or to appoint proxies.

Shareholders may exercise their right to participate in a general meeting through personal attendance, by having a duly authorised representative attend under a proxy attendance, or by submitting a voting ballot, signed either by a shareholder or its duly authorised representative.

A shareholder is not permitted to appoint multiple proxies or authorised representatives.

Thus, the domestic depositary may vote at a general meeting in compliance with the instructions of depositary receipt holders, but the depositary receipt holders themselves may not be able to attend general meetings to vote and/or appoint proxies.

In order to attend general meetings to vote and/or appoint proxies, holders of depositary receipts would need to withdraw their shares from the depositary facility and hold the shares directly.

Approach of the Exchange under the Country Guide – Russia

A shareholder’s inability to appoint multiple proxies or authorised representatives to attend general meetings and creditor meetings is not regarded by the Exchange as material to shareholder protection.

The jurisdictional difference may be resolved by taking into account the ability of a depositary receipt holder to give instructions to the depositary to participate in general meetings and to vote the underlying shares on his behalf; and the ability to convert depositary receipts to shares and hold them as a shareholder to directly exercise the right to speak and vote at general meetings, and that the amount of time, costs and procedures involved in processing the conversion must be reasonable under the deposit agreement acceptable to the Exchange. Further, the issuer must fully disclose the inability of depositary receipt holders to attend general meetings of the issuer.

Practical and Operational Matters

Conflicts with Hong Kong’s rules and regulations

Under the Joint Policy Statement, overseas issuers are advised to consult the Exchange in cases of potential conflict between the laws and regulations of the issuer’s home jurisdiction and Hong Kong’s Listing Rules or The Codes on Takeovers and Mergers and Share Buy-backs (Takeovers Code).

The Exchange’s approach to dealing with potential conflicts between Russian laws and regulations and the Listing Rules and Takeovers Code is as follows:

Directors’ Responsibility

Hong Kong Law (Listing Rules) Russian Law
A listed issuer must ensure that its directors accept full responsibility, collectively and individually, for the listed issuer’s compliance with the Listing Rules. As a general rule, directors are responsible towards the shareholders and the company, but not towards third parties. There is no power vested in the Board to take collective responsibility, and the directors must accept the responsibility individually.
Approach of the Exchange under the Country Guide – Russia A director must contractually undertake to the issuer and the Exchange to accept full responsibility, collectively and individually, for the listed issuer’s compliance with the Listing Rules.
Skills

Posted on

2015-03-13