XI. LISTING DOCUMENTS AND CIRCULARS WHICH REQUIRE PRE-VETTING
GEM Listing Rule 17.53(1) requires the following documents to be submitted to the Exchange for review and approval before publication:
- listing documents (including prospectuses);
- circulars relating to cancellation or withdrawal of listing of listed securities;
- circulars for notifiable transactions which are subject to shareholders’ approval;
- circulars for connected transactions;
- circulars to the company’s shareholders seeking their approval of issues of securities that require specific mandates from the shareholders (under GEM Rule 17.39 and GEM Rule 17.40);
- circulars to the issuer’s shareholders seeking their approval of transactions or arrangements that require independent shareholders’ approval and the inclusion of separate letters from independent financial advisers to be contained in the relevant circulars under GEM Rule 17.47(7), which include:
- spin-off proposals;
- transactions which the Rules require to be subject to independent shareholders’ approval (see GEM Rule 17.47(5)(b)) such as:
- rights issues under GEM Rule 10.29;
- open offers under GEM Rule 10.39;
- refreshments of general mandates before next AGM under GEM Rule 17.42A;
- withdrawal of listings under GEM Rule 9.20; and
- transactions or arrangements that would result in a fundamental change in the principal business activities of the listed issuer within 12 months after listing under GEM Rules 19.88 to 19.90;
- circulars to the issuer’s shareholders seeking consent to an allotment of voting shares that will alter the control of the issuer (under GEM Rule 17.40);
- circulars to shareholders seeking their approval of any matter in relation to a share option scheme which is required under Chapter 23 of the GEM Listing Rules;
- circulars to shareholders seeking their approval of warrant proposals involving approvals by shareholders and all warrant holders under GEM Rule 21.07(3); and
- circulars or offer documents issued by the issuer in connection with takeovers, mergers or offers.
XII. DISCLOSURE OF CHANGES IN THE NUMBER OF ISSUED SHARES
1. Next Day Disclosure Requirements
The Listing Rules (GEM Rule 17.27A) require next day disclosure on the GEM website of 2 categories of changes in the number of issued shares. The first category comprises changes which always require next day disclosure. The second category comprises changes in the number of issued shares which only require next day disclosure in specified circumstances.
Changes Always Requiring Next Day Disclosure
Changes in the number of issued shares, which always require next day disclosure under GEM Rule 17.27A(2)(a) are changes resulting from the following:
- consideration issues;
- open offers;
- rights issues;
- bonus issues;
- scrip dividends;
- repurchases of shares or other securities;
- exercise of an option under a share option scheme by a director of the listed issuer;
- exercise of an option other than under a share option scheme by a director of a listed issuer;
- capitalisation reorganisation; or
- change in the number of issued shares not falling within any of the categories referred to at (i) to (x) above or in GEM Rule 17.27A(2)(b).
Categories of Changes Requiring Next Day Disclosure in Specified Circumstances
The following changes in the number of issued shares specified in GEM Rule 17.27A(2)(b) require next day disclosure in specified circumstances:
- exercise of an option under a share option scheme other than by a director of the listed issuer;
- exercise of an option other than under a share option scheme not by a director of the listed issuer;
- exercise of a warrant;
- conversion of convertible securities; or
- redemption of shares or other securities.
The circumstances in which these categories require next day disclosure are:
- where the event, either individually or when aggregated with other events specified in GEM Rule 17.27A(2)(b) that have occurred since the last monthly return or next day disclosure, whichever is the later, results in a change of 5% or more in the number of the listed issuer’s issued shares; or
- where the listed issuer is in any case required to disclose some other change in the number of issued shares under GEM Rule 17.27A(2)(a) and a change in the number of issued shares resulting from an event specified in GEM Rule 17.27A(2)(b) has occurred but has not yet been disclosed in either a monthly return or pursuant to next day disclosure (because the 5% de minimis threshold has not been reached).
The percentage change in the listed issuer’s number of issued shares is calculated by reference to its total number of issued shares as it was immediately before the earliest relevant event which has not yet been reported in either a monthly return or pursuant to next day disclosure.
The next day disclosure return comprises two sections. Section I deals with disclosure under GEM Rule 17.27A and Section II deals with disclosure under GEM Rule 13.13 (the share buyback regime). Share repurchases are discloseable under GEM Rule 17.27A and under GEM Rule 13.13, in which case both sections of the return must be completed.
The next day disclosure return must be submitted through the Exchange’s e-Submission System no later than 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session on the business day following the relevant event.
2. Monthly Return
A listed issuer is required to submit through HKEx-EPS for publication on the Exchange’s website a monthly return in relation to movements in its equity securities, debt securities and any other securitised instruments during the period to which the monthly return relates (17.27B of GEM Rules). The return must be submitted no later than 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session on the fifth business day next following the end of each calendar month.
The monthly return must be submitted irrespective of whether there has been any change in the information provided in the previous monthly return. The return must be submitted electronically through the Exchange’s e-submission system and will be published on the Exchange website.
XIII. DISCLOSURE OF FINANCIAL INFORMATION
1. Annual Report and Accounts
The requirements in relation to a company’s annual report and accounts are set out in the Companies Ordinance and in Chapter 18 of the GEM Rules.
Timing of Distribution of Annual Report
A GEM listed issuer must send a copy of its annual report including its annual accounts (and, if it prepares consolidated financial statements, its consolidated financial statements) together with a copy of the auditors’ report to every shareholder and every holder of its listed securities not less than 21 days before the date of its annual general meeting (“AGM”) and no later than 3 months after the end of the financial year (GEM Rule 18.03).
The annual accounts, directors’ report and auditors’ report must be laid before the AGM and must be prepared in both English and Chinese.
In the case of overseas shareholders, it is sufficient for the listed issuer to mail the English language version of the relevant documents only, provided that such documents contain a prominent statement in English and Chinese that a Chinese language version is available from the company on request.
Financial statements must include the disclosures required under the relevant accounting standards adopted as well as the information specified in Chapter 18 of the GEM Rules (“Chapter 18”), including a statement of profit or loss and other comprehensive income, a statement of financial position and information on the rates of dividend paid or proposed for each class of shares
Annual financial statements must be prepared in accordance with Hong Kong or International Financial Reporting Standards or China Accounting Standards for Business Enterprises (“CASBE”) in the case of a Chinese issuer that has adopted CASBE (GEM Rule 18.08).
2. Half-year Reports and Accounts
Listed companies are also required to prepare either half-year reports or summary half-year reports (GEM Rules 18.55 and 18.82) and must send them to the company’s shareholders and holders of their listed securities within 45 days of the end of the first 6 months of each financial year (GEM Rules 18.53 and 18.54).
The contents requirements for half-year reports are set out in GEM Rules 18.55 to 18.65.
There is a requirement that half-year reports are reviewed by the listed issuer’s audit committee (Note 2 to GEM Rule 18.55(9)).
3. Quarterly Reporting
Quarterly reporting is a mandatory obligation under GEM Rule 18.66. A GEM listed issuer must publish quarterly financial results and send them to the company’s shareholders and holders of their listed securities within 45 days of the end of the first and the third quarters.
The contents requirements for quarterly reports are set out in GEM Rules 18.68 to 18.77.
4. Preliminary Announcements of Results
A company listed on the GEM must publish a preliminary announcement of its annual, half-year and quarterly results on the GEM website and the listed issuer’s website as soon as possible and, in any event, not later than 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session on the business day after their approval by the board.
Preliminary year-end results must be published no later than 3 months after the financial year end. Preliminary half-year results and preliminary quarterly results must be published no later than 45 days after their respective periods.
5. Consequences of Failure to Publish Financial Information
For GEM issuers, the Listing Rules do not provide that the Exchange will require trading in a listed issuer’s shares to be suspended if it fails to publish its financial information on time. However, failure to publish financial information may be interpreted as a breach of the obligation to disclose inside information under Part XIVA SFO.
6. Additional Information Required in Financial Reports of Mineral Companies
- Mineral Companies are required to include in their half-yearly and annual reports details of their exploration, development and mining production activities and a summary of expenditure incurred on these activities during the period under review. If there has been no exploration, development or production activity, that fact must be stated (GEM Rule 18A.14).
However, to the extent that there are material changes in funding requirements or exploration activity, companies may be required to update shareholders immediately under the obligation to disclose inside information under Part XIVA SFO.
- Mineral Companies must provide an annual update of their resources and/or reserves in their annual reports (GEM Rule 16). Such updates must be prepared in accordance with the accepted reporting standard under which they were previously disclosed or, if none, under one of the accepted reporting standards (GEM Rule 18A.15). The annual updates are not required to be supported by a Competent Person’s Report and thus may be prepared by the company’s own internal experts. Annual updates may also be provided by way of a no material change statement which can be prepared by companies’ internal management (Note to GEM Rule 18A.17).
- Other (non-Mineral Company) listed issuers that publicly disclose details of resources and/or reserves are also required to provide annual updates of those resources/reserves in their annual reports. Such updates must be prepared in accordance with the reporting standard under which they were previously disclosed or one of the accepted reporting standards (GEM Rule 18A.15). They may also be achieved by way of a no material change statement (Note to GEM Rule 18A.17).
The Exchange has published guidance on the disclosures required in the annual and interim reports of Mineral Companies and other listed issuers which publicly disclose details of their resources and/or reserves. This is set out in Exchange Guidance Letter HKEx-GL47-13 “Continuing Obligations under Chapter 18 (Chapter 18A of GEM Rules)”