1. The Listing Rules require listed companies to publish announcements in a wide range of situations.
The Exchange’s Guide on Pre-vetting Requirements and Selection of Headline Categories for Announcements (“Pre-Vetting Guide”) sets out the situations in which an announcement is required under the Main Board Rules, whether or not the announcement is required to be vetted by the Exchange before publication and the headline categories that will generally apply. The following is a summary of the main situations in which a listed issuer is required to publish an announcement.
Price-sensitive information – any price-sensitive information which is disclosable as inside information under Part XIVA SFO must be announced and kept strictly confidential until a formal announcement is made.
Notifiable transactions – any notifiable transaction within Chapter 14 of the Main Board Rules.
Connected transactions – any connected transaction (unless an exemption is available) within Chapter 14A of the Main Board Rules.
Advances and financial assistance to third parties – the listed issuer or any of its subsidiaries makes a “relevant advance to an entity” which:
- exceeds 8% of the total assets of the listed issuer (Main Board Rule 13.13); or
- is greater than the previously disclosed relevant advance by 3% or more of the listed issuer’s total assets (Main Board Rule 13.14).
The expression “relevant advance to an entity” means the aggregate of amounts due from and all guarantees given on behalf of an entity, its controlling shareholder, its subsidiaries and affiliated companies. An advance to a subsidiary of the listed issuer, or between subsidiaries of the listed issuer, is not regarded as a relevant advance to an entity.
Financial assistance to affiliated companies – where financial assistance and guarantees of financial assistance given by the listed issuer or any of its subsidiaries to affiliated companies (being those which are equity accounted for by the issuer) of the listed issuer together exceed 8% of the listed issuer’s total assets (Main Board Rule 13.16).
Pledge of controlling shareholder’s interest – where the controlling shareholder of the listed issuer has pledged its interest in shares of the issuer to secure debts of the issuer or to secure guarantees or other support of obligations of the issuer (Main Board Rule 13.17).
Loan agreements – where:
- the listed issuer (or any of its subsidiaries) enters into a loan agreement that imposes specific performance obligations on any controlling shareholder (e.g. a requirement to maintain a specified minimum holding in the share capital of the listed issuer) and breach of such obligation will cause a default in respect of loans that are significant to the operations of the listed issuer (Main Board Rule 13.18); or
- the listed issuer or any of its subsidiaries breaches the terms of a loan that is significant to the operations of the listed issuer, such that the lender may demand immediate repayment and the breach has not been waived by the lender (Main Board Rule 13.19).
Takeover offers – an announcement must be made once a takeover offer is made or accepted, as required by the Takeovers Code.
Accounts and auditors
Board meeting for approval of results – an issuer must inform the Exchange and publish an announcement at least 7 clear business days in advance of the date fixed for any board meeting at which the profits or losses for any period are to be approved for publication (Main Board Rule 13.43).
Annual and half-year results – must be published by way of announcement under Main Board Rule 13.49.
Change in auditor or financial year end – any change in a listed issuer’s auditors or financial year end, the reason(s) for the change and any other matters that need to be brought to the attention of holders of the company’s securities. The issuer’s announcement must state whether the outgoing auditors have confirmed that there are no matters that need to be brought to the attention of holders of the company’s securities (Main Board Rule 13.51(4)). The issuer must appoint an auditor at each annual general meeting (“AGM“) to hold office until the next AGM. Any proposal to remove an auditor before the end of its term of office must be approved by shareholders in general meeting (Main Board Rule 13.88).
Change of company name – once the board decides to change the company name (Main Board Rules 13.51).
Memorandum and Articles of Association – any proposed alteration of the memorandum or articles of association (or equivalent documents) of the listed issuer (Main Board Rule 13.51(1)).
Registered office – any change in the company’s registered address, agent for service of process in Hong Kong or registered office or registered place of business in Hong Kong (Main Board Rule 13.51(5)).
Share registrar – any change of the company’s share registrar (including any overseas branch share registrar) (Main Board Rule 13.51(5)).
Dividends – an issuer must inform the Exchange and publish an announcement at least 7 clear business days in advance of the date fixed for any board meeting at which the declaration, recommendation or payment of a dividend is expected to be decided (Main Board Rule 13.43). Any decision of the board to declare, recommend or pay a dividend or not to do so must be announced immediately, and include the rate, amount and expected payment date (Main Board Rules 13.45(1) and (2)).
Change in nature of business – an announcement must be published of any decision to change the general character or nature of the issuer or the group (Main Board Rule 13.45(5)).
Winding-up or Liquidation – the appointment of a receiver or manager, the presentation of any winding-up petition or the passing of any resolution authorising the winding up of the listed issuer, its holding company or any of its major subsidiaries (i.e. a subsidiary representing 5% under any of the percentage ratios (please see “Notifiable Transactions” below) or any similar insolvency events (Main Board Rule 13.25(1)).
Decision to withdraw listing – a proposed withdrawal of listing must be notified to shareholders by way of publication of an announcement (Main Board Rule 6.15).
Audit committee – if the issuer fails to set up an audit committee or does not meet the membership requirements (Main Board Rule 3.23).
Remuneration committee – if the issuer fails to set up a remuneration committee or does not comply with the requirements as to its composition or terms of reference (Main Board Rule 3.27).
Directors and officers
Board composition and independent non-executive directors – an announcement must be made if the number of the issuer’s independent non-executive directors (“INEDs”) is less than three or one third of the number of directors on the board, or if it does not have at least one INED with appropriate professional qualifications or accounting or related financial management expertise (Main Board Rule 3.11).
Change in company secretary – an announcement must be made once the board has decided to change the company secretary (Main Board Rule 13.51(5)).
Change in compliance adviser – an announcement must be made as soon as a compliance adviser resigns, and arrangements must be made immediately to appoint a new compliance adviser. Once a new compliance adviser has been appointed, another announcement must be made (Main Board Rules 13.51(6) and 3A.29).
Change in directors – any change of directors or the chief executive, including, in the case of the resignation or removal of a director or the chief executive, the reasons given by or to him for his resignation or removal (Main Board Rule 13.51(2)). An announcement of the appointment of a new director or chief executive or re-designation of a director or the chief executive must include the information specified in Main Board Rule 13.51(2).
Change in disclosed information about directors – any change to the information specified in paragraphs (h) to (v) of Main Board Rule 13.51(2) previously disclosed about a director must be announced (Main Board Rule 13.51B). Such information relates mainly to matters which may cast doubt on the integrity of the directors involved and their suitability for continuing to serve as directors. Any change in the information specified in paragraphs (a) to (e) and (g) of Main Board Rule 13.51(2) must be set out in the next published annual or interim report. The Rules include an obligation for directors to immediately inform the issuer of any information specified in Main Board Rule 13.51(2) and any change to such information (Main Board Rule 13.51C).
Notice of general meetings – notice of an issuer’s annual general meeting and other general meetings must be announced (Main Board Rules 13.37 and 13.73).
Results of general meetings – the poll results must be published before commencement of trading on the business day following the meeting (Main Board Rule 13.39(5)).
Issues of securities – an issue of securities (including convertible securities or warrants, options or similar rights) will almost always require an announcement (except an exercise of options under an employee share scheme) either as inside information under Main Board Rule 13.09(2)(a), or under Chapter 14 or 14A, or under Main Board Rule 13.28.
Changes in the number of issued shares – certain changes in the number of issued shares must be reported to the Exchange for publication on the Exchange’s website on the following business day (Main Board Rule 13.25A). Issuers must also submit a monthly return of changes in their equity securities, debt securities and other securitised instruments (Main Board Rule 13.25B).
Share option schemes – an employee share option scheme must be approved by shareholders in general meeting and a listed issuer must publish an announcement of the outcome of the meeting as soon as possible and no later than the business day following the meeting (Main Board Rule 17.02(1)). Further announcements must be published on the grant of share options pursuant to a share option scheme specifying the information required by Main Board Rule 17.06A. The announcement is required to include details of the date of grant, the exercise price and number of options granted, the market price of the issuer’s securities on the date of the grant, the name of any grantee who is, or is an associate of, a director, chief executive or substantial shareholder of the listed issuer and the number of options granted to such person, and the validity period of the options.
Basis of allotment of securities – the basis of allotment of any securities offered to the public for subscription or sale or an open offer and of the results of any rights issue and, if applicable, of the basis of any acceptance of excess applications. The company must notify the Exchange of such matters no later than the morning of the next business day after the allotment letters or other relevant documents of title are posted (Main Board Rule 13.30).
Public float – the company must inform the Exchange immediately if it becomes aware that the number of listed securities required to be held by the public has fallen below the prescribed minimum percentage (i.e. 25% unless a lower percentage of between 15% and 25% was approved by the Exchange on listing for a company having an expected market capitalisation at the time of listing of more than HK$10 billion) (Main Board Rule 13.32(1)(a)).
Lack of genuine open market – if the Exchange believes that the issuer’s securities lack a genuine open market or are concentrated in the hands of a few shareholders, it may require the issuer to publish an announcement to that effect (Main Board Rule 13.34(a)).
Share Repurchases – any purchase, sale, drawing or redemption by the issuer or its group members of its listed securities (whether on the Exchange or not) (Main Board Rule 13.31). The company should also be aware of the provisions of the Code on Share Buy-backs which sets out detailed rules governing any offer to purchase, redeem or otherwise acquire the shares of a listed issuer made by or on behalf of the listed issuer to any of its shareholders.
2. Announcements which require pre-vetting by the Exchange
Announcements of the following matters or transactions must be submitted to the Exchange for review and approval before publication under Main Board Rule 13.52(2):
- very substantial acquisitions, very substantial disposals or reverse takeovers under Main Board Rules 14.34 and 14.35;
- transactions or arrangements within 12 months after listing which would result in a fundamental change in principal business activities under Main Board Rules 14.89 to 14.91; and
- cash companies under Main Board Rules 14.82 and 14.83.
Announcements other than those specified in Main Board Rule 13.52(2) do not need to be pre-vetted by the Exchange, although companies may consult the Exchange regarding rule compliance issues. The Exchange also reserves the right under Main Board Rule 13.52A to require listed companies to submit for review any draft announcement, circular or other document in individual cases.
A summary of the pre-vetting requirements for announcements is set out in the Exchange’s Guide on Pre-vetting and Selection of Headline Categories for Announcement1.
3. Matters requiring prior consultation with Exchange prior to announcement
There are a number of Rule compliance issues relating to notifiable transactions or issues of securities which need the Exchange’s prior consent or confirmation prior to publication of the announcements. These include, but are not limited to, the following:
- whether the Exchange will allow the listed issuer to adopt alternative size test(s) to classify a notifiable transaction under Main Board Rule 14.20;
- whether the Exchange will deem a party to a transaction to be a connected person of the listed issuer (under Main Board Rules 14A.19 to 14A.22). Main Board Rule 14A.22 requires a listed issuer to notify the Exchange of any proposed transaction with the parties described in such rules unless the transaction is exempt;
- whether the transaction/matter falls under the special or exceptional circumstances described in the Listing Rules, e.g. a rights issue or open offer proposed by a Main Board issuer without underwriting under the notes to Main Board Rule 7.19 or 7.24; a proposed issue of securities for cash under general mandate at a price representing a discount of 20% or more to the benchmarked price under Main Board Rule 13.36(5); or a proposed issue of warrants that would not meet certain specific requirements under Main Board Rule 15.02; and
- in the case of matters affecting trading arrangements (including suspension or resumption of trading, and cancellation or withdrawal of listing), Main Board Rule 13.52B requires that:
- listed issuers must consult the Exchange before issuing the relevant announcement; and
- the announcement must not include any reference to a specific date or timetable which has not been agreed in advance with the Exchange.
4. Publication of announcements
Announcements are required to be published on the website of the Exchange and on the listed issuer’s own website in accordance with the provisions of Main Board Rule 2.07C. Listed companies must submit an electronic copy of the announcement through the Exchange’s electronic submission system (“HKEx-EPS“). When doing so, companies must select all appropriate headlines from the list of headline categories which are set out in Appendix 24 to the Main Board Rules. Unless stated otherwise in the Rules, all announcements must be published in both English and Chinese.
With the exception of certain limited types of announcements that can be published at all times during the operational hours of the e-Submission System, announcements must only be submitted during the designated publications windows which are:
On a normal business day:
- 6.00 a.m. to 8.30 a.m.
- 12.00 p.m. to 12.30 p.m.
- 4.15 p.m. to 11.00 p.m.
On the eves of Christmas, New Year and Lunar New Year when there is no afternoon session:
- 6.00 a.m. to 8.30 a.m.
- 12.00 p.m. to 11.00 p.m.
On a non-business day preceding a business day:
- 6.00 p.m. to 8.00 p.m.
The categories of announcements which can be published during trading hours as well as outside trading hours are:
- suspension announcements;
- announcements made in response to unusual movements in share price or trading volume;
- announcements denying the accuracy of news reports or clarifying that only its published information should be relied upon; and
- overseas regulatory announcements.
IX. LISTING DOCUMENTS AND CIRCULARS WHICH REQUIRE PRE-VETTING
Main Board Listing Rule 13.52(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 Main Board Rule 13.36(1));
- 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 Main Board Rule 13.39(7), which include:
- spin-off proposals;
- transactions which the Rules require to be subject to independent shareholders’ approval (see Main Board Rule 13.39(4)(b)) such as:
- rights issues under Main Board Rule 7.19(6) or 7.19(7);
- open offers under Main Board Rule 7.24(5) or (6);
- refreshments of general mandates before next AGM under Main Board Rule 13.36(4);
- withdrawal of listings under Main Board Rule 6.12; 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 Main Board Rules 14.89 to 14.91;
- circulars to shareholders seeking their approval of any matter in relation to a share option scheme which is required under Chapter 17 of the Main Board Listing Rules;
- circulars to shareholders seeking their approval of warrant proposals involving approvals by shareholders and all warrant holders under paragraph 4(c) of Practice Note 4 to the Main Board Rules; and
- circulars or offer documents issued by the issuer in connection with takeovers, mergers or offers.
X. DISCLOSURE OF CHANGES IN THE NUMBER OF ISSUED SHARES
1. Next Day Disclosure Requirements
The Listing Rules (Main Board Rule 13.25A) require next day disclosure on the Exchange 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 Main Board Rule 13.25A(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 the issuer’s share option scheme by any of its directors;
- exercise of an option other than under the issuer’s share option scheme by any of its directors;
- capital 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 Main Board Rule 13.25A(2)(b).
Categories of Changes Requiring Next Day Disclosure in Specified Circumstances
The following changes in the number of issued shares specified in Main Board Rule 13.25A(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 Main Board Rule 13.25A(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 Main Board Rule 13.25A(2)(a) and a change in issued share capital resulting from an event specified in Main Board Rule 13.25A(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 numbwer 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 Main Board Rule 13.25A and Section II deals with disclosure under Main Board Rule 10.06(4)(a) (the share buyback regime). Share repurchases are discloseable under Main Board Rule 13.25A and under Main Board Rule 10.06(4)(a), 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 (13.25B of Main Board Rules). The return must be submitted no later than 8.30 a.m. 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.
1 Exchange’s Guide on Pre-vetting and Selection of Headline Categories for Announcement (effective 1 April 2015) at http://www.hkex.com.hk/eng/rulesreg/listrules/guidref/guide_pre_vetting_req.htm.