CONSULTATION ON CODIFICATION OF GENERAL WAIVERS AND PRINCIPLES RELATING TO INITIAL PUBLIC OFFERINGS AND LISTED ISSUERS AND MINOR RULE AMENDMENTS

The Stock Exchange of Hong Kong Limited ("HKEX") received comments from market practitioners that certain requirements currently set out in its guidance materials should be codified in the Main Board Rules and the GEM Rules (collectively, the "Rules"). In consequence thereof, HKEX in August 2019 issued a consultation paper to seek comments on the codification proposed for:

(a) a number of waivers with general effect previously approved by The Securities and Futures Commission;

(b) the principles and conditions underpinning a number of waivers that have been granted by HKEX on more than one occasion; and

(c) minor Rules' amendments.

The above proposals are set out in a Consultation Paper titled “Codification of General Waivers and Principles Relating to IPOs and Listed Issuers and Minor Rule Amendments". This Consultation Paper was reviewed by the Council, with the assistance of the Company Law Committee.

In general, the Law Society welcomes HKEX's above proposals in the Consultation Paper except a Housekeeping Rule Amendment, which proposes to introduce a new GEM Rule 11.22A to the GEM Rules to the effect that HKEX must be satisfied that there will be sufficient public interest in the business of the issuer and in its securities for which the listing is sought on GEM Board.

The Law Society disagrees with the above. Since the targeted investors of GEM companies are professional and institutional investors, it is not appropriate to set out "public interest" as a requirement for a company of which its securities are to be listed on GEM board. Apart from the above, the Law Society also suggests some minor modifications with respect to the HKEX's proposals.

The full submission of the Law Society is at:

http://www.hklawsoc.org.hk/pub_e/news/submissions/20190925.pdf

Jurisdictions: