New Listing Committee Decision Review Structure for the Stock Exchange of Hong Kong in 2019

The Stock Exchange of Hong Kong (SEHK) will adopt a new Listing Committee decision review structure in mid-2019. The key changes are:

  • “Matters of Material Significance” (such as rejections of listing applicants solely on the basis of lack of suitability and listing cancellations) will be entitled to only one level or review. The Listing Appeals Committee, to which there is currently a further right of review, will no longer exist.
  • A new Listing Review Committee will be created to replace the existing Listing (Review) Committee and Listing (Disciplinary Review) Committee.
  • Decisions on non-disciplinary matters will be routinely published.
  • The SFC’s right to request a review of any matter, including a review of a Listing Committee decision, will be codified.  The SFC will not however be able to request a review of decisions of the Listing Review Committee.

CURRENT LISTING COMMITTEE DECISION REVIEW STRUCTURE

Currently, there are two levels of review for the Listing Committee’s decisions. Non-disciplinary matters can be referred to the Listing (Review) Committee, and disciplinary matters can be referred to the Listing (Disciplinary Review) Committee. The Listing Appeals Committee is the final review body for decisions made by the Listing Committee, Listing (Review) Committee and the Listing (Disciplinary Review) Committee concerning:

  1. the termination of the role of an authorised representative of a listed issuer;
  2. the rejection of an application for lifting the suspension of dealings in a listed issuer's securities, where the suspension has been in place for more than 30 consecutive days; and
  3. “Matters of Material Significance” (such as rejections of listing applicants solely on the basis of lack of suitability and listing cancellations).

ESTABLISHING THE LISTING REVIEW COMMITTEE

The SEHK will replace the Listing (Review) Committee and the Listing (Disciplinary Review) Committee with a new Listing Review Committee, which will be a committee of SEHK. The members of the Listing Review Committee will comprise market participants rather than Listing Committee members in order to increase the perception of the review body’s independence. The Listing Review Committee will hear reviews that are currently conducted by its two predecessor committees. It will hear cases de novo (i.e. a re-hearing) and make its own decisions after considering all relevant evidence and arguments, old and new. In upholding or overturning a prior decision, it will state its reasons for its own decision.

PUBLISHING DECISIONS ON NON-DISCIPLINARY MATTERS

The HKEx will publish the Listing Review Committee’s decisions on non-disciplinary matters on a routine basis. To address concerns of confidentiality, HKEx will delay the publication of a decision if it contains price-sensitive information or withhold the names of the relevant parties if their interests would be unduly prejudiced by such disclosure.

SFC POWER TO REQUEST REVIEWS OF DECISIONS

The SFC has the power to request review of any decision made by the Listing Committee under paragraph 10.6 of the Memorandum of Understanding signed by HKEx and the SFC (the Memorandum of Understanding). This power will be codified in the Listing Rules. However, the SFC will not be able to request reviews of the Listing Review Committee’s decisions as it will be the final review body of the Listing Committee’s decisions. This limit on the SFC’s power will be included in an addendum to the Memorandum of Understanding. Where the SFC requests a review of a Listing Committee decision, and the Listing Review Committee overturns its decision, the relevant party will have the right to seek a further review of the decision. In this situation, the final review will be conducted by a different group of members of the Listing Review Committee.

Solicitor, Charltons Law, Hong Kong

With a background in banking and debt capital markets in London and Hong Kong, Kim joined boutique corporate law firm, Charltons, in 2003 and focuses on Hong Kong corporate finance regulation, including IPOs, listed company regulatory compliance, SFC licensing, funds, and debt capital markets.  Her main interest is the development of Hong Kong regulation to facilitate Hong Kong’s continued growth as Asia’s premier international finance centre.  Key areas of interest currently include continued broadening of access to Hong Kong’s stock exchange, crypto assets, crowd-funding, fintech, virtual banking and green banks.