Protection standard revisions
Previously, non-Hong Kong issuers had to demonstrate that their shareholders were afforded shareholder protection at least “equivalent” to Hong Kong’s equivalence requirement.
To comply, listing applicants were either companies incorporated in recognised jurisdictions (namely Cayman Islands, Bermuda, mainland China and Hong Kong) or companies incorporated in acceptable jurisdictions that the SEHK accepted as place of incorporation eligible for listing in Hong Kong.
Under the new regime, the equivalence requirement and distinction between recognised jurisdictions and acceptable jurisdictions are removed.
Now a baseline level of shareholder protection requirements (core standards) set out in appendix 3 of the new Listing Rules is adopted for all issuers to ensure the same level of protection to all investors.
The core standards concern different aspects regarding, among others, directors, proceedings at general meetings, variation of rights, amendment of constitutional documents, appointment, removal and remuneration of auditors, proxies and corporate representatives, inspection of branch register, and voluntary winding up.
Shareholder protection requirements under the core standards should be set out in the issuer’s constitutional documents – unless the stock exchange is satisfied that the domestic laws, rules and regulations to which the issuer is subject provide for the same protection.
Existing listed issuers are required to ensure they fully comply with the new core standards – otherwise they need to make any necessary amendments to their constitutional documents to conform by their second annual general meeting following 1 January 2022.