New delisting regime is relevant to all listed companies in HK

0
244

The Stock Exchange of Hong Kong Limited (HKEx), on 25 May 2018 published its consultation conclusion on the delisting regime. The amended Listing Rules relating to the new delisting regime will take effect on 1 August 2018.

The new delisting regime is relevant to all listed companies, not only to those that are in challenging situations. To maintain good regulatory compliance, all listed companies should be mindful of HKEx’s regulatory actions and the resumption process and criteria for three specific circumstances, including where the issuer: (1) fails to maintain a sufficient public float; (2) fails to maintain sufficient operations or assets; or (c) is no longer suitable for listing.

MAJOR AMENDMENTS

To minimize prolonged trading suspension and to provide certainty about the circumstances where delisting will be triggered, and where resumption of trading will be granted, the amended listing rules have imposed the following changes:

(1) Fixed period delisting criterion. HKEx has adopted a deadline for issuers to develop a viable action plan to resume trading: For main board issuers, 18 months (MB rule 6.01A(1)); for GEM issuers, 12 months (GEM rule 9.14A(1)).

With this bright line test in place, HKEx has the power to delist an issuer with prolonged trading suspension amid the not so clear delisting considerations under MB rule 6.01, or GEM rule 9.14.

(2) Trading halt and suspension. To avoid ambiguity, HKEx has removed the original MB rule 6.01(1), which provided that a material breach of the listing rules is a specific ground for suspension (as this is the disciplinary decision of HKEx under MB chapter 2A). Now, HKEx may direct a trading halt or suspension in the following three specific circumstances: (1) insufficient public float (rule 8.08(1)); (2) insufficient level of operations or assets (rule 13.24); or (3) the issuer or its business is unsuitable for listing.

In appropriate circumstances, HKEx may (1) publish a delisting notice and give the issuer a specific period to remedy the relevant issues to avoid delisting, or (2) delist the issuer immediately (MB rule 6.10).

(3) Other amendments. In line with the proposals set out in the consultation paper, HKEx has adopted the following changes:

– Removing Practice Note 17 (PN 17), which currently sets out a three-stage delisting procedure;

– Setting a prescribed remedial period for the resolution of the relevant issues and resumption of trading, as opposed to submission of resumption proposal as in the current regime (paragraph 12 of GL 95-18);

– Requiring suspended issuers to announce updates of their developments including progress on satisfying resumption conditions on a quarterly basis (rule 13.24A);

– Removing the bright line trading halt requirement for non-publication of a share transaction or a major (or above) transaction or other notifiable transactions that constitute inside information (inside information requirement is still required under rule 13.10A) (MB rule 14.37/GEM rule 19.37 repealed); and

– Adding two characteristics of issuers who would be unable to demonstrate sufficient operations (note to MB rule 13.24): (1) financial difficulties that seriously impair an issuer’s ability to continue its business; and/or (2) issuers whose liabilities exceed their assets.

TRANSITIONAL ARRANGEMENTS

HKEx may delist Main Board issuers whose shares have been suspended from trading for a continuous period of 18 months. HKEx may delist GEM issuers whose shares have been suspended from trading for a continuous period of 12 months. The transitional arrangements are in the tables below:

Next consultation on continuing listing criteria. HKEx is separately reviewing its regulation relating to continuing listing criteria, including the delisting criteria and insufficient operation criteria. A separate consultation paper setting out HKEx’s proposals will be published soon.

主板上市公司
在2018年8月1日的状态

STATUS OF THE MAIN BOARD ISSUERS AS OF 1 AUGUST 2018

过渡安排

TRANSITIONAL ARRANGEMENTS

根据第17项应用指引处于停牌
阶段的上市公司

Suspended issuers that are placed in a delisting stage under PN 17

《第 17 项应用指引》继续适用 《主板规则》第6.01A(2)(a)条 
PN 17 continues to apply (rule 6.01A(2)(a))

已连续停牌少于 12 个月的上市公司 Issuers that have been suspended for less than 12 months

港交所可在2020年2月1日后将上市公司除牌即2018年8月1日后18个月)(《主板规则》第6.01A(2)(b)(i)条
HKEx may delist the issuer after 1 February 2020 (i.e., 18 months after 1 August 2018) (MB rule 6.01A(2)(b)(i))

已连续停牌超过12 个月的上市公司 Issuers that have been suspended for more than 12 months

港交所可在2019年8月1日后将上市公司除牌即2018年8月1日后12个月)(《主板规则》第6.01A(2)(b)(ii)条
HKEx may delist the issuer after 1 August 2019 (i.e., 12 months after 1 August 2018) (MB rule 6.01A(2)(b)(ii))

已被港交所裁定须开展取消上市地位程序及获通知除牌期限的上市公司 Issuers that are subject to a decision and a notice period to commence the delisting procedure

相关裁决及通知期将对上市公司继续生效,即使该上市公司的上市地位尚未取消《主板规则》第6.01A(2)(c)条
The specific decision and notice period continue to have effect on the relevant issuer, notwithstanding that the actual cancellation of listing has not taken place. (rule 6.01A(2)(c))

 

GEM上市公司在2018年8月1日的状态

STATUS OF THE GEM ISSUERS AS OF 1 AUGUST 2018

过渡安排

TRANSITIONAL ARRANGEMENTS

所有已经停牌的上市公司

Any suspended issuers

港交所可在2019年8月1日后将上市公司除牌即2018年8月1日后12个月)(《GEM 规则》第9.14A(2)(a)条
HKEx may delist the issuer after 1 August 2019 (i.e., 12 months after 1 August 2018) (GEM rule 9.14A(2)(a))

已被港交所裁定须开展取消上市地位程序及获通知除牌期限的上市公司 Issuers that are subject to a decision and a notice period to commence the delisting procedure

相关裁决及通知期将对上市公司继续生效,即使该上市公司的上市地位尚未取消《GEM 规则》第9.14A(2)(b)条

The specific decision and notice period continue to have effect on the relevant issuer, notwithstanding that the actual cancellation of listing has not taken place. (GEM rule 9.14A(2)(b))

Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Danian Zhang (Shanghai) at danian.zhang@bakermckenzie.com