Last night the Stock Exchange published an announcement (attaching revised Listing Rules) to modify the "blackout" period extension which has been the subject of much recent controversy in the Hong Kong market.

The blackout period was due to be extended on 1 April 2009 such that directors would be prohibited from dealing during the period from the financial period end until publication of the financial results (potentially 7 months in a year). The Stock Exchange has now modified the proposed blackout period, following consultation with the SFC, and has suggested other measures to enhance corporate governance in Hong Kong.

Amended black out period to come into effect 1 April 2009 (subject to SFC approval)

  • For annual results, the blackout period will be 60 days preceding the publication date of the results, or if shorter, the period from the year end until the publication date
  • For quarterly and half-year results, the blackout period will be 30 days preceding the publication date of the results, or if shorter, the period from the period end until the publication date
  • Listed issuers will be under an obligation to notify the Stock Exchange in advance of the commencement of the blackout period.

Other initiatives to enhance the disclosure regime

 In reaching this compromise, the Stock Exchange suggested a variety of measures to enhance the disclosure regime and bolster investor confidence. These measures include:

  • support for early implementation of statutory backing for the disclosure of price sensitive information with proportionate sanctions, to deter non-compliance
  • proposed consultation, together with the SFC, as soon as possible on amendments to the current formulation of the price sensitive disclosure regime in the Listing Rules
  • an intention to explore alternative approaches to quarterly reporting (with proposed market consultation) as an interim measure, with the Stock Exchange's long term goal being to require quarterly reporting
  • support for early implementation of the SFC's April 2008 consultation paper proposals to require electronic disclosure of SDI filings, with potential to shorten the filing timeframes
  • support for the SFC's continued action against insider dealing and
  • enhanced monitoring by the Listing Division of dealings by directors with a view to identifying any suspicious dealings.

A copy of the announcement and proposed Listing Rule amendments can be found here.

A summary of the other changes to the Listing Rules which came in to force on 1 January 2009 was included in our December e-bulletin, a copy of which can be found here.