On May 25, 2018, The Stock Exchange of Hong Kong Limited ("Hong Kong Stock Exchange") announced the consultation conclusions to its Consultation Paper on Delisting and Other Rule Amendments published on September 22, 2017 ("Consultation Conclusions"). The Consultation Conclusions set out the proposals by the Hong Kong Stock Exchange to improve the effectiveness of the delisting framework under the Main Board Listing Rules ("MB Rules") and the GEM Listing Rules ("GEM Rules") (collectively, "Listing Rules"), which address the issue of prolonged suspension of trading in issuers' listed securities. The newly amended Listing Rules will take effect from August 1, 2018 ("Effective Date").

Major Amendments to the Listing Rules Under the New Delisting Framework

The changes to the MB Rules include the following:

  • Adding a separate fixed period delisting criterion that allows the Hong Kong Stock Exchange to delist an issuer after its continuous suspension of 18 months;

  • Allowing the Hong Kong Stock Exchange to (i) publish a delisting notice and specify a period within which the issuer may remedy the issues or be delisted, or (ii) delist the issuer immediately in appropriate circumstances; and

  • Removing Practice Note 17 that sets out a three-stage delisting procedure for issuers without sufficient operations or assets, as the new delisting process will equally apply to those issuers.

The changes to the GEM Rules include the following:

  • Adding a separate fixed period delisting criterion that allows the Hong Kong Stock Exchange to delist an issuer after its continuous suspension of 12 months; and

  • Allowing the Hong Kong Stock Exchange to (i) publish a delisting notice and specify a period within which the issuer may remedy the issues or be delisted, or (ii) delist the issuer immediately in appropriate circumstances.

Transitional Arrangements to Facilitate the Amendments

Transitional arrangements are provided for issuers whose securities are under a trading suspension immediately before the Effective Date.

The current Practice Note 17 continues to apply for issuers placed in a delisting stage under that Practice Note. For issuers subject to a decision to commence the procedures to cancel a listing and a notice period for delisting, MB Rules or GEM Rules, where appropriate, will continue to apply. Other Main Board issuers with their securities continuously suspended for 12 months or more may be delisted if they fail to resume trading within 12 months from the Effective Date. All other Main Board issuers, and all GEM issuers regardless of their suspension duration, will be subject to the new Listing Rules.