In the past quarter, HKEx has issued a number of Listing Decisions and Guidance Letters on various aspects of listing practice. It also consulted the market on various regulatory initiatives. A summary of key items follows:

  • consolidation and restatement of HKEx policies on pre-IPO investments in 2 new Guidance Letters, GL43-12 (key terms and investors' rights in pre-IPO investment) and GL44-12 (restrictions on convertible and exchangeable instruments in pre-IPO investment) – please see a Davis Polk & Wardwell briefing on these Guidance Letters
  • amendment of an existing Listing Decision (LD43-3) on the treatment of variable interest entities (“VIE” or “structured contract”) listings, setting out certain prospectus disclosure as well as substantive structuring requirements
  • new Guidance Letter (GL34-12) on the disclosure of “hard underwriting” in a prospectus – hard underwriting refers to a case where the underwriters, in exchange for an additional fee, commit to purchasing a fixed value of shares in the event of under-subscription, on condition that the offer is priced at the lower end of the indicative price range 
  • public consultation on introducing trading halts that would enable price-sensitive information to be disclosed during trading hours with a 30-minute trading halt, to replace the current practice of trading-session-based suspensions for release of information 
  • public consultation on listed company board diversity (focusing in particular on gender and age) with proposals to insert a Principle in the Corporate Governance Code of "diversity of perspectives" as a key consideration for board structures, and a Code Provision that the nomination committee should have a policy on this subject and that relevant disclosure should be made in the Corporate Governance Report issued by the listed company
  • consultation conclusions on the proposed Environmental, Social and Governance (“ESG”) Reporting Guide, comprising recommended practices for Main Board and GEM listed companies with their upcoming financial year-end after 31 December 2012, which will upgrade the ESG obligations of a listed company to the "comply or explain" status (similar to the current corporate governance core principles) by 2015