The HKEx published its "Consultation Paper on Proposed Changes to Requirements for the Listing of Debt Issues to Professional Investors Only" (Debt Issues Consultation Paper) on 17 December 2010 to amend the Listing Rules requirements for listing debt securities offered to professional investors only. None of the proposals contained in the Debt Issues Consultation Paper would apply to debt securities offered to retail investors in Hong Kong.
Chapter 37 of the Main Board Listing Rules deals with listing debt securities that are offered to professional investors only and not offered to public investors in Hong Kong. These debt securities are referred to in the Listing Rules as selectively marketed securities and such debt listings are referred to as listings by selective marketing. These debt securities are rarely traded on the SEHK and most trading are conducted off-exchange. Listing is sought so that institutional investors with investment mandates that are limited to listed debts can subscribe for these securities.
The major proposals contained in the Debt Issues Consultation Paper are summarised below:
- The relevant Listing Rules provisions are proposed to be presented in more accessible language and two forms of alternative presentation have been suggested to seek respondents' preference.
- Eligibility requirements
- To bring in line the definition of "professional investor" contained in the Listing Rules with the definition in the SFO.
- To remove provisions relevant only to retail investors from the eligibility requirements for listing applicants.
- Listing approval
- To authorise the Executive Director - Listing (i.e. Head of Listing) to approve all offers of debt securities to professionals and allow that authority to be delegated within the Listing Division.
- Listing documents
- To replace the current detailed disclosure requirements with an obligation to include information that is customary for offers of debt securities to professionals.
- To retain the requirements to include responsibility and disclaimer statements in prescribed forms and a statement limiting distribution of the offering circular to professionals.
- Application vetting
- To continue vetting applicants for compliance with the relevant listing eligibility criteria.
- To only vet listing documents for compliance with the obligations to include disclaimer and responsibility statements in prescribed forms and a statement limiting distribution of the document to professionals only.
- Application procedures
- To streamline the application procedures.
- Continuing obligations
- To remove provisions relevant only to retail investors from the continuing obligations.
- Other issues
- To amend the relevant GEM Listing Rules to bring them into line with the proposals contained in the consultation paper.
Comments in response to the Debt Issues Consultation Paper should be submitted no later than 18 February 2011.
Copies of the Debt Issues Consultation Paper can be downloaded via the link below: