Until late 2006, The Stock Exchange of Hong Kong Limited ("HKSE") would accept listing applications from only companies incorporated in four jurisdictions – Hong Kong, the P.R.C., the Cayman Islands and Bermuda. In recent years, as Hong Kong develops into one of the fastest growing capital markets in the world – raising total equity of US$82.8 billion and US$109.7 billion in 2009 and 2010 respectively – HKSE is also expanding its industry coverage and making itself a capital raising destination for companies all over the world. Under its current strategic plan, HKSE welcomes listings of companies from different sectors and different parts of the world, as long as they meet certain listing criteria, including corporate governance standards and financial requirements.

Since October 2006, HKSE has approved fourteen (14) other jurisdictions as acceptable overseas jurisdictions of an issuer's place of incorporation under the Hong Kong Listing Rules, including Australia, Brazil, B.V.I., Canada (British Columbia and Ontario), Cyprus, Germany, the Isle of Man, Japan, Jersey, Luxembourg, Singapore, the U.K. and the U.S.A. (California). Most recently, in January and then in March 2011, HKSE started to include Italy and France as such acceptable overseas jurisdictions.

For each such new jurisdiction, before it would approve a listing, HKSE may require certain amendments to such companies' constitutional documents to strengthen corporate governance (except where such amendments are prohibited in the home jurisdiction of the applicant), and certain disclosures in the offering documents to highlight material differences in that respect. Further, in addition to the Hong Kong Financial Reporting Standards or the International Financial Reporting Standards, overseas incorporated companies may have the accountants' reports prepared in accordance with generally accepted accounting principles in the U.S.A. or other accounting standards acceptable to HKSE under specific circumstances.

Once listed on HKSE, these overseas issuers are required to observe disclosure obligations and corporate governance requirements under the Listing Rules, which comport with international standards.

Italy

In January 2011, HKSE announced it would recognize Italy as an acceptable overseas jurisdiction of an issuer's place of incorporation under the Hong Kong Listing Rules if the listing applicant (i) is a joint stock company with the default structure, (ii) makes certain revisions to its constitutional documents, and (iii) demonstrates a reasonable nexus with Italy when it submits its listing application.

The potential Italian listing applicant is required to submit at the time of filing its listing application:

  • (a) a confirmation from the sponsor that it has considered and reviewed all material shareholder protection issues in its due diligence review under the Listing Rules, and that it is independently satisfied that the protection afforded by Italian laws and regulations to the applicant's shareholders is at least equivalent to or broadly commensurate with that in Hong Kong; and
  • (b) a legal opinion and the sponsor's confirmation that the applicant's constitutional documents do not contain provisions preventing it from complying with the Listing Rules, the Securities and Futures Ordinance and the Takeovers Codes ("Takeovers Codes").

Future applicants incorporated in Italy may follow the streamlined procedures set out in the Guidance Letter issued by HKSE in September 2009 ("Guidance Letter").

For a potential applicant of a corporate type other than a joint stock company, or with a management and control structure other than the default structure (under which a company is managed by a sole director or a board of directors), it will have to address further differences, if any, in protection afforded to its shareholders.

France

In March 2011, HKSE announced it would recognize France as an acceptable overseas jurisdiction of an issuer's place of incorporation under the Hong Kong Listing Rules if the listing applicant (i) is incorporated in France as a société anonyme ("SA") with a single-board structure, (ii) is subject to the requirements of Autorité des marchés financiers ("AMF"), and (iii) demonstrates a reasonable nexus with France when it submits its listing application.

The potential French listing applicant is required to submit at the time of filing its listing application:

  • (a) a confirmation from the sponsor that it has considered and reviewed all material shareholder protection issues in its due diligence review under the Listing Rules, and that it is independently satisfied that the protection afforded by French laws and regulations to the applicant's shareholders is at least equivalent to or broadly commensurate with that in Hong Kong; and
  • (b) a legal opinion and the sponsor's confirmation that the applicant's constitutional documents do not contain provisions preventing it from complying with the Listing Rules, the Securities and Futures Ordinance and the Takeovers Codes.

Future applicants incorporated in France as an SA with a single-board structure that are subject to the regulation of AMF may follow the streamlined procedures set out in the Guidance Letter. Applicants of other corporate types or management structures that are not subject to regulation by the AMF must consider the Joint Policy Statement Regarding the Listing of Overseas Companies issued by HKSE and the Securities and Futures Commission in March 2007 and address any further differences in shareholder protections.

Conclusion

HKSE's acceptance of Italian and French issuers to list in Hong Kong marks an important milestone for Italian and French companies that have existing operations or business interests, or have future development plans, in Asia – they will join other European companies that have listed in Hong Kong in the last four years – including Germany, Luxembourg, Jersey, Cyrus, the Isle of Man and the United Kingdom – to raise capital and have their securities traded in Hong Kong, one of the world's largest capital markets.

For a potential issuer from a jurisdiction that has not been accepted, HKSE allows it to benchmark the shareholder protection standards in its home jurisdiction to any one of the recognized jurisdictions, instead of benchmarking to Hong Kong. It means that, for example, a potential issuer from a country within the European Union may choose to compare its home corporate laws with French or Italian laws or laws of other recognized European jurisdictions to assess equivalence of shareholder protection and demonstrate the acceptability of its home jurisdiction.