Key changes

(a) Electronic dissemination of corporate communications by listed issuers

Mandating electronic dissemination of corporate communications

Effective from 31 December 2023, all listed issuers are required to disseminate corporate communications to their securities holders electronically, provided that such dissemination is permitted by their applicable laws and regulations and their constitutional documents.

Listed issuers can devise their own electronic dissemination arrangements as long as they comply with applicable laws and regulations and their constitutional documents. Listed issuers must also indicate on their websites how they will send or make corporate communications available to their securities holders. To address the concern that certain investors (e.g., elderly investors) may have difficulty in accessing listed issuers’ corporate communications electronically, listed issuers must provide printed corporate communications to a securities holder upon request. Each listed issuer must also disclose on its website the process for requesting a hard copy of such communications.

Listed issuers intending to implement any new arrangements on dissemination of corporate communications must send a one-time notification (before implementation of the new arrangements) to their securities holders individually, either in hard copy or electronically. The notification should (a) inform the securities holders of the new arrangements; and (b) ask the securities holders for their email addresses. The Stock Exchange will update its Guidance Materials to reflect this requirement.

Implied consent for electronic dissemination of corporate communications

To simplify the process of disseminating corporate communications and to reduce the administrative burdens of listed issuers, the Stock Exchange will also remove the current consent mechanism for disseminating corporate communications electronically, so that listed issuers can rely on securities holders’ “implied consent” for electronic dissemination of corporate communications if this is permitted by their applicable laws and regulations.

If listed issuers can rely on securities holders’ “implied consent” for electronic dissemination of corporate communications, securities holders would receive corporate communications via electronic means where this was stated in the listed issuer’s articles of association and they would not have the right to receive hard copies of corporate communications. The securities holders would not be given the opportunity to choose whether to receive electronic or physical copies of communications.

As stated in the Consultation Paper, the majority of listed issuers are incorporated in the PRC, Bermuda or the Cayman Islands and these jurisdictions generally do not prohibit “implied consent” for electronic dissemination of corporate communications.

However, in the case of Hong Kong-incorporated listed issuers, the Companies Ordinance (Cap. 622) does not permit “implied consent” for electronic dissemination of corporate communications and, as such, express consent or “deemed consent” must be obtained. Under the Companies Ordinance, “deemed consent” to communications by means of website is considered obtained if (a) the company’s articles or a member’s resolutions provide to that effect; (b) the member has been asked individually by the company for such consent; and (c) the member has not responded to the company’s request for consent where the request stated clearly the effect of a failure to respond within 28 days, unless it is proved that the member did not receive the request. Where a member has not agreed to accept website communications, the company should not make the request again within a period of 12 months from the prior request.

The Stock Exchange has indicated that it will work with relevant parties to consider the issue of implied consent for the corporate communications of Hong Kong-incorporated listed issuers.

Mandating Actionable Corporate Communications to be sent to securities holders individually and in electronic form

The Stock Exchange will mandate that listed issuers send actionable corporate communications (Actionable Corporate Communications) (i.e., any corporate communication that seeks instructions from an issuer’s securities holders on how they wish to exercise their rights or make an election as the issuer’s securities holders) individually to securities holders in electronic form, such as via email with weblinks to the relevant pages on the issuer’s website, if functional electronic contact details have been provided to the issuer. If the listed issuer does not have functional electronic contact details of a securities holder, it must send Actionable Corporate Communications to such securities holder in hard copy.

Given the importance of keeping securities holders sufficiently informed of the opportunity to exercise their rights, listed issuers will not be able to satisfy this requirement by solely publishing Actionable Corporate Communications on their websites or the Stock Exchange’s website and must send Actionable Corporate Communications to securities holders individually. In a case where the listed issuer does not have electronic contact details for a shareholder, it must send hard copies and request electronic contact details.

Having noted certain operational obstacles that might be encountered by listed issuers (e.g., invalid, obsolete or duplicated contact details, or email delivery failures for various reasons), the Stock Exchange clarified in the Consultation Conclusions that a listed issuer will be considered to have complied with the requirements if it has used reasonable efforts to contact a securities holder using the electronic contact details provided.¹

Transitional arrangements in respect of electronic dissemination of corporate communications

In light of the adoption of the proposal in respect of electronic dissemination of corporate communications, listed issuers should ascertain whether their constitutional documents contain any provision that may prohibit them from disseminating corporate communications to their securities holders electronically in accordance with the Listing Rules.

Listed issuers will be required to amend their constitutional documents only if the documents contain any restriction to that effect (e.g., any provision that mandates hard-copy dissemination as the only means of dissemination of corporate communications). If such restriction is due to a requirement under the applicable laws and regulations the issuer is subject to, the issuer will be required to amend its constitutional documents to facilitate its compliance with the relevant Listing Rules if and when the relevant restriction is removed from the applicable laws and regulations.

The following transitional arrangements apply to issuers listed before 31 December 2023 if it is necessary to amend their constitutional documents to facilitate electronic dissemination of corporate communications in accordance with the amended Listing Rules.

• Issuers not prohibited by applicable laws and regulations from complying with the relevant amended Listing Rules will have until their first annual general meeting following 31 December 2023 to make the necessary amendments.
• Issuers subject to restriction under any applicable laws and regulations will have until their first annual general meeting following the date on which the relevant restrictions are removed from the applicable laws and regulations to make the necessary amendments.

(b)   Reduction in the number of submission documents and mandating electronic submission

Reduction in the number of submission documents

Codifying obligations in undertakings, confirmations and declarations

The Stock Exchange will codify obligations currently found in various undertakings, confirmations and declarations into the Listing Rules and Guidance Materials instead of requiring the submission of these documents. For example, the Directors’ Undertaking Form (Form B/H/I) will be removed, and Part 1 of the form will be combined with the Contact Details Form for Director/Supervisor/Authorised Representatives/Company Secretary/Compliance Office (Form FF004). The new Listing Rules also require each newly appointed director to obtain legal advice as regards the requirements under the Listing Rules that are applicable to them as a director of a listed issuer and the possible consequences of making a false declaration or giving false information to the Stock Exchange, and require the disclosure of the date of the training of the newly appointed director in an issuer’s corporate governance report.

Consolidating the requirement for personal particulars of directors/supervisors in Form FF004

The Stock Exchange will consolidate the submission requirement for personal particulars of directors and supervisors (in the case of PRC issuers) by combining Part 1 of the Directors’ Undertaking Form with Form FF004 and renaming the form the “Personal Details Form”. For a new listing and a listing of debt securities, the Stock Exchange has also decided to advance the submission deadline for the form, so that the form must be submitted together with the listing application form.

Removing unnecessary submission documents

The Stock Exchange will remove the requirement for issuers to submit certain documents (as set out in Table 1 in Schedule II to the Consultation Paper), e.g., Form M114 (Compliance Adviser’s undertaking) and certain items in Form M104 (Additional information to be submitted together with the Form A1), as these documents reiterate or overlap with obligations already outlined in the Listing Rules or Guidance Materials published by the Stock Exchange, providing no additional value to its assessment of listing applications or regulation of listed issuers.

Codifying listing agreements

The Stock Exchange will repeal the requirement for listing agreements for debt securities (except for debt issues to professional investors), structured products and interests in Collective Investment Scheme (CIS) and investment companies by codifying the relevant obligations (as set out in Table 3 of Schedule II to the Consultation Paper).

Authorisation and consent

Certain obligations of an issuer and other relevant parties to obtain necessary authorisations and consents for their actions will also be codified. For example, board minutes of the listing applicant authorising the submission of Form A1 and approving the new applicant’s undertaking set out therein, as well as resolution(s) in general meetings authorising the issue of securities, are codified into new obligations for listing applicants and sponsors to ensure that submission of Form A1 and new applicants’ undertakings have been duly authorised and approved.

Consolidating sponsors’ and new applicants’ obligations into overarching undertakings

In light of the removal of various documents, the Stock Exchange will add to Form A1 a consolidated set of overarching undertakings, as follows:

• A new applicant must undertake to submit, or procure the submission of on its behalf, accurate and complete information to the Stock Exchange throughout the listing application process.
• Sponsors must undertake on compliance with applicable Listing Rules and Guidance Materials on due diligence, and the provision of advice and guidance to a new applicant and its directors on compliance with applicable Listing Rules and Guidance Materials.

Mandating electronic submissions

The Stock Exchange will mandate electronic submission of all documents unless otherwise specified in the Listing Rules or required by the Stock Exchange. To facilitate this arrangement, the Stock Exchange plans to launch an online “Issuer Platform” as a two-way communication channel between the Stock Exchange, listed issuers and new applicants through which the listed issuers and new applicants can electronically submit all documents and e-forms. The Issuer Platform will enable electronic signature of the relevant submission documents and will incorporate electronic signature features designed to comply with the Electronic Transactions Ordinance (Cap. 553).

In addition, the Stock Exchange will replace the requirement for the submission of multiple hard copies of certain documents (as set out in Table 6 of Schedule II to the Consultation Paper) with a requirement for the submission of one electronic copy of each of those documents.

Until the launch of the Issuer Platform, issuers should submit their documents electronically via email or the HKEX-ESS system (or the “SPRINTS” platform for structured products) in accordance with the requirements of the Stock Exchange.

(c)   Simplification of appendices to the Listing Rules

The Stock Exchange has proposed restructuring the current appendices to the Listing Rules to enhance the online experience for users through:

• moving fee-related appendices and certain forms that set out mandatory requirements to new sections on the Stock Exchange’s website and indicating that they still form part of the Listing Rules;
• repealing administrative appendices and displaying their contents separately on the Stock Exchange’s website outside of the Listing Rules section;
• deleting appendices that have been superseded or repealed, or are otherwise unnecessary in the Listing Rules; and
• reorganising the remaining appendices by theme.

The Consultation Conclusions (which contain the proposed amendments to the Listing Rules) and the Consultation Paper are available on the website of the Stock Exchange.

1. As stated in the Consultation Conclusions, for example, an issuer is considered to have complied with the requirements if it sends corporate communications to the electronic contact details provided by the securities holders without receiving any non-delivery message. If, however, it receives a non-delivery message, the issuer should contact the relevant holders using other contact details provided by them and resend the corporate communications to the holders in the manner agreed by the holders, or resend the corporate communications in any other manner (e.g., in hard copy) the issuer considers appropriate.

In-depth 2023-204