Interim and annual reports – disclosure of operation of Share Schemes

Key changes to the disclosure requirements in interim and annual reports are as follows:

Annual report – summary of Share Schemes

From 1 January 2023, the requirement to include a summary of each of the issuer’s share option schemes in the annual report will be extended to all share award schemes, irrespective of whether they are funded by existing or new shares.²² There is no substantive change to the content requirement of such summary.²³ The summary must include:

• Purpose of the scheme
• Participants of the scheme
• Total number of shares available for issue under the scheme (and the percentage of issued shares they represent)
• Maximum entitlement of each participant
• The exercise period and minimum vesting period
• The amount, if any, payable on application or acceptance of the option or award and the period within which such payment must be made
• Basis for determining the exercise price of options (or purchase price of shares awarded, if any)
• Remaining life of the scheme

Remuneration or corporate governance report

Given the role of the Remuneration Committee under the new rules in reviewing or approving proposed grants of options and awards to directors and senior management, the Rules will require a summary of material matters relating to Share Schemes considered by the Remuneration Committee the disclosure of the issuer’s remuneration report or corporate governance report.²⁴ The Remuneration Committee is also given the discretion to decide on the appropriate level of disclosure.²⁵

Next Steps

Issuers should take note of the latest disclosure requirements, and prepare announcement for grants and interim and annual reports in compliance with these requirements from the Effective Date.

If we can assist issuers with any compliance issue relating to Share Schemes, please feel free to contact us.

Reference materials:

Consultation Paper – Proposed Amendments to Listing Rules relating to Share Schemes of Listed Issuers (October 2021)

Consultation Conclusions – Proposed Amendments to Listing Rules relating to Share Schemes of Listed Issuers and Housekeeping Rule Amendment (July 2022)

Marked up amendments to the MB Rules (Appendix III of the Consultation Conclusions)

Marked up amendments to the GEM Rules (Appendix IV of the Consultation Conclusions)

Frequently Asked Questions on the amended Rules and the transitional arrangements for existing Share Schemes (July 2022)

1. Unless otherwise specified, capitalised terms used in this client alert shall have the same meaning as in the previous client alert published on 13 September 2022, and any reference to the MB Rules, GEM Rules or Rules in this client alert is a reference to the amended Rules, which will take effect from 1 January 2023 (the Effective Date).
2. MB Rule 17.06A(2), and GEM Rule 23.06A(2).
3. MB Rule 17.06B(2)(a), and GEM Rule 23.06B(2)(a).
4. MB Rule 17.06B(1), and GEM Rule 23.06B(1).
5. MB Rule 17.06B(3), and GEM Rule 23.06B(3).
6. MB Rule 17.06B(5), and GEM Rule 23.06B(5).
7. MB Rule 17.06B(6), and GEM Rule 23.06B(6).
8. MB Rule 17.06B(4), and GEM Rule 23.06B(4).
9. MB Rule 17.06B(2)(b), and GEM Rule 23.06B(2)(b).
10. MB Rule 17.06B(7), and GEM Rule 23.06B(7).
11. MB Rule 17.06B(8), and GEM Rule 23.06B(8).
12. MB Rule 17.06B(9), and GEM Rule 23.06B(9).
13. Under Chapter 14A of the MB Rules, the announcement requirement may be exempted under the de minimis exemption. See MB Rule 14A.76, and GEM Rule 20.74.
14. MB Rule 17.06B(10), and GEM Rule 23.06B(10).
15. MB Rule 17.06B, and GEM Rule 23.06B.
16. MB Rule 17.12(1), and GEM Rule 23.12(1).
17. MB Rule 17.07, and GEM Rule 23.07.
18. MB Rule 17.07(1)(c), and GEM Rule 23.07(1)(c).
19. MB Rule 17.07, and GEM Rule 23.07.
20. MB Rule 17.12(1)(a), and GEM Rule 23.12(1)(a).
21. MB Rule 17.07(1), and GEM Rule 23.07(1).
22. MB Rules 17.09 and 17.12(1)(b), and GEM Rules 23.09 and 23.12(1)(b).
23. MB Rule 17.09, and GEM Rule 23.09.
24. MB Rule 17.07A, and GEM Rule 23.07A.
25. Consultation Conclusions – Proposed Amendments to Listing Rules relating to Share Schemes of Listed Issuers and Housekeeping Rule Amendment (July 2022), at [147].

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