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New Inspection Regime under the Companies Ordinance – Restraint on Public Access to Protected Information of Directors and Company Secretaries

This year the Government proposed to bring into operation the new inspection regime under the Companies Ordinance. The subsidiary legislation relating to implementation of the new regime (“Subsidiary Legislation“) was gazetted on 18 June 2021 and tabled at LegCo for negative vetting.

The key feature of the new regime is the restraint on public access to the usual residential addresses / full identification numbers of directors and company secretaries (collectively, “Protected Information“). Instead, their correspondence addresses / partial identification numbers would be made available for public inspection.

Certain specified persons may apply to the Registrar for access to Protected Information. Upon such applications and subject to meeting the requirements under the legislation, the Registrar may disclose the Protected Information to the specified persons. Examples of specified persons are a member of the company, a solicitor, a CPA (practising) and a financial institution.

According to the proposed timeline, the new regime will be implemented in three phases:-

  • Starting on 23 August 2021, a company may withhold Protected Information from inspection despite the requirements for such information to be contained in the company’s registers.
  • Starting on 24 October 2022, the Registrar must not make available for public inspection the Protected Information contained in a document that is required by the Ordinance under which the document is registered with the Companies Registry to contain such information.
  • Starting on 27 December 2023, data subjects may apply to the Registrar for withholding from public inspection their Protected Information contained in a document already registered with the Companies Registry before 24 October 2022.

On 16 July 2021, the Chairman of the Subcommittee on the Subsidiary Legislation indicated that the Subcommittee would not propose any amendments to the Subsidiary Legislation and would submit a written report in due course.


Full texts of the Subsidiary Legislation are available here.

4 August 2021
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HK Stock Exchange published revised Policy Statement on the enforcement of the Listing Rules and revised Sanctions Statement

The changes to the Listing Rules relating to disciplinary sanctions and powers (Disciplinary Related Rules Changes) came into effect on 3 July 2021. Shortly after the Disciplinary Related Rules Changes have come into effect, The Stock Exchange of Hong Kong Limited (HK Stock Exchange) published a revised Enforcement Policy Statement (Policy Statement) and a revised Enforcement Sanctions Statement (Sanctions Statement) on 8 July 2021. The Policy Statement and the Sanctions Statement reflect both recent developments and the HK Stock Exchange’s view of current enforcement priorities.

There are three enforcement priorities specifically set out in the Policy Statement: (1) responsibility; (2) controls and culture; and (3) cooperation. To further elaborate, (1) responsibility refers to the key priority behind the HK Stock Exchange’s enforcement actions, that is to ensure that those individuals who are responsible for discharging duties in connection with listing matters, and those who are culpable of failures and misconduct, are held to account; (2) controls and culture includes as a minimum the implementation of appropriate and effective internal controls and extends to the culture of the company, and the attitude towards compliance and corporate governance; and (3) cooperation is a straightforward concept: failure to respond to or cooperate with the HK Stock Exchange when there is a duty to do so will be viewed as serious misconduct.

The Sanctions Statement, which is a statement on the principles and factors in determining sanction, has been updated to reflect the Disciplinary Related Rules Changes. For example, whether there was wilful or persistent failure by the issuer to discharge its responsibilities under the Listing Rules is no longer a matter which will be considered before deciding that facilities of the market be denied for a specified period since the threshold of “wilful or persistent” failure has been removed under the Listing Rules.

For more details, please refer to the revised Policy Statement here and the revised Sanctions Statement here

3 August 2021
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FINI – a new platform for Hong Kong IPO settlement

Following a huge support from the market, on 6 July 2021, Hong Kong Exchanges and Clearing Limited (HKEX) confirmed to introduce FINI (Fast Interface for New Issuance) – a new digitalised platform for Hong Kong IPO settlement.  HKEX expects to roll out FINI in the fourth quarter of 2022, at the earliest.

The purpose of FINI is to provide a common venue for market participants and regulatory authorities who are involved in the end-to-end Hong Kong IPO settlement process (including the listing initiation, subscription, pricing, allotment, payment, regulatory approval and stock admission processes) to interact with each other. FINI aims to modernise and streamline the settlement process, and shorten the cycle between IPO pricing and commencement of trading.

Currently and for a long time, a typical Hong Kong IPO settlement cycle means “T+5” i.e. an average of five business days are required for new shares to become tradeable in the secondary market after pricing of an IPO.  FINI will be launched with a “T+2” IPO settlement timetable as the initial standard cycle although a “T+3” or longer IPO settlement period may be allowed upon advance request by issuers.  A shorter IPO settlement cycle is believed to be able to reduce market risk exposure and alleviate the impact on liquidity in Hong Kong dollar.

For more details, please refer to FINI Concept Paper Conclusions at here

22 July 2021
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Arbitration (Amendment) Ordinance 2021 now fully operational

On 19 May 2021, Part 2 of the Arbitration (Amendment) Ordinance 2021 (‘Amendment Ordinance‘) came into operation, making amendments to the Arbitration Ordinance (Cap 609) necessary to fully implement the Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (‘Supplemental Arrangement‘) signed between the Government of the Hong Kong Special Administrative Region (HKSAR) and the Supreme People’s Court of the People’s Republic of China on November 27, 2020.

Two of the measures under the Supplemental Arrangement are the removals of the requirement that Mainland arbitral awards must be made by a ‘recognized‘ Mainland arbitral institution to be enforced in Hong Kong, and of the restriction against concurrent proceedings in Mainland and Hong Kong courts for enforcement of an arbitral award.  To implement these measures, it was necessary to amend Section 2 and repeal Sections 93 and 97 of the Arbitration Ordinance, which has now been done by way of the Amendment Ordinance.  It is hoped that these changes will assist parties in cross-border enforcement of arbitral awards.

For completeness, the Amendment Ordinance also amends the Arbitration (Parties to New York Convention) Order to add Ethiopia, Palau, Sierra Leone and Tonga as parties to the New York Convention.

The text of the Amendment Ordinance is available here.

22 July 2021

SFC issues a warning statement on unregulated virtual asset platforms

On 16 July 2021, the Securities and Futures Commission (“SFC”) issued a warning statement concerning virtual asset platforms. In the warning statement, the SFC highlighted their awareness that Binance may offer trading services in “stock tokens” in Hong Kong, and that no entity in the Binance group is licensed or registered to conduct any “regulated activity” in Hong Kong.

According to the SFC’s warning statement, stock tokens are virtual assets that are represented to be backed by different depository portfolios of underlying overseas listed stocks, with their prices closely tracking the performance of the respective stocks. As stock tokens can be denominated in factional units, they are promoted as an alternative means for investors to purchase fractional shares instead of the entire fully paid-up shares.

Although there is uncertainty as to whether stock tokens fall within the definition of “securities” under the Securities and Futures Ordinance, the SFC expressed their view in the warning statement that stock tokens are likely to be “securities” and thus within their regulatory remit. This means that unless a person is licenced by the SFC (or unless an applicable exemption applies), any person who offers stock tokens or the trading of stock tokens to the Hong Kong public may be criminally liable.

See here for the full warning statement issued by the SFC.

22 July 2021
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