From January to April 2026, The Stock Exchange of Hong Kong Limited (the “Exchange”) published certain guidance covering, among other matters: (1) the uncertificated securities market (the “USM”); (2) revisions to the ongoing public float requirements; and (3) the appointment, removal and remuneration of auditors. This article summarises the key aspects of the relevant updates.

(1) Uncertificated Securities Market

The USM regime aims to abolish paper share certificates and enable the electronic holding and transfer of securities. The core feature of the USM is that, through the platforms operated by approved securities registrars (“ASR“) and connected to systems of Hong Kong Securities Clearing Company Limited, investors may hold prescribed securities (“Prescribed Securities“) directly in their own names in uncertificated form and enjoy shareholders’ rights directly. The Exchange and the Securities and Futures Commission currently expect the USM to be implemented on 16 November 2026 (“USM Implementation Date“), with the corresponding amendments to the Listing Rules taking effect upon the implementation of the relevant subsidiary legislations. The USM regime prescribes a five‑year phased mandatory transition, with an aim to enhance the operational efficiency and security of the securities market.

For new applicants of Prescribed Securities whose listing date falls after the USM Implementation Date, such securities must be issued in uncertificated form from the date of listing. Prescribed Securities of listed issuers will be required to become Participating Securities within the five‑year transition period from the USM Implementation Date. For listed issuers, there are certain preparatory steps which need to be completed at this stage, including (but not limited to):

Listed issuers are therefore recommended to engage with their ASRs and assess whether preparatory work (such as amendments to constitutional documents) should be commenced in advance, in order to facilitate a smooth transition to the USM regime.

(2) Revisions to the Ongoing Public Float Requirements

The Exchange has revised the ongoing public float requirements under the Listing Rules. The revised rules have taken effect since 1 January 2026, introducing new ongoing public float thresholds, disclosure obligations and the regulatory approach to public float shortfalls.

While the existing minimum 25% public float requirement applicable to issuers (which have no other classes of listed shares) (the “Initial Prescribed Threshold“) will remain effective, the revised regime introduces an alternative threshold for compliance purpose. Under the alternative threshold, an issuer must ensure that the portion of the class of shares an issuer has listed on the Exchange that is held by the public must, at all times:

1. have a market value of at least HK$1 billion; and
2. represent at least 10% of the issuer’s total number of issued shares in the class of shares listed (excluding treasury shares) (“Alternative Threshold“).

An issuer which intends to adopt the Alternative Threshold is required to publish an announcement as soon as practicable, containing the reasons for the change and a statement setting out the market value and percentage of its public float as at the latest practicable date.

For A+H share issuers, the revised rules replace the former aggregate threshold for both A and H shares with bespoke ongoing public float requirements for H shares. Under the new regime, at all times, the issuer’s H shares listed on the Exchange and held by the public must either:

1. have a market value of at least HK$1 billion (calculated by reference to the volume‑weighted average price over the previous 125 trading days); or
2. represent at least 5% of the total number of issued H shares (excluding treasury shares).

In addition to the longstanding requirement to confirm sufficient public float in annual reports, the revised regime introduces ongoing disclosure requirements at both monthly return and annual report levels, summarised below:

The revised regime also removes automatic suspension solely due to a public float shortfall and adopts a disclosure‑ and remedial‑based approach.

For all issuers with a public float shortfall:

1. an initial announcement (“Initial Announcement“) must be published within one business day after the issuer becomes aware of the shortfall, disclosing the non‑compliance and relevant public float information;
2. where a restoration plan and expected timeline cannot be finalised for inclusion in the Initial Announcement, a subsequent announcement must be published within 15 business days thereafter;
3. while the shortfall persists, subsequent monthly announcements must be published to update the market on the status and progress of the restoration plan; and
4. unless exceptional circumstances apply (e.g. privatisation or compliance with court orders), the issuer and its directors (and supervisors, where applicable) must not take actions that would further reduce the public float.

For issuers with a Significant Public Float Shortfall (as defined under Rule 13.32F of the Listing Rules), additional requirements apply, including:

1. the publication of an announcement within one business day upon becoming aware of a Significant Public Float Shortfall;
2. the addition of the stock marker “‑PF” to the issuer’s listed shares, until compliance is restored;
3. the inclusion of an appropriate warning statement in all announcements and documents required to be published by the Listing Rules; and
4. delisting if the issuer fails to re‑comply with the applicable ongoing public float requirement within 18 months (or 12 months for GEM issuers).

(3) Latest FAQs on the Appointment, Removal and Remuneration of Auditors

The Exchange has also updated FAQ16 – No.5 to provide further clarification on the core shareholder protection standards relating to the appointment, removal and remuneration of auditors under paragraph 17 of Appendix A1 to the Listing Rules.

Under the relevant guidance, a listed issuer must ensure that the appointment, removal and remuneration of its auditors are approved by a majority of shareholders, or by another body that is independent of the board of directors. The Exchange has confirmed that, where a listed issuer’s constitutional documents:

• permit the board of directors to appoint an auditor to fill a casual vacancy, with such appointment lasting only until the next annual general meeting; and
• provide that the auditor’s remuneration is approved by ordinary resolution at a general meeting, or determined in the manner specified in such a shareholders’ resolution,

such arrangements will generally be regarded as meeting the core shareholder protection standards, provided they are consistent with the applicable provisions of the Companies Ordinance (Cap. 622) (or the equivalent provisions in the issuer’s constitutional documents and domestic laws).

In addition, to ensure that the appointment or re‑appointment of auditors is considered through due process, the Exchange has indicated that the relevant circular should disclose the estimated audit fee agreed with the auditor for the audit services for the relevant reporting period (whether as a fixed amount or a fee range), together with an explanation of the basis of determination and key assumptions adopted.

Importantly, the Exchange has emphasised that a listed issuer must not request or take any action to cause an auditor to resign without first obtaining shareholders’ approval at a general meeting, as such request or action may be regarded as a removal of the auditor under the Listing Rules. The Exchange has further cautioned that pressuring an existing auditor to materially reduce previously agreed audit fees, whether directly or by reference to lower quotes from other auditors, may be regarded as indirectly causing an auditor’s resignation in lieu of shareholders’ approval.

For further information or advice regarding the above, please do not hesitate to contact us.