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.