Hong Kong Exchanges and Clearing Limited (HKEX) has issued a notice announcing amendments to the continuous public shareholding requirements under the Main Board Listing Rules and the GEM Listing Rules, following approval by the Securities and Futures Commission. The revisions take effect immediately.
The notice states that, except as specified under these rules, exchange participants are prohibited from trading suspended securities under any circumstances. Participants failing to comply are subject to disciplinary action by the Board. However, the following transactions involving suspended securities are not considered violations: (1) Trading of securities suspended due to the public shareholding falling below the minimum requirement specified in the Main Board or GEM Listing Rules, where the exchange participant trades to help the security regain the required minimum public shareholding level, provided the participant reports all such trades as required by the exchange. (2) Returning borrowed securities that have been suspended from trading (without creating a new borrowing position) or making a cash payment in lieu of return. (3) For applicable market maker securities that are suspended, where the market maker, in its own account, any affiliated account, or any licensed securities dealer account: (a) borrows the applicable market maker security; or (b) issues instructions to issue additional shares under terms stipulated by the issuer, for the purpose of completing market maker short sales agreed before the suspension. (3A) For dual-counter securities that are suspended, where the dual-counter market maker, in its own account, any affiliated account, or any licensed securities dealer account, borrows the dual-counter security to complete dual-counter market maker short sales agreed before the suspension. (4) For securities suspended due to any of the following activities (and not for other reasons): (a) placement of securities by the issuer or its representative, or by an existing shareholder of the issuer under the Main Board or GEM Listing Rules; and (b) offers for subscription, offers for sale, rights issues, and open offers conducted under the Main Board or GEM Listing Rules. For placements, exchange participants trading the placed securities during the first five trading days of the suspension period; for offers for subscription, offers for sale, rights issues, and open offers, exchange participants entering into subscription or underwriting agreements with the issuer, existing shareholders, or underwriters during the first five trading days of the suspension period, provided participants comply with exchange requirements. Notwithstanding the above, exchange participants may apply to the exchange to extend the period during which trading suspended securities under such placements, offers for subscription, offers for sale, rights issues, and/or open offers is not considered a violation of Rule 539, and the exchange may approve extensions as it deems appropriate. (5) Exchange participants engaging in lending of suspended securities to facilitate settlement of delivery obligations arising from the exercise and assignment of stock options under the Options Trading Rules and Clearing Rules.
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