Hong Kong Exchange Proposes Relaxing Disclosure Thresholds to 50% in Second Phase of Competitiveness Review

Stock News
Sep 21

On September 21, the Hong Kong Stock Exchange published a consultation paper seeking market feedback on its second phase of proposals aimed at enhancing the competitiveness of its listing regime. The consultation period will run for 10 weeks, concluding on November 30, 2026.

This consultation marks the second stage of the exchange's review into the competitiveness of its listing framework, with a primary focus on regulating corporate transactions conducted by already-listed issuers. The proposals cover notifiable transactions, connected transactions, and spin-off listing requirements, with the dual objective of granting listed issuers greater flexibility in executing corporate deals while preserving appropriate investor protection through enhanced disclosure obligations and robust board accountability mechanisms.

Woo Chi-suen, Head of Listing at Hong Kong Exchanges and Clearing, stated that the reform aims to provide issuers with greater flexibility and certainty. By reducing the cost and time associated with corporate transactions, the measures seek to uphold investor safeguards via timely, meaningful disclosures and strong board accountability.

Key proposals on transaction classification and thresholds

The exchange recommends removing the "profits ratio" test, which is most prone to producing anomalous outcomes, and would instead allow listed issuers to compare the consideration ratio against the higher of their market capitalisation or net asset value. Furthermore, the threshold for disclosable transactions would be substantially relaxed from the current 5% to 25% range up to a new 5% to 50% band, while the threshold for major transactions would rise from 25% to 50%. Additionally, the proposal calls for eliminating the classifications of very substantial disposals and very substantial acquisitions.

Transactions in the ordinary course of business

For asset acquisitions or leases conducted in the ordinary course of business that would otherwise constitute major transactions, the proposal suggests removing the requirement to issue a circular and obtain shareholder approval.

Announcement disclosure standards

To ensure investors receive timely, sufficient, and substantive information to evaluate transactions, all announcements for notifiable transactions would be required to disclose material transaction terms, key financial data of the target company, and an explanation of the transaction's impact. Additional circumstances necessitating separate announcements would also be introduced.

Connected transaction rules

The proposal seeks to raise the definition threshold for a "connected subsidiary" from the current 10% voting power exercisable or controlled by a connected person to 30%. It also suggests allowing annual caps for continuing connected transactions to be expressed as a percentage of revenue or other financial items, rather than being limited to monetary amounts.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Most Discussed

  1. 1
     
     
     
     
  2. 2
     
     
     
     
  3. 3
     
     
     
     
  4. 4
     
     
     
     
  5. 5
     
     
     
     
  6. 6
     
     
     
     
  7. 7
     
     
     
     
  8. 8
     
     
     
     
  9. 9
     
     
     
     
  10. 10