Jurisdiction - Hong Kong
Reports and Analysis
Hong Kong – Listed Companies, Stock Exchange: Review Of Disclosure In Annual Reports.

24 April, 2015


The Hong Kong Stock Exchange has published a report setting out its findings and recommendations from its review of issuers’ annual reports for the financial years ended between December 2013 and November 2014. This is part of the Hong Kong Stock Exchange’s on-going monitoring and compliance activities but is separate from its Financial Statements Review Program, which reviews the periodic financial reports published by issuers as to the financial reporting standards and Listing Rules compliance.


In general, there was an improvement in the disclosures in annual reports and a reduction in cases involving possible material breaches of the Listing Rules. However, the following areas were flagged as requiring improvement:


  • Equity fundraising – the intended use of proceeds should be clearly disclosed at the time of the fundraising and the company should report back to its shareholders in its annual report on how those proceeds were actually applied;


  • Significant changes to financial performance – while in general, there were improvements in the MD&A sections, issuers that rely on key customers or have experienced material changes in trade receivables could provide more in-depth discussion in these areas. Where there is reliance on a small number of key customers, a majority of issuers had failed to disclose details of those key customers and their relationship with the issuer, particularly with respect to overdue receivables, enforcement of credit policy, subsequent settlement of overdue receivables and provisions for impairments or lack of provisions for overdue amounts. Where there are material changes in trade receivables, overdue balances or debtor turnover days, adequate explanation should be given for such fluctuations; and


  • Newly listed issuers – newly listed issuers publishing profit warning announcements under the Inside Information Provisions (the statutory provisions under Part XIVA of the SFO which codifies listed issuers’ continuing obligations under the Listing Rules to disclose price sensitive information) should ensure that the information represents material developments subsequent to the date of the prospectus that has not been disclosed by the issuer. Where additional information on a newly listed issuer’s financial position is provided and this information is not inside information, the information given should be meaningful and specific, rather than just repeating information already in the prospectus.


Hogan Lovells


For further information, please contact:


Jamie Barr, Partner, Hogan Lovells

[email protected]


Tim Fletcher, Partner, Hogan Lovells

[email protected]


Terence Lau, Partner, Hogan Lovells

[email protected]


Mark Parsons, Partner, Hogan Lovells

[email protected]


Nelson Tang, Partner, Hogan Lovells

[email protected]


Thomas Tarala, Partner, Hogan Lovells

[email protected]


Steven Tran, Partner, Hogan Lovells

[email protected]


Hogan Lovells Capital Markets Practice Profile in Hong Kong



Comments are closed.