Jurisdiction - Hong Kong
Hong Kong – New Listing Decisions.

13 May 2012



Delaware and Maryland are Now Acceptable Jurisdictions
In February and March 2012, Delaware and Maryland, respectively, became acceptable overseas jurisdictions. 
For a copy of the Delaware Listing Decision, including a comparison table of shareholder protection standards between Hong Kong and Delaware, please follow the link: 
For a copy of the Maryland Listing Decision, including a comparison table of shareholder protection standards between Hong Kong and Maryland, please follow the link:
An example of a Maryland-incorporated issuer is Coach, Inc., which was listed on the New York Stock Exchange and now has a secondary listing in Hong Kong. 
There are no Delaware-incorporated issuers listed on the Exchange yet. The acceptable jurisdictions list has now reached 20, in addition to Hong Kong, Mainland China, Bermuda and the Cayman Islands. 
Alberta, Canada Clarified 
In February 2012, the Exchange clarified that Alberta is considered an acceptable jurisdiction irrespective of whether the applicant is (i) listed on the Toronto Stock Exchange and a reporting issuer; or (ii) a non-reporting issuer and not listed on any exchange (e.g., Sunshine Oilsands Ltd.). 
For a copy of the updated Alberta Listing 
Decision, including a comparison table of shareholder protection standards between Hong Kong and Alberta, please follow the link:
Rights Issues and Mandates
In March 2012, the Exchange published two new listing decisions in relation to:
1. Whether Company A’s proposal to issue rights shares under a general mandate would comply with the 20% discount limit on issue price under the Listing Rules 
A mandate was granted to Company A by a special resolution of its shareholders passed at the annual general meeting to allow Company A to issue new shares of not more than 20% of each of the issued H shares and domestic shares within 12 months. The general mandate did not set any price restriction. 
The proposed rights issue represented a discount of about 40% to the average closing price. 
The Exchange ruled that the 20% discount limit on the issue price under Listing Rule 13.36(5) did not apply to the proposed rights issue as the mandate did not contain any price restriction. 
For a copy of the Listing Decision, please follow the link: http://www.hkex.com.hk/eng/rulesreg/listrules/listdec/Documents/ld25-2012.pdf
2. Whether Company A could seek a mandate for rights issue from its independent shareholders at the same general meeting to consider the acquisition 
Company A entered into a very substantial and connected acquisition (subject to independent shareholders’ approval) with its Parent Company to acquire a target. Company A would conduct a rights issue to finance the acquisition. As the rights issue would increase its share capital by more than 50%, independent shareholders’ approval under Listing Rule 7.19(6) is required. 
When considering whether to accept a prior mandate in lieu of a later shareholders’ approval on the terms of the rights issue, the Exchange noted that the rights issue was made with a specific purpose, i.e., to finance the acquisition and the target’s business. In addition, Company A had taken reasonable steps to provide sufficient information about the rights issue to the independent shareholders to decide how to vote, including the purpose of the rights issue, its maximum dilution effect on shareholding, the amount to be raised, and details of the intended use of proceeds. The circular would also contain an independent financial adviser’s opinion on the proposed rights issue. 
The Exchange thus allowed Company A to proceed with the proposal after revising the mandate period from 12 months to four months. 
The Exchange is of the view that if the rights issue did not materialize within a reasonable period, independent shareholders should be given the opportunity to reconsider the proposal taking into account the company’s circumstances and the market conditions at that time. 
For a copy of the Listing Decision, please follow the link: 


For further information, please contact:

Venantius Tan, Partner, Morrison & Foerster
John Moore, Partner, Morrison & Foerster


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