Jurisdiction - Hong Kong
Reports and Analysis
Hong Kong – Updates To The Disclosure Requirements For Acquisitions Prior To Listing.

16 December, 2014


Legal News & Analysis – Asia Pacific – Hong Kong – Capital Markets


The HKEx recently updated two guidance letters governing the disclosure requirements for acquisitions of subsidiaries and businesses (the Target) conducted during or after a company’s requisite three-year trading record period, namely HKEx-GL32-12 and HKEx-GL6-09A.
A brief summary of these letters and current HKEx practice is set out below:


For acquisitions that occur during the final trading record period as set out in a company’s published prospectus:


  • Disclosure of the financial information of the Target from commencement of the three year trading record period up to the date of acquisition is required if the size of the acquisition exceeds any of the 25 per cent thresholds in the Hong Kong Listing Rules calculated by comparing the total assets, profits and revenue of the Target for the most recent financial year of the trading record period against those of the company for the same financial year.
  • If any of the 25 per cent thresholds are met, disclosure of the Target’s financial information up to the date of acquisition is required in the proof of the prospectus submitted at the time of the listing application (the Application Proof) even if the acquisition took place after the latest balance sheet date (e.g., the company is seeking to benefit from HKEx-GL6-09A by f iling with two years and nine months of accounts and the acquisition was in the final three months of the third year). However, if the size test results are all below 25 per cent, the Application Proof prospectus does not need to include the pre-acquisition financial information of the Target provided the company updates the prospectus before the listing hearing to cover the final three months of the trading record period that includes the acquisition.


For acquisitions that occur after the final trading record period:


  • Disclosure of the financial information of the Target during the trading record period (including any stub period) is required regardless of the results of the size test calculation.

All acquisitions or proposed acquisitions since the date the latest audited accounts of the applicant were made should be aggregated. If the aggregate total assets, profits or revenue represents 5 per cent or more under any of the threshold tests, a pro forma statement of assets and liabilities of the enlarged group is required. If any of the tests yield 100 per cent or more, a pro forma balance sheet, pro forma income statement and pro forma cash flow statement of the enlarged group are required.


For further information, please contact:


Christopher Betts, Partner, Skadden
[email protected]

Edward Lam, Partner, Skadden
[email protected]

Alec Tracy, Partner, Skadden
[email protected]

Will Cai, Partner, Skadden
[email protected]




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