Jurisdiction - Hong Kong
Hong Kong – Waiver For Rule 9.09(b) – No Dealing In Shares Prior To Listing.

13 October, 2012


In September 2012, the Exchange published a guidance letter describing the circumstances under which a Rule 9.09(b) waiver may be considered in the case of a new applicant. 
Rule 9.09(b)
Rule 9.09(b) prohibits dealing in shares by any connected person (such as directors and substantial shareholders and their associates) of the issuer from four clear business days before the Listing Committee hearing until listing is granted. 
Non-exhaustive Circumstances
Each application will be considered on a case-by-case basis, and the Exchange may modify or add conditions for granting the waiver. The 
circumstances which support a Rule 9.09(b) waiver include but are not limited to the following: 


Listed overseas (excluding tradingonly status or over-the-countertrading status)
The applicant’s existing shareholders include independent and public investors over whose investment decisions the applicant has no control. A public investor may become a substantial shareholder of the applicant before it lists on the Exchange.A Rule 9.09(b) waiver may be granted so as not to restrict share dealings by these public investors on the basis that: 
(i) the applicant has no control over the investment decisions of the public investors who may become its substantial shareholders before listing on the Exchange; 
(ii) the applicant will promptly release any price sensitive information to the public in its home jurisdiction; 
(iii) the applicant’s existing connected persons (including substantial and controlling shareholders, directors and chief executive and their respective associates) will not deal in the applicant’s shares during the prohibited period under Rule 9.09(b); and 
(iv) the applicant will notify the Exchange of any breach of the dealing restriction by any of its connected persons during the restricted period.
No change in the ultimate beneficial 
An example would be a distribution in specie by the legal holder of the shares to the ultimate controlling shareholders on a pro-rata basis.
Corporate reorganization The share dealing is due to a corporate reorganization.
Pre-existing shareholder agreement
There was a pre-existing shareholder agreement for distribution of the applicant’s shares in a particular way so as not to dilute the shareholdings of the original shareholders.
Compliance with Listing Rules 
The share dealing is due to a need to comply with the Listing Rules, for example: 
(i) to unwind a pre-IPO investment that does not comply with the Guidance on Pre-IPO Investments; or 
ii) to revise the applicant’s corporate structure, which involves issuing more shares to the controlling shareholder as consideration for injecting its business into the applicant to address the Exchange’s concern on conflicts of interest posed by the controlling shareholder’s business


Pre-IPO Interim Guidance
Applicants should note that dealing in the applicant’s shares by connected persons during the prohibited period under Rule 9.09(b) may fall under the Interim Guidance on Pre-IPO Investments. Applicants must ensure that any share dealing complies with the Interim Guidance on Pre-IPO Investments. 
Applying for a Rule 9.09(b) Waiver
For a Rule 9.09(b) waiver to be granted, applicants must: (i) demonstrate that compliance with Rule 9.09(b) would be irrelevant or unduly burdensome based on the facts and circumstances of their case; and(ii) disclose in the listing document the reasons for applying for a Rule 9.09(b) waiver and the waiver conditions attached. 
Lapse of Prohibition
The share dealing prohibition under Rule 9.09(b) ceases to apply after an application has lapsed (i.e., six months after the filing of a Form A1 listing application). 
For a copy of the guidance letter GL42-12, please follow the link: 



For further information, please contact:
Tony Grundy, Partner, Morrison Foerster
John Moore, Partner,  Morrison Foerster


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