The Securities and Futures Commission (SFC) and The Stock Exchange of Hong Kong Limited (SEHK), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), have published a revised Joint Policy Statement (JPS) regarding the listing of overseas companies.
The objective of the revised JPS replaces the original JPS issued in March 2007, which was aimed at facilitating the listing of overseas companies by clarifying requirements in the Listing Rules of SEHK and providing a clear roadmap for potential issuers and their advisers to refer to regarding key shareholder protection matters.
By identifying the key shareholder protection standards that must be met to be an acceptable jurisdiction of incorporation, the JPS made it possible for applicants from a much wider range of jurisdictions to list in Hong Kong. To date, the SEHK's Listing Committee has approved, in principle, 21 such jurisdictions.
The objective of the revised JPS is to promote transparency in the listing process; provide regulatory certainty for overseas companies seeking a primary or secondary listing in Hong Kong; and maintain the quality of Hong Kong's financial market, in its high standards of regulation, investor protection and corporate governance.
"The revised JPS consolidates all relevant issues regarding listing of overseas companies into a single document. It is comprehensive, and should facilitate a clear understanding of the ways in which listing of overseas companies can be achieved in line with regulatory expectations," said the SFC's Chief Executive Officer Ashley Alder.
David Graham, HKEx's Chief Regulatory Officer and Head of Listing, added that "setting out our approach in the revised JPS enables us to adapt our requirements quickly. It also provides transparency on our approach to help those overseas companies planning to make a listing application."
The key elements of the revised JPS are refining shareholder protection standards, expanding the regulatory co-operation arrangements expected to be in place with relevant overseas jurisdictions, providing guidance on acceptable overseas accounting and auditing standards, and highlighting some practical or operational matters that overseas companies contemplating a listing in Hong Kong may encounter, such as cross-border clearing and settlement.
In addition, it clarifies the approach to vetting the suitability of companies applying for secondary listings, and provides guidance on the common waivers the SEHK is prepared to grant an overseas company with, or seeking, a listing, and on the waivers that are automatically granted to companies with, or seeking, a secondary listing if they meet the criteria described in the revised JPS.
SEHK has requested and been granted the SFC's consent for these waivers. The SFC and SEHK have agreed that SEHK will likely amend its Listing Rules in the longer term to incorporate the experience SEHK gains from using the revised JPS in practice.
SEHK also aims to publish a Country Guide for each acceptable jurisdiction by the end of 2013 setting out, among other things, comprehensive and user friendly guidance on how companies incorporated in the jurisdiction can meet the requirement for equivalent shareholder protection standards in the Listing Rules.A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
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