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Hong Kong listing rules

Charltons offers a full advisory service on Hong Kong Listing Rules compliance for companies seeking a new listing on the Hong Kong Stock Exchange and already listed companies, as well as their directors, senior management and major shareholders. The firm also advises sponsors, underwriters, compliance and financial advisers on their role in assisting Hong Kong listed companies.

The regulatory and compliance regime in Hong Kong changes constantly as regulators update requirements to keep the market in line with international best practice and deal with specific market developments. Charltons keeps clients up to date on new and impending regulatory change through comprehensive client updates and providing in-house training on new requirements.

The key areas on which Charltons assists clients include advising:

  • companies on the requirements and procedures for listing and different methods of listing
  • sponsors and underwriters, including in relation to the nature and extent of sponsors’ due diligence obligations
  • listed companies on post-listing fund raising activities including rights issues and open offers, and further issues and placings of equity and debt
  • listed company transactions and Hong Kong Listing Rules compliance
  • general on-going regulatory compliance and corporate governance
  • implications of the Codes on Takeovers and Mergers and Share Repurchases


The general regulatory and compliance regime in relation to connected transactions involving a company listed in Hong Kong

 Connected transactions, in general, involve transactions between a group of companies (including the company listed on The Stock Exchange of Hong Kong Limited) (Hong Kong Stock Exchange) and the connected persons; transactions between a group and third parties that may confer benefits to connected persons.  These transactions can be one-off or continuing, and include both capital and revenue nature transactions.

Connected transactions involving a listed company in Hong Kong is mainly governed by Chapter 14A of the rules governing the listing of securities on The Stock Exchange of Hong Kong Limited (Hong Kong Listing Rules) (or Chapter 20 of the rules governing the listing of securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited (GEM Listing Rules)).

The purpose of the relevant provisions in the Hong Kong Listing Rules and the GEM Listing Rules is to safeguard the interest of the shareholders and the general investing public against the person taking advantage of his/its position to control or influence a group of companies to enter into connected transactions.

Connected persons are, in general, persons who can control or exercise significant influence over the group or who may benefit from transactions with the group. They include senior executives (including directors) and substantial shareholders of the listed company or its subsidiaries, and any persons closely associated with them and this include, in general, any non wholly-owned subsidiary of the listed company if it is substantially held by such senior executives and/or substantial shareholders (and/or their associates).

In other circumstances, the Hong Kong Stock Exchange may also deem other persons as connected persons.

Depending on the nature and size of the connected transactions, a listed company is required to make disclosure in announcements and annual reports, and sometimes, obtain approval from its shareholders.  Persons with materials interests in the relevant connected transactions cannot vote on the relevant shareholders’ resolution approving the transaction.  In relation to continuing connected transactions, they may also be subject to annual reviews by independent non-executive directors and the auditors.

Some specific connected transactions are exempted or waived from the relevant requirements under the Hong Kong Listing Rules or the GEM Listing Rules.  These apply to connected transactions that are immaterial to the group, or where the risk of abuse by connected persons is low.  There are exemptions that partially or wholly exempt the connected transactions or the continuing connected transactions from the requirements of the Hong Kong Listing Rules or the GEM Listing Rules.  However, the Exchange has the power to specify that an exemption will not apply to a particular transaction.

Moreover, the Exchange will aggregate a series of connected transactions and treat them as if they were one transaction if they were all completed within 12-month period or otherwise related.

Hong Kong Listing Rules

Corporate governance

Regulatory and compliance regime

Hong Kong regulatory and compliance regime

Chapter 14A of the Hong Kong Listing Rules

Ongoing regulations and corporate governance

Hong Kong listed companies

Requirements and procedures for listing in Hong Kong

Codes on Takeovers and Mergers and Share Repurchases

Hong Kong connected transactions

GEM Listing Rules
Chapter 20 of GEM listing rules
Stock Exchange Listing Rules
Corporate Governance Guidelines
Regulatory and Compliance Training

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