Articles: HKEx/SFC: Listing Rules
The insider blackout period
Webb-site.com
supports the Listing Committee's proposal to rebase the
blackout period on directors' dealings from the end of the financial period
until results are published. Tell us what you think in our opinion poll.
(24-Apr-08)
Poll Position
We need your help! SEHK
has proposed requiring all votes to be conducted by poll (1-share-1-vote),
ending the ancient show-of-hands system. We strongly support this move to
greater transparency and accountability. Take our opinion poll and tell us
what you think. Meanwhile, we urge custodians to tick the CCASS box to
demand polls in all meetings. (3-Apr-08)
Stock Exchange launches lunchtime shocks
Under "minor listing rule
amendments" announced tonight, HKEx will allow companies to release
unscheduled price-sensitive information during lunchtime, leaving
outstanding orders from the morning session at risk of being hit. (1-Feb-08)
Faster and quarterly financial reporting
We need your help! After trying once in 1998 and again in 2002, Hong Kong is
again proposing faster financial reporting and mandatory quarterly reporting, to
catch up with the rest of Asia, including mainland China, where quarterly
reports have been mandatory since the start of 2003. With your support, we hope
to overcome vested interests this time. Please take our opinion poll!
(24-Sep-07)
Blackout on Receivables
If you saw the lights dim recently, it was because the Stock Exchange scrapped a
requirement for listed companies to disclose large accounts receivable, which
could have warned investors about impending disaster. Dressed up as a "minor
and housekeeping" rule amendment without consultation, the change is
illustrative of the urgent need to increase investor representation on the
Listing Committee, to produce pro-investor policy reform. And that's where HK
needs your help. (24-Mar-06)
CSFB's Toxic Convertibles
Webb-site.com lifts the lid on the toxic convertibles scam in HK, in
which small, mostly naive companies surrender control over future equity
issuance to an investment bank, whose principal interest is to lock in a profit
by converting bonds on a rolling basis at a deep discount to market and selling
the resulting shares. CSFB has led the way down this value-destroying path, with
Merrill Lynch recently joining the fray. We estimate that the banks make a gross
profit on money raised of about 31%, and the average stock price has fallen 30%
since a toxic convertible was launched. If you are a listed company, just say
no. If you are an institutional investor, take your business elsewhere.
(8-Jun-05)
New World Development Co Ltd and certain directors v SEHK
HK Court of Appeal, 27-May-05
Toxic IPOs in HK
In this epic article, we
take you through the IPOs of at least 14 listed companies, 3 of which have
already led to criminal charges. We explain the inter-relationships
between the companies, sponsors, lead managers, auditors and the INEDs.
Before you buy another IPO, stop and read this article. (21-Mar-05)
Vampire - Nothing Left to Prove
Last week saw AGMs of CITIC Pacific, Hysan, Li & Fung,
China Unicom, Cathay, Swire, HK Electric and CKI. In every case, a majority of
investor votes were against the 20% cash issue mandate, but controllers pushed
it through. With 10 HSI companies now having voted, Project Vampire has nothing
left to prove - investors have voted on average by more than 2 to 1 against the
issue mandate. It's time for the regulators to act. (16-May-04)
New World Development Co Ltd and certain directors v SEHK
HK Court of First Instance, 3-May-04
Project Poll Update
Polls are a part of the
future of Hong Kong, at least for listed companies, if not the
Government. This year, a number of index members have announced that they will
conduct a poll, possibly making a virtue out of the
fact that Webb-site.com could force them to anyway. It's the beginning of the end for
the rigged show-of-hands system. We call on the Stock Exchange and its
Listing Committee to make poll voting mandatory, as the OECD Asian round table
recommended. (5-Apr-04)
Almost No Mandate
The tide is turning in Hong Kong's battle for pre-emptive rights. In a close
shareholder vote, the board of HKEx almost lost its general mandate to issue new
shares, by asking for a 20% cash mandate, against the recommendations of Project
Vampire. And this is the company which makes the Listing Rules which allow such
mandates in the first place. Things weren't much better over at Bank of East
Asia, either (5-Apr-04)
Four more slay Vampire
Another four companies have joined the elite "Vampire Pioneers" list of
companies which have adopted the recommendations of Project Vampire to limit
their general issue mandates, so reducing the risk to investors of unwanted
dilution of their shareholdings and economic rights. Find out who these pioneers
are, and how your company can join the list. (10-Jul-03)
Arts Optical adopts Vampire
A month ago we launched Project Vampire, urging investors to vote against the
general issue mandate which allows directors to dilute shareholders' interests
without a rights issue. We promised a fanfare for the first HK company to comply
with our recommendations on restricting the mandate to international standards.
And the prize goes to: Arts Optical. We hope that others will follow their
example. (22-Apr-03)
Webb-site.com launches
Project Vampire
Webb-site.com announces
the launch of Project Vampire and urges institutional investors worldwide
to vote against the placing mandate at each AGM, as this is a
license to dilute shareholder value and voting rights. We recommend standards set
by UK institutional forums, as we explain. (16-Mar-03)
Webb-site.com launches
Project Poll
Webb-site.com announces
the launch of Project Poll, a campaign which will get all votes counted,
one-share-one-vote, in
every meeting of the 33 Hang Seng Index companies and HKEx. Currently, absentee votes
are ignored, and the levels of support and opposition to management proposals
remain unrecorded. We will also appoint up to 5 journalists to attend each
meeting, in an effort to open the closed doors of Hong Kong's shareholder
meetings. (3-Mar-03)
Investors don't
count at HKEx
HKEx has released the conclusions of its year-old consultation on the Listing
Rules, and in an outrageous disregard of investor interests, it has counted 337
responses submitted via Webb-site.com as a single submission, while
counting everyone else in the total of 167, including 110 listed companies,
separately. Opponents of Article 23 must be wondering if their petitions will be
treated in the same way. (19-Jan-03)
Listing Chaos
We review
a chaotic month on the Government policy front in general and the HKEx in
particular, and look at the broader issues surrounding the current
proposals, or rather the lack of them. Merging two issuer-dominated
Listing Committees together will not address the needs of investors, while
the Government ducks the real problem of having a for-profit toothless
regulator rather than SFC regulation and statutory backing for the Listing
Rules. (28-Jul-02)
Listing Rules
Review Part 5: Rules Roundup
We're almost out of time on the
Listing Rules consultation, which closes next Monday, so this final part of our review covers some of
the remaining issues from the 176 page document. We look at notifiable
transactions, directors' pay and share dealings, connected transactions,
battles for control of the board, and the availability of basic corporate
documents. (17-Apr-02)
Listing Rules
Review Part 4: Show us the Money
In Part 4 of our review of the proposed Listing Rule changes, we look at
the proposals on financial reporting, including the long-awaited move to
quarterly statements. When directors and controlling
shareholders know what is going on daily, why shouldn't all other
shareholders be told quarterly? Suggestions from HSBC and others that the
market, for its own good, shouldn't be told too much too often, are
disingenuous nonsense. (28-Mar-02)
Listing Rules
Review Part 3: Count the Votes
In Part 3 of our review of the proposed Listing Rule changes, we look at
shareholder democracy, Hong Kong style. Institutions we speak to are often
surprised to hear that their votes are seldom counted. Companies persist
in an easily-rigged show-of-hands system which hails from Victorian town
halls. The Exchange fails to address this adequately. But we have a plan:
if they don't fix it, then we will. (11-Mar-02)
Listing Rules Review
Part 2: Board Games
In Part 2 of our review of the proposed Listing Rule changes, we look at the
fundamental question of independent directors and committees. Here again, the SEHK wins a
perfect 6.0 in the "form over substance" category. They are
skating on thin ice by allowing controlling shareholders to elect "
independent" directors, a system which has failed to prevent numerous
horror stories on Webb-site.com.
Independent directors should be elected by independent shareholders.
(21-Feb-02)
Listing Rules
Review Part 1: Stop Displacement
The SEHK has published a long-awaited consultation
paper on amendments to the corporate governance aspects of its Listing
Rules. It's 175 pages long, so we'll being covering this in a series of
articles before making our concluding submission. We start with the
general placing mandate for non-pre-emptive issues, where the Exchange proposes cosmetic changes
which fail to bring Hong Kong up to international best practice. (23-Jan-02)
New GEM Exemptions
Over a year after
consultation ended, new rules have been announced for HK's
second board. The track record requirement is reinstated to two years, but
with a glaring exemption for candidates that can meet certain
"substantial size" and "significant public following"
criteria. So small scams are unacceptable, but big ones
are OK, and if you can con 300 people, you don't need a track record. As
we explain, this is not going to salvage GEM's tattered reputation, and
the process again underlines the need to move listing regulation to the
SFC. (30-Jul-01)
SEHK Moves to Web
Disclosure
In a long-awaited move advocated by Webb-site.com since 1999, the Stock
Exchange of Hong Kong has announced plans to require full web-based disclosure
for main board-listed companies through its web site. We fill in the blanks
behind the proposals and note that there is still some way to go with other
company filings such as shareholder circulars and reports. (26-Apr-01)
Hobson's Choice on
Privatisations
Webb-site.com highlights a growing trend for controlling shareholders to
threaten minority shareholders with the following choice: take our undervalued
offer, or risk having your shares delisted anyway, and losing the regulatory
protection and liquidity of the stock market. We call for a change in the
Listing Rules that make this possible, and we also deal with the obsolete
requirement for a 25% free float rather than just a minimum dollar value.
(14-Jan-01)
The Independent Panda
Following our scoop that
Vincent Lo's Shui On Group had an undisclosed interest in Panda-Recruit,
the company put out an announcement which defined "independent"
in a piece of legal dissection not seen since Bill Clinton's definition of "is".
This affair highlights a much wider loophole in the Stock Exchange's
definition of connected parties, as we explain. (11-Aug-00)
Your views on GEM's
Rules
In a successful start to Listing Rule consultations over the internet, readers
of Webb-site.com have made their views known to GEM. By the deadline of
30-Jun-00, 55 submissions had been made, with a further 6 received in the week
after the deadline. The total is 3 times the number of submissions that might
typically be received by the Exchange. Here's what you had to say...
(9-Jul-00)
GEM wants YOUR
views!
In another internet
first, Webb-site.com allows you to submit your views on the GEM
listing rules directly to the SEHK. Read our views, then use our one-click
form to tell the Exchange whether you agree. Your vote for better investor
protection can make a difference, but hurry - the deadline
for submissions on the consultation paper is Friday 30-Jun-00. (26-Jun-00)
No Exceptions?
Two months ago the SEHK and SFC introduced standardised waivers of the GEM
listing rules. Despite its denials of preferential treatment, the Exchange
has still not leveled the playing field by tightening the waivers on share
options and lock-ups granted to Tom.com and Hongkong.com. Indeed, the wording on
Tom.com's option limit has been relaxed further. Now the Exchange proposes a
similar amendment to the option limits on the main board. Dilution city here we
come. (14-May-00)
GEM Waivers Reviewed
Following our recent
criticisms of the confetti of waivers granted by GEM, the SFC and SEHK
have hammered out a compromise which relaxes some rules but contains some
encouraging news and a minor victory for minority shareholder protection.
However, the new proposals are being effected before public consultation,
and by the time this is over too many horses will have bolted. The whole
affair underlines the need to transfer the listing division to the SFC and
let the Exchange focus on exchanging. (12-Mar-00)
Waivers Galore for
Tom.com
The SEHK, demonstrating the inherent conflict between its regulatory role and
its future role as a profit-making company, has begun waiving listing
rules in a wholesale fashion to attract new listings. We look at the 3 major
waivers granted to Tom.com on placings, lock-ups and a five-fold increase in
share options, and at the wider issue of regulatory decay through competition.
(21-Feb-00)
Options-R-Us
Reacting defensively to our previous
article and others that followed, the SEHK issued a statement claiming
that no preferential waivers have been granted to anyone. Their
announcement contained a number of misleading statements which cannot go
unanswered. We also look at how a good governance framework would improve
investor returns and lower the cost of capital to Hong Kong issuers.
(7-Mar-00)
Open Rip-offers
Eel-feed maker Corasia Group has announced an open
offer of 1 new share for every share held, at a 76% discount to the
previous price. We explain why deep-discount open offers should be banned
because they force shareholders to either pay up or lose value.
Unlike rights issues, you cannot just sell your entitlements to recover
the bonus issue which is hidden in the offer. Meanwhile, independent
shareholders of Corasia should vote against the offer. (11-Oct-99)
Results Delayed
If your newspapers feel thicker than
usual today, blame it on the Stock Exchange, which has yet to implement
proposals released in Dec-98, to shorten the reporting deadlines
and increase the financial disclosure on the main board. GEM will have
quarterly reports and shorter deadlines, but these reports will continue to lack
meaningful details such as interest charges, cashflow statements and balance
sheets. Why are the Exchange's results delayed? (30-Sep-99)
SEHK Ducks Publication Duty
The Stock Exchange of Hong Kong, soon
to be part of a profit-making listed entity, has proposed that listed
companies be required to publish their corporate documents on their own
web sites. We see this as a blatant attempt to relinquish responsibility
for the centralised publication and storage of information, a
responsibility that the Exchange has yet to fulfill. (16-Sep-99)
EXCLUSIVE- GEM Rules
Revealed
Webb-site.com brings you the scoop on
the GEM listing rules. In an ironic technological gaff, we discovered that
the new rules have been left open to view on the new GEM web site at the
Stock Exchange, ahead of tomorrow's announcement. (21-Jul-99)
The Placing Game
Leading fund manager Templeton has announced that it will vote against all resolutions
which give HK-listed companies discretion to issue new shares without first offering them
to existing shareholders. Webb-site.com explains the arguments and tells you why we
support this move. (17-May-99)
Hong Kong's not so Independent
Directors
How Hong Kong's controlling shareholders appoint the Independent
Directors who are supposed to prevent them from abusing the company, and what to do about
it (20-Apr-99)
The Practitioner's Guide to Listing
Rule Loopholes
A warning to investors on what loopholes your company may be exploiting
GEM (the SEHK's 2nd board)
An outline and commentary on the proposals for a second board in Hong Kong
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