Hong Kong Capital Markets Update – Issue 7, November 2021
Hong Kong Capital Markets Update – Issue 7, November 20
HKEX’s consultation for Share Schemes of listed issuers
On 29 October 2021, the Stock Exchange of Hong Kong Limited (the “Exchange”) published a consultation paper (“Consultation”) seeking market views on proposed amendments to the Listing Rules in relation to share schemes (including both share option schemes and share award schemes) of listed issuers and their subsidiaries (“Share Schemes”). The deadline for submissions is 31 December 2021.
To ensure the Listing Rules remain fit for their purpose and represent acceptable standards that help promote investor confidence, the Exchange conducts reviews from time to time to consider market developments and international best practices.
Given the increasing adoption of share award schemes by listed issuers, the Exchange set out proposed amendments to the Listing Rules in relation to Share Schemes of listed issuers and their subsidiaries to provide a consistent framework to govern both grants of share options and share awards (“Share Grants”).
Appendix I to the Consultation has set out all the proposed changes and the applicable Listing Rules. The key proposals are as follows:
- Extend the Listing Rules to govern grants of share awards.
- Define eligible participants of Share Schemes to be (i) Employee Participants, (ii) Related Entity Participants and (iii) Service Providers.
- Require issuers to set a Scheme Mandate Limit and a Service Provider Sublimit.
- Require independent shareholders’ approval for scheme mandate refreshment within a three-year period.
- Require a minimum vesting period of 12 months for all Share Schemes.
- Require performance targets and a clawback mechanism.
- Revise the approval requirements for Share Grants to (i) individual participants and (ii) Connected Persons.
- Increase in types of grantees subject to share grants disclosures on individual basis.