Hong Kong Capital Markets Update – Issue 8, November 2023

On 27 October 2023, the Stock Exchange of Hong Kong Limited (the “Exchange”) published a consultation paper seeking market feedback on proposals to introduce a new treasury share regime.   

With currently most of the issuers listed on the Exchange incorporated in jurisdictions that allow holding of treasury shares, the Exchange considers it appropriate to consult the public on the removal of the Listing Rules requirement to cancel repurchased shares and the adoption of a framework in the Listing Rules to govern the resale of treasury shares.

The proposed removal of the Listing Rules requirement to cancel repurchased shares will be accompanied by a framework to ensure a fair and orderly market in the trading of repurchased shares and to afford fair and equal treatment for shareholders. The key proposals are summarised below.

1. Remove the requirement to cancel repurchased shares;
2. Govern the resale of treasury shares in the same manner as the issue of new shares; and
3. Add requirements to mitigate the risks of market manipulation and insider dealing

The deadline for submissions is 27 December 2023.