Hong Kong Capital Markets Update – Issue 1, April 2024

On 12 April 2024, the Stock Exchange of Hong Kong Limited (the “Exchange”) published the conclusion to its consultation (the “Conclusion”) on proposed amendments to the Listing Rules in relation to treasury shares.

To give issuers greater flexibility in managing their capital structure, the Exchange published a consultation paper (the “Consultation Paper”) on 27 October 2023 which set out the proposed amendments to the Listing Rules to remove the requirement to cancel repurchased shares and to adopt a framework in the Listing Rules to govern the resale of treasury shares (for a summary, please refer to our Capital Markets Update Issue 2023-8). The consultation period ended on 27 December 2023.

The removal of the Listing Rules requirement to cancel repurchased shares will be accompanied by a framework to ensure a fair and equal treatment of all shareholders on the resale of treasury shares and maintain a fair and orderly market in the trading of issuer’s shares. The key amendments 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
3. Add safeguards to mitigate the risks of market manipulation and insider dealing

The revised Listing Rules will become effective on 11 June 2024.