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Hong Kong Institute of CPAs submits comments on capital market enhancements

21 August 2017

(HONG KONG, 21 August 2017) The Hong Kong Institute of Certified Public Accountants has submitted its comments on the concept paper and consultation paper of the Hong Kong Exchanges and Clearing ("HKEX"), which set out a set of proposals to enhance Hong Kong's listing framework, improve market quality and attract a broader range of companies to come to list in Hong Kong.


The Institute welcomes the current review of Hong Kong's listing regime to identify areas where the regime could be strengthened and expanded in order to meet the evolving needs of investors and issuers and enhance Hong Kong's competitiveness as a global capital centre.


The Institute comments on the following four areas:


1.     "New Economy" Industries


  • The Institute has no objection, in principle, to the establishment of a New Board to attract potential issuers which do not fit into the current listing regime. However, the proposed New Board is intended for "New Economy" industries but there is no generally accepted definition of New Economy.


  • This "New Economy" concept is an evolving concept which can potentially embrace all new industries or any existing industry that use new technologies to partly or wholly produce, sell or distribute their goods and services. It is impractical to restrict the New Board to any particular industries and any attempt to draw a line will be arbitrary.


2.     Companies with non-standard governance structure


  • While we have no objection to HKEX exploring the feasibility of permitting companies with different voting right structures to be listed in Hong Kong, changes should not be made on a piecemeal fashion without examining the overall implication of the weighted voting rights (WVR) on investor protection.


  • In this respect, we recommend introducing wider changes to corporate governance and regulatory framework in Hong Kong to maintain appropriate investor protection, and for educating the market and investors on the non-standard governance structure and associated risks.


  • Companies with WVR structures would need to explain and justify the adoption of a WVR structure and have effective mechanisms to safeguard the interests of ordinary shareholders before being permitted to be listed.


  • Consideration should be given to impose restrictions or conditions on WVR structure that take into account the circumstances of each company to avoid abuses of WVR, such as


-       restrictions on the types of persons that can hold WVR

-       restrictions on transfer of WVR to third parties

-       requirements to impose a sunset clause on WVR structure


  • The Institute considers that investor protection, which is central to Hong Kong's high regulatory standards and the core value of the securities market, should not be compromised.

3.     New Board PRO and New Board PREMIUM

  • There is little point in creating a New Board PREMIUM to accommodate companies with non-standard governance structures as the proposed admission financial requirements, the vetting and approval process of new listing applicants and the continuous listing and corporate governance obligations of its issuers would be same as the Main Board.


  • The New Board could simply be a listing venue for pre-profit / early stage companies that do not meet the existing financial or track record eligibility requirements of the Main Board or GEM and for professional investors only (i.e. the New Board PRO).


  • With GEM being repositioned as a board for small to medium-sized companies, we suggest that the new listing framework to comprise of three boards New Board, GEM and Main Board.


4.     Segmented approach


  • The characteristics and the scope of each of the boards should be clearly delineated to avoid confusion.


  • HKEX should provide a clear roadmap and mechanism of how a listed issuer could migrate its listing from one board to another, when the characteristics of an issuer have changed due to growth and development.










1.     「新經濟」行業


  • 公會原則上不反對設立創新板,以吸引未符合現有上市規定的潛在發行人。然而,建議中的創新板是供「新經濟」行業上市,但目前對新經濟沒有廣為接納的定義。


  • 「新經濟」的概念是不斷演變的,可包括所有新行業或任何使用新科技全面或局部生產、銷售或分發他們產品或服務的現有行業。把創新板局限於特定行業是不可行的,而任何劃分的定義都會是不全面。


2.     採用非傳統管治架構的公司


  • 我們不反對香港交易所探討容許不同類型投票權架構的公司在香港上市,但有關的轉變不應是單件式地進行,而是要全面檢討不同投票權對投資者保障的影響。


  • 因此,我們建議對香港企業管治和監管框架引入更廣泛的修訂,以維持適當的投資者保障,及教導市場和投資者有關非傳統管治架構及相關風險。


  • 公司需要合理解釋他們採用非傳統管治架構的原因,並需在公司獲許上市前,設立有效機制保障一般股東的利益。


  • 考慮對不同投票權架構的公司設訂適合他們情況的限制或條件,以避免不同投票權架構被濫用,例如:


- 限制可以持有不同投票權的人士類別
- 限制把不同投票權轉移給第三者

- 要求對不同投票權架構設訂日落條款


  • 公會認為投資者保障是香港高質素監管標準的重點及證券市場的核心價值,這是不能妥協的。


  • 為非傳統管治架構的公司設立創新主板,沒有太大意義,因為建議中對新上市申請人的財務要求、審核和批准過程,以及其發行人就持續上市和企業管治的義務,都是與主板相同的。


  • 創新板可以簡單作為未符合主板或創業板目前對於財務或營業紀錄要求的未有盈餘公司或初創企業的上市渠道,並只限專業投資者進行交易(即創新初板)。


  • 既然創業板已重新定位為中小型公司的上市渠道,我們建議新上市框架應由三個板塊(創新板、創業板及主板)組成。


4.     將市場分類的做法


  • 應清晰描述每個板塊的特色和範疇,以避免混亂。


  • 香港交易所應為上市的發行人提供清晰的路線圖和機制,說明當他們因成長或發展的原因而改變了特色,可以如何轉板。