Introduction

In our previous newsletter, “Hong Kong Stock Exchange publishes a consultation paper on further expansion of the Paperless Listing Regime”，we discussed the consultation paper issued by The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 16 August 2024 (the “Consultation”), regarding proposals to further expand the paperless listing regime and the related amendments of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”). On 24 January 2025, the Stock Exchange published conclusions to the Consultation. This article will highlight the key proposals adopted under the conclusions.

Proposals adopted

Electronic instructions from securities holders to issuers: The Stock Exchange adopted the proposal to require issuers (to the extent permitted by laws and applicable regulations) to put in place mechanisms that enable securities holders to send the following instructions (the “Requested Communications”) to issuers electronically:

1.      Instructions regarding a meeting of securities holders, including an indication as to attendance at such meeting and proxy-related instructions; and

2.      Instructions made in response to actionable corporate communications, save for those made in response to any provisional allotment letter in connection with a rights issue.

Issuers would be expected to put in place appropriate arrangements to verify the authenticity of Requested Communications. Examples of verification arrangements include: (a) requiring a securities holder to provide a statement of identity in the Requested Communications, with authentication such as a scanned signature; (b) deploying a commonly available “off-the-shelf” electronic signature solution that enables identity authentication; or (c) implementing a tailor-made system integrated into an online platform.

Real-time electronic payment of Corporate Action Proceeds: The Stock Exchange will adopt the following modified proposal:

Issuers are allowed to provide electronic payment option, such as Clearing House Automated Transfer System (“CHATS”, a payment system in Hong Kong operated by the Hong Kong Interbank Clearing Limited), Faster Payment System (FPS), autopay and telegraphic transfer, of their choice to pay proceeds in connection with its corporate actions (“Corporate Action Proceeds”) to securities holders. Issuers must ensure that the payment option they provide can result in good funds being received by securities holders on the specified payment date. The Stock Exchange clarified that in connection with takeovers and privatisations, the proposal will only cover payments made by a listed offeror to securities holders of the relevant offeree.

Electronic subscription monies: The Stock Exchange will adopt the proposal that listed issuers are required to provide an option for securities holders to pay subscription monies via electronic payment option of the issuer’s choice for offers conducted by listed issuers to existing securities holders. Issuers would be required to disclose to their securities holders how they may pay subscription monies. Securities holders would bear any charges incurred when paying subscription monies electronically.

Abolition of Mixed Media Offers: Mixed media offers will be abolished. As a result:

1.       any forms for an application for a public offer of equity securities, collective investment schemes and debt securities would no longer be made available in printed form;

2.       subscriptions for a public offer of equity securities and by a collective investment schemes would be required to be made through online electronic channels only; and

3.       subscriptions for a public offer of debt securities would continue to be conducted through their well-established channels such as through placing banks.

Hybrid general meetings and electronic voting: The Stock Exchange will require the issuers’ constitutional documents to include provisions which enable them to hold hybrid general meetings (i.e. by way of physical and virtual means) and allow electronic voting, to the extent permitted by the laws and regulations applicable to them. Consequently, issuers may need to amend their constitutional documents to fulfil this requirement. Issuers should have due regard to the requirements set out in the core shareholder protection standards (Appendix A1 to the Listing Rules), and put in place measures to ensure that securities holders’ rights to speak and vote be maintained if they choose to hold hybrid general meetings.

Implementation timeline

The implementation timeline for the above adopted proposals are as follows: