Background

In March 2023, the Securities and Futures Commission (“SFC”) published a consultation paper on Uncertificated Securities Market (“USM”) Rules and Approved Securities Registrars (“ASR”) Rules, as well as amendments to various existing legislation for the implementation of USM in Hong Kong. Under the USM regime, it is proposed that no physical securities certificates are issued and transferred. The consultation conclusions was published in July 2024, and the USM Rules, ASR Rules and amendments to existing legislation were passed by the Legislative Council on 16 April 2025.

In this article, we summarize the major amendments made to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and the actions required for listed issuers as a consequence of the implementation of the USM regime. It should be noted that the amendments to the Listing Rules in relation to USM are only applicable to Prescribed Securities (as defined in section 101AA of the Securities and Futures Ordinance) which are listed or to be listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

Amendments to the Listing Rules

Amendments applicable to all issuers of Prescribed Securities

Under the current Listing Rules, the appointment of an approved share registrar, which must be a member of the Federation of Share Registrars Limited, is a condition for listing equity securities. The Listing Rules will be amended to mandate the appointment of an ASR as a condition for the new listing of Prescribed Securities on or after the date of implementation of USM (“USM Implementation Date”) and as a condition for the continued listing of Prescribed Securities in existence as at the USM Implementation Date. Dealings in Prescribed Securities will be suspended if no ASR acts as the securities registrar for those securities, unless the SFC has given permission.

The Code of Conduct for ASR issued by the SFC also sets out the standards and practices expected of ASRs, and the limits for certain fees that ASRs may charge investors, such as transfer, registration fee and dematerialisation fee. Under the revised Listing Rules, issuers are required to use all reasonable endeavours to ensure that neither they nor their ASR (or other agents) charge holders or transferees any fees for relevant services that, in total, exceed the upper limit stipulated in the Code of Conduct for ASR.

In addition, to participate in USM, issuers will need to enable their Prescribed Securities to be evidenced and transferred without a physical instrument. The constitutional documents of the issuers and/or the terms of issue of the relevant securities must be amended for this purpose.

Amendments applicable only to new applicants

Under the revised Listing Rules, new applicants incorporated in Bermuda, the Cayman Islands, Hong Kong and the Mainland China, and certain other Prescribed Securities constituted under the laws of these jurisdictions are required to include, among others, the following information in their listing documents:

1.      the fact that the securities will be in uncertificated form;

2.      a summary of the actual and potential impact of those securities being in uncertificated form may have on the securities holders, including actions (if any) which may be required on the part of the securities holders, and the implications of inaction;

3.     details of the contact point(s) for handling queries in relation to its Prescribed Securities.

Amendments applicable only to existing listed issuers

Shares in a body corporate incorporated in Bermuda, Cayman Islands, Hong Kong and the Mainland China, and certain other Prescribed Securities in existence as at the USM Implementation Date must become uncertificated within five years of the USM Implementation Date. The date of the transition to USM of each listed issuer’s securities will be communicated to the listed issuer by the Stock Exchange by written notice. Listed issuers are required to inform the market of their plan to transition to USM and update the market on their progress by publishing an announcement.

Actions required and
corresponding deadlines for listed issuers

Below is a summary of the actions required and corresponding deadlines for listed issuers as a consequence of the amendments to the Listing Rules.

Conclusion

Listed issuers and new applicants of Prescribed Securities should be mindful of the amendments to the Listing Rules in relation to the implementation of USM. They should be aware of the actions required of them and the corresponding deadlines in order to avoid any breach of the Listing Rules.