Originally published on 8 June 2011

Keywords: new rules, ex-entitlement trading, HKEx, shareholder approval

Hong Kong Exchanges and Clearing Limited (HKEx) published its "Consultation Conclusions on Ex-entitlement Trading and Shareholder Approval" (Consultation Conclusions) on 20 May 2011 in response to its corresponding consultation paper issued on 17 December 2010 in relation to whether shares should be traded ex-entitlement only after the entitlement has been approved by shareholders.

Proposals Adopted

As explained in the Consultation Conclusions, the following proposals have been adopted by HKEx:

  • Shares should be traded ex-entitlement (for conditional entitlement) only after shareholders' approval. It is viewed that such new rule would help to eliminate the risk of uncertainty in relation to trading of shares during the period from the ex-date to the date of general meeting. It might also promote a fair and orderly market as shares could be traded in a better informed basis.
  • The record date (if there is no book closure) or the last registration date (if there is a book closure) should be set at least three business days after the date of shareholders' approval (i.e. at least one cum-trading day is to be provided).
  • A minimum of one last cum-trading day should be provided after the general meeting in the event that the voting results cannot be published by 8:30 a.m. (i.e. not later than 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session) on the business day following the general meeting.
  • The ex-entitlement arrangement should be applied to all conditional entitlements which are subject to general meeting approval.

Rules Amendments

The corresponding amendments to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (Main Board Rules) to implement the proposals adopted in the Consultation Conclusions will become effective on 20 June 2011. Corresponding changes to the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited will also be made to be consistent with the Main Board Rules.

Copies of the Consultation Conclusions can be downloaded via the link below:

http://www.hkex.com.hk/eng/newsconsul/mktconsul/Documents/cp2010123cc.pdf


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