Hong Kong: HKex’s New Disclosure-Based Approach For PRC Properties

Last Updated: 11 August 2010
Article by Conrad Chan, Winnei Hung and Vivian Tse

The Hong Kong Exchanges and Clearing Limited (HKEx) recently published a guidance letter (HKEx-GL19-10) to further outline HKEx's requirement for land use right certificates and/or building ownership certificates for Mainland properties.

The 1998 Announcement and related listing decisions

The 1998 Announcement

On 25 March 1998, HKEx published a "Clarification on Requirements for Land Use Title of properties situated in the Mainland of the People's Republic of China" (1998 Announcement) which laid down the requirements as to when a new listing applicant should obtain land use right certificates and/or building ownership certificates (Title Certificates) in relation to their property interests situated in Mainland China.

According to the 1998 Announcement, in order for HKEx to approve a listing application:

  • infrastructure project companies had to obtain long-term land use right certificates for all Mainland properties used in infrastructure projects;
  • property companies which did not have long-term Title Certificates in respect of properties situated in the Mainland, had to provide other appropriate evidence of title, which together, covered a major portion of their property assets in terms of either asset value or profit contribution, regardless of whether such properties were completed or still under development. In any event, long-term Title Certificates had to be obtained if such Mainland property (i) represented a substantial portion of the listing applicant's property assets in terms of either asset value or profit contribution; or (ii) in the opinion of HKEx, was crucial to the listing applicant's activities; and
  • other companies, which did not fall within the two paragraphs above, were required to obtain long-term Title Certificates for those Mainland properties that were crucial to its operations, unless otherwise permitted by HKEx.

Listing decisions

Since the 1998 Announcement, HKEx published two listing decisions, namely, HKEx-LD10-3 and HKEx-LD52-1, in relation to Title Certificates for Mainland properties. These listing decisions reiterated the requirements set out in the 1998 Announcement and confirmed the principle that the decision on whether a property was "crucial" to the listing applicant's operations was made on a case-by-case basis.

HKEx further accepted that the requirements under the 1998 Announcement would be complied with if:

  • the lessor was the owner of the leased properties in the Mainland and had obtained valid long-term land use right certificates for the leased properties;
  • the leases, with the support of a PRC legal opinion, were legal, valid and enforceable;
  • the leases had been duly registered with relevant PRC authorities; and
  • the terms of the leases were considered to be of a meaningful duration, in light of the nature and use of the leased properties.

A new disclosure-based approach - the 2010 Guidance Letter

Since the 1998 Announcement, the administrative procedures for obtaining Title Certificates from the relevant Mainland registration authorities have eased. Further, it is noted that in other international markets, listing applicants are permitted to disclose in the listing document the failure to obtain long-term Title Certificates as a risk factor. HKEx is now moving towards a more disclosure-based approach in line with international market standards and published a guidance letter titled "Land Use Title for Properties Situated in Mainland China" (HKEx-GL19-10) (2010 Guidance Letter).

According to the 2010 Guidance Letter, the requirements set out in the 1998 Announcement remain effective for infrastructure project and property companies. Mineral and exploration companies are expected to comply with the requirements set out in the new Chapter 18, which came into effect on 3 June 2010.

For all other new listing applicants, HKEx no longer requires them to obtain Title Certificates for their Mainland properties. They are required to disclose, in listing documents, the risks associated with their operations for failure to obtain such Title Certificates. As a result, the two listing decisions, HKEx-LD10-3 and HKEx-LD52-1, were superseded by the 2010 Guidance Letter.

The 2010 Guidance Letter illustrates that HKEx is aligning its policy with other international markets in relation to land title issues. Failure to obtain Title Certificates is sometimes beyond the control of listing applicants, due to historical reasons or local conditions. The requirements for disclosing the relevant risks in listing documents will also ensure Hong Kong is moving in line with all other major stock markets. Having said that, we would recommend listing applicants should, as a matter of good corporate governance, prepare for contingencies in case the failure to obtain Title Certificates will seriously affect their operations. We also recommend that these contingency plans are disclosed in listing documents. This will ensure investors have full knowledge of the risks involved and that the listing applicants have prepared plans to cover those risks.

The 2010 Guidance Letter provides clearer guidance to new listing applicants on this issue. HKEx will consider each listing application based on the relevant circumstances and if in doubt, prior consultation with HKEx is recommended.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.