The Hong Kong Stock Exchange ("HKSE") has recently
issued an update on HKSE's efforts to develop sustainable
markets for RMB products. A significant development is the ability
of existing listed issuers to make a "RMB follow-on
offering". This allows for raising of funds in RMB via
placement, rights issue/open offer, public offer, or a combination
of the above using similar fund raising methods allowed under the
existing Hong Kong listing rules.
This latest development, together with the ability of companies
to raise RMB through an IPO provides Hong Kong with a leading edge
in raising offshore RMB. It is anticipated that there will be
higher levels of investor appetite and enthusiasm for this type of
Cayman, Bermuda, BVI, Jersey, Isle of Man and Guernsey companies
are all acceptable jurisdictions for listing on the HKSE. They can
all benefit from this development either by way of a RMB IPO or
where the company is already listed by way of a follow up offering
of RMB traded shares. A RMB follow-on offering will mean the same
issuer can maintain RMB traded shares together with HKD traded
shares. Both RMB traded shares and HKD traded shares will be the
same class of shares. All shareholders are treated equally. The
only difference is that the shares will be traded under two
separate counters on the HKSE in their respective currencies (ie.
one in RMB and one in HKD). While the new shares subscribed in RMB
will be traded over the RMB counter, the existing HKD traded shares
will continue to be traded on the existing HKD counter.
It is intended by HKSE that there will be transferability
between HKD traded shares and RMB traded shares. This
transferability will ensure the efficiency of arbitrage and thereby
maintain the prices of the two counters reflecting closely the
actual exchange rates. However, since we are still at the early
stage of development of RMB equities in Hong Kong, HKSE explains
that there may be a need to have a short period of
nontransferability for the first few RMB IPOs or RMB follow-on
offerings. HKSE will retain flexibility on this matter and will
work with prospective issuers who are interested in dual counter
fund raising to find an optimal solution on transferability during
the IPO process.
This is another landmark in the further internationalisation of
RMB and Hong Kong's position as the preeminent offshore RMB
Appleby is the only offshore law firm to cover all of the
offshore jurisdictions approved by the HKSE (Cayman Islands,
Bermuda, BVI, Jersey, Isle of Man and Guernsey). With our wealth of
experience in corporate finance, multi-lingual team and long
standing presence in Asia, we are able to offer our clients
outstanding offshore guidance for their listing needs.
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.
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On 16 November 2016 the Guernsey Financial Services Commission (the "Commission") approved the introduction of a new classification of fund known as the Private Investment Fund ("PIF").
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