ARTICLE
20 March 2025

Impact Of An Uncertificated Securities Market On The Constitutional Documents Of Hong Kong Listed Offshore Issuers

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Appleby

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On 16 July 2024, the Securities and Futures Commission (SFC) released consultation conclusions on its proposed subsidiary legislation, code and guidelines for implementing an uncertificated securities market (USM) in Hong Kong.
Hong Kong Corporate/Commercial Law

On 16 July 2024, the Securities and Futures Commission (SFC) released consultation conclusions on its proposed subsidiary legislation, code and guidelines for implementing an uncertificated securities market (USM) in Hong Kong.

The USM initiative seeks to remove the need for manual and paper-based processes, thereby enhancing operational efficiencies and elevating Hong Kong's financial market infrastructure. Investors will have the capability to hold prescribed securities in their own names and in uncertificated form, thus granting them direct legal ownership of their securities electronically.

Subject to the legislation being enacted by the first quarter of 2025, the SFC aims to implement USM around the end of 2025. This will allow about 9 to 12 months to deal with matters that can only be completed after the legislation is enacted, e.g. amendments to issuer's articles/ bye-laws. The SFC is currently aiming to cover all prescribed securities constituted under Hong Kong law and as far as possible, under the laws of Bermuda, Cayman Islands or Mainland China, but they will review and adjust this list as appropriate when the subsidiary legislation for implementing USM is submitted to the Legislative Council for negative vetting.

The SFC aims to provide some sample provisions that issuers may refer to when considering how best to amend their articles/ bye-laws to cater for USM. Listed issuers may need to review and amend their constitutional documents to ensure consistency with the USM regime by that time.

We will continue to monitor the latest announcements from the SFC and will keep you updated on the latest developments regarding the implementation of USM in Hong Kong.

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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