The Securities and Futures Commission (the SFC) and The Stock Exchange of Hong Kong Limited (the SEHK), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), jointly released consultation conclusions on 26 November 2010, clearing the way for public offers to take place without paper listing documents. Companies seeking to list shares and debentures in Hong Kong through public offers will therefore be able to distribute paper application forms as long as the prospectus is available over the internet, on HKEx’s and the issuer’s websites, subject to certain conditions. Similar waivers will be granted to issuers of listed SFC-authorised collective investment schemes.
Over the years, the market has developed a practice of printing large quantities of physical prospectuses (required in both English and Chinese) for distribution at branches of receiving banks and at sponsors’ offices, even though prospectuses may already be available for consultation on-line. Many of these copies are not taken up and end up as trash. Under a Mixed Media Offer (MMO), an issuer will therefore be able to distribute application forms to applicants under a public offer, without attaching a prospectus. This will still require, among other things, a waiver to be obtained from the SFC.
Investors will still be able to obtain paper copies of the prospectus upon request from locations to be stated in the prospectus. These will include the depositary counter of Hong Kong Securities Clearing Company Limited – which operates the Central Clearing and Automated Settlement System (CCASS); the offices of the issuer’s Hong Kong share registrar, sponsors or coordinators; and designated branches of the receiving or placing banks. At least three copies of the printed prospectus will have to be made available for inspection at every location where the application forms are distributed. Electronic prospectuses will need to be identical to paper prospectuses, password-protected and tamper-resistant.
These changes are expected to become effective on 1 February 2011, subject to negative vetting by the Legislative Council.