HKEX: Publishes consultation paper on Phase 2 review of listing regime competitiveness, proposes relaxing disclosure of dealings threshold to 50%

On 21 September, HKEX published a consultation paper seeking market views on Phase 2 proposals to enhance the competitiveness of Hong Kong's listing regime. The consultation period is 10 weeks, ending on 30 November 2026. This consultation is the second phase of HKEX's review of the competitiveness of the listing regime, focusing on the regulation of corporate transactions by listed issuers, covering notifiable transactions, connected transactions and spin-off listing requirements. It aims to give listed issuers greater flexibility to undertake corporate transactions, while maintaining appropriate investor protection through enhanced disclosure requirements and effective board accountability mechanisms. HKEX Head of Listing Katherine Ng said the reforms aim to provide issuers with greater flexibility and certainty, reducing the cost and time of corporate transactions while maintaining investor protection through timely, meaningful disclosure and strong board accountability mechanisms. Key proposals include: On transaction classification and thresholds, HKEX proposes to remove the profits ratio, which is most prone to anomalous results, and to allow listed issuers to compare the consideration ratio against the higher of their market capitalisation or net asset value. At the same time, the threshold for discloseable transactions would be significantly relaxed from the current 5% to 25% to 5% to 50%, while the threshold for major transactions would be raised from 25% to 50%. In addition, it is proposed to remove the classifications of very substantial disposals and very substantial acquisitions. On ordinary course of business transactions, it is proposed that acquisitions or leases of assets conducted by listed issuers in the ordinary course of business that constitute major transactions would not require the issue of a circular or shareholder approval. On announcement disclosure, the aim is to ensure investors receive timely, sufficient and substantive information to assess transactions. Specifically, announcements for all notifiable transactions would be required to disclose information including material transaction terms, key financial information of the target company, and an explanation of the transaction's impact. Additional circumstances requiring separate announcements would also be added. On connected transactions, it is proposed to raise the threshold in the definition of "connected subsidiary" from 10% of voting power exercisable or controlled by a connected person to 30%; and to allow the annual caps for continuing connected transactions to be expressed as a percentage of revenue or other financial items, rather than being limited to monetary amounts.