HKEX’s Proposed Listing Rule Changes for Listed Company Share Schemes | Webinar | 29 April 2022

On 29 April 2022, Julia Charlton presented a webinar on Hong Kong Stock Exchange or HKEX’s proposed Listing Rule changes for listed company share schemes. The webinar explained Hong Kong Stock Exchange or HKEX Listing Rule amendments with reference to the existing regime and the position in other jurisdictions. HKEX issued Hong Kong Stock Exchange or HKEX Consultation Paper on Proposed Amendments to Listing Rules Relating to Share Schemes of Listed Issuers on 29 October 2021 and the consultation period ended on 31 December 2021.

Although the consultation paper discusses proposed changes to Chapter 17 of Hong Kong Stock Exchange or HKEX Main Board Listing Rules which covers the share option schemes of companies listed on Hong Kong Stock Exchange or HKEX Main Board, the proposals also apply to Chapter 23 of Hong Kong Stock Exchange or HKEX GEM Listing Rules which covers share option schemes of Hong Kong Stock Exchange or HKEX GEM-listed companies.

Chapter 17 of Hong Kong Stock Exchange or HKEX Listing Rules currently applies only to listed companies’ share option schemes. It does not cover share award schemes which grant actual shares rather than options to acquire shares.

HKEX is proposing to expand Chapter 17 of HKEX Listing Rules to cover share award schemes that are funded by issues of new shares and share option schemes, creating a coherent regulatory framework for both types of share schemes.

HKEX is proposing to restrict who can benefit from listed company share schemes by defining eligible participants of Share Schemes of Listed Issuers to include three types of participants. The first category Employee Participants will cover the directors and employees of listed companies and their subsidiaries, the second category, Related Entity Participants will cover the directors and employees of listed companies’ related entities and the third, Service Providers will cover persons who provide services to the listed group on a continuing and recurring basis in its ordinary and usual course of business.

HKEX is proposing to expand the existing requirements for share option schemes of subsidiaries to also apply to subsidiaries’ share award schemes.

HKEX is proposing to amend Chapter 17 of HKEX Listing Rules to clarify that the chapter would apply Share Schemes of Listed Issuersfor the benefit of participants identified by the listed company before the grants.
#HKEX #ShareSchemes #ConsultationPaper

Timecodes:
00:00 Julia Charlton's welcome speech
01:14 General introduction to the HKEx consultation paper
04:49 Share Schemes Funded by the Issuance of New Shares of Listed Companies
06:52 Proposed adoption of “Eligible participants” definition ─ proposed Listing Rule 17.03A
13:02 Proposed Limit on Scheme Mandate ─ proposed Listing Rules 17.03(3), 17.03B(1) and 17.03C(1)
18:02 Sublimit on Grants to Service Providers - proposed Listing Rules 17.03(3) and 17.03B(2)
19:02 Minimum vesting period for Share Grants ─ proposed note to Listing Rule 17.03(6)
21:14 Performance Targets and Clawback Mechanism ─ proposed Listing Rules 17.03(7), 17.03(19), 17.06B(7) and 17.06B(8)
23:37 Exercise Price or Share Grant Price ─ proposed Listing Rule 17.03E
24:21 Restrictions on large Share Grants to Individual Participants ─ proposed Listing Rule 17.03D
25:05 Grants of Share Options and Share Awards to Connected Persons - proposed Listing Rule 17.04
31:07 Announcements of Share Grants - proposed Listing Rules 17.06A, 17.06B and 17.06C
35:14 Disclosure in Interim Reports and Annual Reports ─ proposed Listing Rules 17.07 and 17.09
37:28 Disclosure of the Work Performed by the Remuneration Committee - proposed Listing Rule 17.07A
38:59 Approval for changes to terms of Share Award or Option Granted ─ proposed note 2 to Listing Rule 17.03(18) and proposed note 1 to Listing Rule 17.04(5)
39:30 Transfer of Share Award or Options ─ proposed note to Listing Rule 17.03(17)
40:15 Voting Rights of the Trustee Holding Unvested Scheme Shares ─ proposed Listing Rule 17.05A and 13.25
40:51 Disclosure in Grant Announcements and Financial Reports ─ proposed Listing Rule 17.01(2)
42:25 Voting rights of the Trustee holding Unvested Scheme Shares - proposed Listing Rule 17.01(2) and 13.25B
42:53 Extend the Scope of Chapter 17 to Govern Subsidiaries’ Share Award Schemes ─ proposed
Listing Rule 17.01(1)
43:52 Share Schemes of Insignificant Subsidiaries ─ proposed Listing Rule 17.10
45:55 Trust Arrangements ─ proposed Listing Rule 17.01(1)
46:44 Removal of the Recommended Disclosure of Fair Value of Options in the Circular relating to the Adoption of a New Share Option Scheme ─ proposed removal of current Listing Rule 17.02(3)
47:22 Other proposed Listing Rule amendments relating to Share Schemes ─ proposed Listing Rules 3.13(2), 10.08(1), 13.52(1)(e)(ii) and Paragraph 7 of Appendix 10
49:05 Drafting amendments to Chapter 17
49:20 Transitional arrangements
51:37 Consultation questions
51:50 Closing remarks

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