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HKCMA Spring Cocktail 2004. Andrew Malcolm. The EU Prospectus and Transparency Directives - what they mean for Asian issuers and Hong Kong’s Securities Law Reform - the three-phase process. EU Financial Action Plan. 42 new Directives

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HKCMA Spring Cocktail 2004

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Hkcma spring cocktail 2004

HKCMA Spring Cocktail 2004

Andrew Malcolm

Hkcma spring cocktail 2004

  • The EU Prospectus and Transparency Directives - what they mean for Asian issuers

  • and

  • Hong Kong’s Securities Law Reform - the three-phase process

Eu financial action plan

EU Financial Action Plan

  • 42 new Directives

  • A pan-European securities market to rival the United States?

Eu pd and td

EU PD and TD

  • Two major directives for our purposes

    • Prospectus Directive: new offers

    • Transparency Directive: continuing obligations

Eu pd and td1

EU PD and TD

  • The Directives will apply to

    • securities offered to the public

    • securities listed in EU (whether or not offered to the public)

Eu pd and td2

EU PD and TD

  • The Directives are complex and still incomplete. But the headline requirement is for

    • financial information under IFRS (IAS)

    • “true and fair view” audit under international auditing standards

Eu pd and td3

EU PD and TD

  • Surprisingly: no (useful) grandfathering

Eu pd and td4

EU PD and TD

  • Even more surprisingly: very limited exemptions for euromarket issues

    • for straight debt (and many exchangeables), exemption if in minimum denominations of €50,000 or equivalent

    • no exemptions for equity, convertible bonds or (effectively) GDRs

Eu pd and td5

EU PD and TD

  • Only “home-state lock-in” currently in force - for an issuer’s first EU listing after 31 December 2003

  • Main provisions effective from sometime in 2005

Eu pd and td6

EU PD and TD

  • What to do?

    • For straight debt: use € 50k denominations?

    • A delist-and-relist right

    • List on Hong Kong or Singapore

Stop press


  • At end February, EU Parliamentary Committee on Economic and Monetary Affairs recommended:

    • US, Canadian, Australian GAAP “equivalent” to IAS

    • No quarterly reporting

    • Grandfathering for straight debt listed before 1 January 2006

      EU Parliament/Council of Ministers reaction awaited

Hkcma spring cocktail 2004

  • Reform of Hong Kong Securities Law

  • Regime Change



Phase One

Class Exemptions

We are here!

“Quick Fix” Legislation

Phase Two

Phase Three

Radical Overhaul


Guidelines and class exemptions

Guidelines and Class Exemptions

  • Dual prospectuses

  • Offer awareness publicity

  • Prospectus contents for bonds

Quick fix legislation

Quick Fix Legislation

  • Embed the Guidelines and Exemptions

  • New offering safe harbours

    • Professional investors (like SFO)

    • Denominations of HK$500k

    • Private placements up to 50 offerees

Quick fix legislation1

Quick Fix Legislation

  • Committee stage amendments

    • deletion of resale restrictions

    • transparency in waivers/exemptions

    • others

  • Expected timing for implementation

Radical overhaul

Radical Overhaul

  • New Ordinance

  • “Debenture”

  • Transaction-based rather than document- based regime

  • Promotional advertising

  • Incorporation by reference, shelfs, passports

Hkcma spring cocktail 2004

  • Questions?

Hkcma spring cocktail 2004

  • A03898573

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