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Abolition of Paid Announcement Requirement – An Overview. January 2007. Outline. Background Project Objectives Scope of Change Implications New Model Operational Readiness Way Forward Implementation. Background.

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outline
Outline
  • Background
  • Project Objectives
  • Scope of Change
  • Implications
  • New Model
  • Operational Readiness
  • Way Forward
  • Implementation
background
Background

HKEx has a policy direction to abolish requirement for Main Board issuers to publish announcements by way of paid announcement in at least one English-language and one Chinese-language gazetted newspaper.

project objectives
Project Objectives

The No Paid Ad Project (NPA) aims to enhance the issuer information dissemination regime in Hong Kong by

  • abolishing the requirement for paid announcements in newspaper;
  • introducing mandatory electronic submission by listed issuers;
  • automating the process for publication of issuer documents on HKEx and GEM websites; and
  • enhancing the presentation and user-friendliness in the display andsearching of issuer documents on HKEx websites
scope of change current regime

Investors

Scope of Change (Current Regime)

Issuer announcements and other documents required under Listing Rules



Issuers

Scope of NPA

(Announce-ments and other documents)

HKEx websites

ePublication System

(EPS)

eSubmission system (ESS)

Yes

No

Vetting?

or

Issuer Information Feed (IIS)

Information vendors



ESS for vetting

(Pre-vetted announcements)

Market Data Feed (MDF)/EMSIS

CD-Rom/diskette

Clearance

ASCII-Text

ASCII-Text

or

Input and uploaded by ISD

Trading terminals

AMS/3



Fax

Listing Division

scope of change new regime

HKEx website

Scope of Change (New Regime)

Scope of NPA

Issuers

Issuer announcements and other documents required under Listing Rules



(Announce-ments and other documents)

Investors

Yes

No

eSubmission System

(ESS)

ePublication System (EPS)

Vetting?

Information vendors

ESS for vetting

Issuer Information Feed (IIS)

(Announcements and other documents)

Market Data Feed (MDF)/EMSIS

News alerts

News

alerts

Clearance

AMS/3

Trading terminals



Listing Division

implications 1
Implications (1)

What does NPA mean for Hong Kong?

  • Close alignment with international norms
  • Allows more timely dissemination of issuer announcements to the market
  • Builds the foundation to move towards the ultimate model of dissemination of information during trading hours, when considered appropriate
  • Assists in the move towards a post-vetting regulatory model
implications 2
Implications (2)

What does NPA mean for issuers and investors?

  • Reduce continuous listing costs
  • Cease the requirement for the submission of text file version
  • Adapt to new submission regime including mandatory usage of ESS, publication windows and selection of headline categories and title
  • Establish own website
  • Clearer classification of issuer document due to headline categories and title
  • Faster access to issuer documents due to straight through publication
  • Adjust behaviour of HK-based retail investors regarding access to issuer documents (i.e. from newspaper paid announcements to online access via HKEx or issuer websites)
  • Benefit to overseas investors

Issuers

Investors

new model 1
New Model (1)

Main Features - Overall

  • MB issuers will no longer be required to publish their announcements in local newspapers in the form of paid advertisements
  • MB issuers will be required to publish notification in newspapers during 6-month interim period (Phase 1)
new model 2
New Model (2)

Main Features - Submission Channel

  • Mandatory use of HKEx’s Electronic Submission System (ESS) for submission of documents for publication on Exchange’s website and GEM website. No diskette or CD will be accepted.
  • To submit documents for publication, all issuers and their agents need to be registered for ESS*.
  • Security passwords will be issued to issuers (but not agents)

* Non-listed offerors submitting Takeovers Code-related documents for publication on HKEx website will also need to be registered for ESS. Documents can be submitted by adviser but security passwords will be issued to offeror only. Thus early registration of offeror is recommended.

new model 3
New Model (3)

Main Features - Submission window

Announcements

  • No submission of announcements for publication during trading hours and lunchtime, except
    • results announcements (can be submitted 12:30 p.m.- 1:30 p.m. on business day),
    • overseas regulatory announcements,
    • standards and “supers” clarifying share price/turnover movements or media reports
    • suspension notifications
  • Subject to above exceptions, business day submission windows are:
    • 6:00 a.m. – 9:00 a.m. (but may result in suspension)
    • 4:15 p.m. - 11:00 p.m.
  • Further submission window on non-business day immediately preceding business day: 6:00 p.m. – 8:00 p.m.
new model 4
New Model (4)

Main Features - Submission window

Documents other than announcements

  • Documents other than announcements (e.g. circulars and annual reports) can be submitted for publication at any time during the ESS opening hours (i.e. 6:00 a.m. – 11:00 p.m.)
  • Simultaneous submission of English and Chinese versions (except listing documents and annual reports – submitted one immediately after the other) – if not, document will not be accepted by ESS
  • Exceptionally, some single language documents, e.g. overseas regulatory announcements
new model 5
New Model (5)

Other Features – Issuer’s Own Website

  • MB issuer must also publish full announcement on own website (if any)
  • All documents requiring publication on HKEx website must be published on issuer’s own website
    • Usual situation:

no later than 1 hour after such submission

    • Exception:

Document submitted after 7:00 p.m. - deadline for publication on issuer's own website is 9:00 a.m. on the following business day

    • Document must remain on issuer’s website for at least 5 years
  • Main Board issuer that does not have its own website will, before requirement for all issuers to have their own websites becomes effective, be required to publish its LR announcements in newspapers in addition to publication on HKEx website
new model 6
New Model (6)

Other Features – Issuer’s Own Website

  • 1 year after commencement of Phase 1, every issuer must have its own website where public must be able to access the document free of charge
    • Issuer's website does not need to be hosted on domain owned or directly operated by issuer
    • Website is assigned dedicated location on Worldwide Web
    • Website may be hosted on third-party domain or operated by third party, but issuer must retain control over contents of its website
    • Source of document must be from issuer (not from HKEx web site)
  • Upon requirement becoming effective, Main Board or GEM issuer that does not have its own website will be in breach of Listing Rules
new model 7
New Model (7)

Other Features – Headline Categories/Title

  • Mandatory selection of headline categories
    • When submitting document through ESS for publication on Exchange’s website, issuer must select all such headlines as may be appropriate (List of headline categories included as an appendix to the Listing Rules)
    • Responsibility to select correct headline on issuer
    • Submitter should endeavour to prioritise order of headlines
    • Issuer able to amend headlines through ESS within 5 days of publication (once only)
  • Mandatory use of title
    • Issuer must input into designated free-text field in ESS the same title as appears in document
new model 8
New Model (8)

Other Features – Notification in newspapers

  • Notification to be published in newspapers for 6 months (i.e. during Phase 1) instead of announcement
  • Notification does not require pre-vetting
slide17

New Model (9)

Headline category

Free-text title

Issuer’s own website

Caveats

Inspection of announcement

SAMPLE Notification

new model 10
New Model (10)

Other Features - Suspension

  • At present, suspension of trading first notified to public by means of short notice prepared by HKEx which is published on HKEx website
  • Starting with Phase 1, where issuer requests suspension, issuer must immediately submit announcement through ESS to HKEx for publication on HKEx website or GEM website informing of suspension and setting out brief reasons
  • Upon receipt of electronic copy from issuer, such announcement will be published by HKEx provided suspension has been effected
  • Suspension announcement is only required to be published on HKEx or GEM and issuer’s own website, no notification or announcement required in newspapers
new model 11
New Model (11)

Other Features - Suspension

  • Strict enforcement of 11:00 p.m. submission of announcement for publication deadline
  • General principle - electronic copy of announcement received by 11.00 p.m., notification published in newspapers next morning
  • 6:00 a.m. – 9:00 a.m. the following day - however, if PSI may need to suspend
  • To avoid suspension, strongly recommend adhering to general principle
new model 12
New Model (12)

Summary Chart

operational readiness 1
Operational Readiness (1)

To help ensure issuers/agents adequately prepared for changes:

  • Issuers/agents seminars
  • Familiarisation sessions:
    • week-ends
    • 4-hour sessions conducted online: 9:00 a.m. – 1:00 p.m. (morning session) or 2:00 p.m. – 6:00 p.m. (afternoon session).
    • Issuers and advisers to be notified by letter of assigned session - participation mandatory for issuers, optional for advisers
    • Written confirmation of participation (and operationally ready and adequate knowledge of ESS) required of issuers
  • Interactive e-learning CD
  • Hotline (listing-related matters) : 2840 3577
  • Hotline (publication-related matters): 2840 3460
operational readiness 2
Operational Readiness (2)

Contingency measures

  • If and when necessary to invoke any particular contingency measure, will publish relevant contingency arrangements on HKEx website - may allow for use of diskettes or CD ROMs
  • Such arrangements would only come into effect if and when, in our determination, there were problems with ESS preventing generally timely submission of documents to HKEx for publication 
  • Issuer would not be permitted to invoke suchcontingency arrangements unilaterally
way forward
Way Forward
  • Abolition of paid announcement requirement will also lay foundation for news dissemination model (being considered for the medium term) whereby:
    • issuers' announcements can be released at any time during the day, including during trading hours
    • majority of announcements are not vetted prior to release
  • Facilitate full and timely disclosure of price-sensitive information, as well as reduce incidence of trading suspensions, contributing to enhanced investor confidence in Hong Kong market.
implementation
Implementation
  • ESS registration process
  • Familiarisation and confirmation of participation
  • Security passwords being sent out to issuers in Q1 2007
    • Issuers must return acknowledgement slip for security passwords for activation by HKEx
  • Tentative commencement date: Q2 2007