FAQs Main Board Listing Rules Chapter 3

Transcription

1 FAQs Main Board Listing Rules Chapter 3 Authorised Representatives will be required to provide their addresses to the Exchange. Is this requirement applicable to existing Authorised Representatives? Yes, it does apply to existing Authorised Representatives. FAQ Series 17, FAQ No. 9 LR reference: Main Board Rules 3.06 / GEM Rules 5.25 How does the board assess if the INEDs' or NEDs' commitment to the issuer's affairs is sufficient (especially for smaller issuers that have infrequent changes to their business or group structure) when normally they are not required to be involved in the management of the issuer? The Code recognises that different directors have different roles and functions within the issuer. The time commitment required from a director varies from company to company and from year to year, depending on the company's operations. NEDs' time commitment to the issuer is likely to be less than EDs' because they are not involved in the day-to-day running of the business. According to the revised Code, the issuer should determine how much time it needs from each of its directors and review whether the director is meeting that requirement. FAQ Series 17, FAQ No. 11 LR reference: Main Board Rules 3.08 / GEM Rules 5.01 If issuers do not follow the guides named in the Note ("A Guide on Directors' Duties" issued by the Companies Registry, and the Guidelines for Directors and Guide for Independent Non-executive Directors published by the Hong Kong Institute of Directors), do they breach the Listing Rules? 1

2 No. These guides are suggested as resources for directors looking for further guidance on their duties and responsibilities to an issuer. FAQ Series 17, FAQ No. 10 LR reference: Main Board Rules Note to Rule 3.08 / GEM Rules Note to Rule 5.01 Clarify the requirement of "appropriate professional qualifications". Clarify the requirement of "appropriate accounting and related financial management expertise" There are two limbs to this requirement. Under the first limb, "appropriate professional qualifications" normally refers to a professional accounting qualification. For a candidate with other professional qualifications, issuers should also consider whether based on the experience and expertise of the candidate, he can fulfil the requirement under Main Board rule 3.10(2)/ GEM rule 5.05(2). The note to Main Board rule 3.10(2)/ GEM rule 5.05(2) sets out what we would expect such experience to be. FAQ Series 1, FAQ No. 2 LR reference: Main Board Rules 3.10(2) / GEM Rules 5.05(2) Is a professional qualification obtained from an overseas jurisdiction acceptable, such as a PRC or Singapore qualified accountant? Yes, a professional qualification obtained from a recognised body in an overseas jurisdiction would be acceptable. FAQ Series 1, FAQ No. 3 LR reference: Main Board Rules 3.10(2) / GEM Rules 5.05(2) 2

3 Can a solicitor be said to have appropriate professional qualifications, or does he need to have the appropriate experience? A legal qualification is not considered to be the appropriate professional qualification even if the person has obtained some accounting knowledge in the course of his studies. A person with a legal qualification is acceptable if the person has the "appropriate accounting and related financial management expertise" required under the rules. The Exchange may question the factors the board has considered when making the decision to accept a person. FAQ Series 1, FAQ No. 4 LR reference: Main Board Rules 3.10(2) / GEM Rules 5.05(2) Can a person who has served on the audit committee of an issuer for a number of years be considered to have the appropriate experience required under the rules? Please refer to the note to Main Board rule 3.10(2)/ GEM rule 5.05(2) as to what the appropriate expertise means. Prima facie, we would not consider a person whose only experience has been a member of an audit committee to fulfil the criteria set out in the note to the rule. FAQ Series 1, FAQ No. 5 LR reference: Main Board Rules 3.10(2) / GEM Rules 5.05(2) Is experience with a non-public company acceptable as having the appropriate accounting and related financial management expertise? Generally no, but the Exchange recognises that experience and scope of duties of a candidate may 3

4 demonstrate that he is capable of discharging the role required of such person as set out in Main Board rule 3.10(2)/ GEM rule 5.05(2). It is up to the board to evaluate the totality of the individual's experience and education to consider if he is acceptable. FAQ Series 1, FAQ No. 6 LR reference: Main Board Rules 3.10(2) / GEM Rules 5.05(2) If an existing NED meets the independence requirements, can he be re-designated as an INED so as to comply with the requirements effective 31 March 2004? Does an announcement need to be made for the re-designation? Yes, an existing NED may be re-designated as an INED, but we will consider his present or past relationship with a connected person or the issuer. This will be considered on a case-by case-basis. Where, in order to meet the new requirements, a director needs to comply with any relevant cooling-off period under the Rules, the relevant cooling-off period needs to have ended by the date on which his confirmation of independence is given. An announcement needs to be made for re-designation of a director from NED to INED for transparency. FAQ Series 1, FAQ No. 7 LR reference: Main Board Rules 3.13 / GEM Rules 5.09 If a non-executive director of an issuer is a legal adviser (say, a partner of a law firm) but for the past 1 year such director has not provided any relevant services to the issuer, and also such director fulfils the other guidelines of Main Board rule 3.13 / GEM rule 5.09, does this mean that such non-executive director can be an independent non-executive director of the issuer? If he is accepted as an INED and in future he provides services to the issuer again, will he continue to be considered independent? 4

5 Yes, he can act as an INED provided that he or his firm is not providing or has not provided services to parties set out in Main Board rule 3.13(3) / GEM rule 5.09(3) within 1 year before his appointment as an INED. If the firm (whether or not it is the director himself) still provides services, then he cannot act as an INED. Once the firm (whether or not he is directly involved) provides any services to the issuer or core connected persons again, he will immediately cease to be considered as independent. FAQ Series 1, FAQ No. 8 LR reference: Main Board Rules 3.13 / GEM Rules 5.09 (Updated on 1/7/2014) An existing INED is a partner of a law/cpa firm and this firm is currently providing legal/accounting services to the issuer or its subsidiaries. Is this existing INED not qualified and does the issuer need to appoint a new one? How is materiality of the interest determined when considering independence? Are there any specific definitions or figures (e.g. %) that can be used as reference? The individual is not qualified to act as an INED and the issuer needs to appoint a new one. However, he can still act as a non-executive director. Materiality must be assessed from the issuer's as well as the director's perspective. There is no specific figure materiality needs to be determined on a case-by-case basis. FAQ Series 1, FAQ No. 9 LR reference: Main Board Rules 3.13 / GEM Rules 5.09 Once an independent non-executive director ("INED") has submitted to the Exchange the initial written confirmation concerning his independence comprising all the information required by Main Board Rule 3.13 / GEM Rule 5.09, what information must be included in the INED's annual confirmation of independence 5

6 required to be provided to the listed issuer? Each INED is required to submit to the Exchange, at the same time as the submission of Form B/H in Appendix 5 of the Main Board Rules or Form A/B in Appendix 6 of the GEM Board Rules, a written confirmation regarding his independence which must contain all the information required by Main Board Rule 3.13(a), (b) and (c) / GEM Rule 5.09(a), (b) and (c). Each INED must provide to the listed issuer an annual confirmation regarding his independence which must contain the information required by Main Board Rule 3.13(a) and (c)/gem Rule 5.09 (a) and (c). FAQ Series 8, FAQ No. 9. Issue 17 LR reference: Main Board Rules 3.13 / GEM Rules 5.09 Released on 28/11/2008 Where a person is appointed a director or supervisor by more than one listed issuer, is he required to submit a DU Form or an Undertaking Form for an existing director (as defined in FAQ 56 below) for each listed issuer appointing him? Yes. The director or supervisor must submit a DU Form or an Undertaking Form (in the case of an existing director) for each listed issuer appointing him. FAQ Series 8, FAQ No. 52. Issue 17 LR reference: Main Board Rules Form B/H/I in Appendix 5, 3.20A / GEM Rules Form A/B/C in Appendix 6, 5.12A Released on 28/11/2008 Can the certification of the signature of a director or supervisor in an Undertaking Form or a new DU Form be done by a Notary Public or Commissioner for Oaths rather than by a director or secretary of the listed issuer? 6

7 The Exchange will accept a certification of the signature of the director or supervisor in his Undertaking Form or new DU Form by a Notary Public or Commissioner for Oaths rather than by the company secretary or another director. However, such certification is not required under the Listing Rules. FAQ Series 8, FAQ No. 53. Issue 17 LR reference: Main Board Rules Form B/H/I in Appendix 5, 3.20A / GEM Rules Form A/B/C in Appendix 6, 5.12A Released on 28/11/2008 Does the Exchange accept faxed copies of the executed Undertaking Forms or DU Forms? No. The Exchange only accepts the signed original of the executed Undertaking Forms and DU Forms. FAQ Series 8, FAQ No. 54. Issue 17 LR reference: Main Board Rules Form B/H/I in Appendix 5, 3.20A / GEM Rules Form A/B/C in Appendix 6, 5.12A Released on 28/11/2008 Can a non-executive director who is a connected person of the issuer be a member of the Audit Committee? Although the rules do not specifically prohibit this, we consider that members of the audit committee should be independent of connected persons. FAQ Series 1, FAQ No. 10 LR reference: Main Board Rules 3.21 / GEM Rules 5.28 Can the qualified accountant (also executive director) be appointed as the audit committee's secretary? 7

8 We consider that the secretary of the audit committee should not be a person who is involved in the financial reporting function of the issuer. FAQ Series 1, FAQ No. 11 LR reference: Main Board Rules 3.21 / GEM Rules 5.28 Are board resolutions sufficient for amending the terms of reference of an issuer's audit and remuneration committees? Or are shareholder resolutions required? The board should decide on and amend the terms of reference of the audit and remuneration committees (and indeed of all other board committees). Shareholder approval is not required. FAQ Series 21, FAQ No. 5 LR reference: Main Board Rules 3.22 and 3.26 / GEM Rules 5.29 and 5.35 Released on 27/3/2013 Can the issuer's staff and executive directors be appointed as members of the remuneration committee as long as the committee is chaired by an INED and the majority of its members are INEDs? Yes. The Rules do not restrict issuers from appointing their staff or executive directors to act as members of the remuneration committee, as long as a majority of the remuneration committee are INEDs and it is chaired by an INED. FAQ Series 17, FAQ No. 12 LR reference: Main Board Rules 3.25 / GEM Rules 5.34 If a person acted as the company secretary of Issuer A from 1990 to 2009, then became the company secretary of Issuer B in 2010, when would he have to comply with the 15-hour training requirement? 8

9 The person should comply with the new Rule for the financial year beginning on or after 1 January 2017, as his experience as the company secretary of Issuer A should be taken into consideration. FAQ Series 17, FAQ No. 2 LR reference: Main Board Rules 3.29 / GEM Rules 5.15 Are there any Exchange accredited training courses for the purpose of this Rule? No. Company secretaries should attend training relevant to their duties and responsibilities that they consider appropriate. The Hong Kong Institute of Chartered Secretaries provides ECPD courses for company secretaries which would satisfy the requirements of this Rule. FAQ Series 17, FAQ No. 13 LR reference: Main Board Rules 3.29 / GEM Rules 5.15 Does an accountant or lawyer acting as an issuer's company secretary fulfil the requirement to attend relevant professional training each year by attending CPD courses on subjects such as litigation and accounting standards? We intend that the training be broad rather than restrictive. Where legal and accounting courses are relevant to a company secretary's role and duties, they should count towards the 15-hour training requirement. FAQ Series 17, FAQ No. 13A LR reference: Main Board Rules 3.29 / GEM Rules

10 If a person is the company secretary of an issuer that is dual-listed on the Hong Kong and Shanghai stock exchanges and attends training courses relating to PRC listing requirements and regulations (to comply with Shanghai Stock Exchange requirements), do those courses count towards the 15-hour training requirement? As the company secretary of a Hong Kong listed company, this person should also undergo training on Hong Kong rules and regulations. However, the Exchange does not prescribe specific types of courses that a company secretary should attend, as long as they are relevant to his professional duties. If the training courses are of a general nature (e.g. a course on corporate governance), and not specifically on any PRC rules and regulations, then they may count towards the 15-hour training requirement. FAQ Series 17, FAQ No. 13B LR reference: Main Board Rules 3.29 / GEM Rules 5.15 Would the seminars organised by the Exchange be considered acceptable training for directors and company secretaries? Yes, they would normally count towards directors' and company secretaries' training. FAQ Series 17, FAQ No. 13C LR reference: Main Board Rules 3.29, Appendix 14 (Code Provision A.6.5 and Paragraph I(i)) / GEM Rules 5.15, Appendix 15 (Code Provision A.6.5 and Paragraph I(i)) 10