HKEX Proposes Raising Disclosure Threshold to 50%, Removing Profit Ratio in Listing Reforms
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On September 21, the Hong Kong Stock Exchange (HKEX) published a consultation paper as part of the second phase of its listing competitiveness review, seeking market feedback on proposals to reform regulations for listed issuers' corporate transactions. The consultation period runs for 10 weeks until November 30, 2026. Key proposals include deleting the 'profit ratio' test, allowing issuers to compare the consideration ratio against the higher of market capitalization or net assets, and raising the disclosure transaction threshold from 5%-25% to 5%-50%. The major transaction threshold would increase from 25% to 50%, and categories for very substantial disposals and acquisitions would be eliminated. Asset acquisitions or leases in the ordinary course of business that constitute major transactions would no longer require a circular or shareholder approval. For connected transactions, the definition threshold for 'connected subsidiaries' would rise from 10% to 30% voting power, and annual caps for continuing connected transactions could be expressed as a percentage of revenue or other financial items. HKEX Head of Listing Bonnie Y Chan stated the reforms aim to provide greater flexibility and certainty for issuers while maintaining investor protection through timely disclosures and board accountability.
Source report
September 21 — Hong Kong Exchanges and Clearing Limited (HKEX) has published a consultation paper seeking market feedback on the second phase of proposals to enhance the competitiveness of its listing regime. The consultation period runs for 10 weeks, ending on November 30, 2026.
This second phase of HKEX's listing regime competitiveness review focuses on regulating corporate transactions of listed issuers, covering notifiable transactions, connected transactions, and spin-off requirements. The proposals aim to provide listed issuers with greater flexibility in conducting corporate transactions, while maintaining appropriate investor protection through enhanced disclosure requirements and effective board accountability mechanisms.
Bonnie Y Chan, Head of Listing at HKEX, said the reforms are designed to offer issuers greater flexibility and certainty, reducing the cost and time involved in corporate transactions while safeguarding investor protection through timely, meaningful disclosures and robust board accountability.
Key Proposals
Transaction Classification and Thresholds
- Remove the "profits ratio," which is most prone to anomalous results
- Allow listed issuers to compare the consideration ratio against the higher of their market capitalisation or net asset value
- Broaden the disclosure transaction threshold from the current 5%–25% range to 5%–50%
- Raise the major transaction threshold from 25% to 50%
- Abolish the classifications of "very substantial disposal" and "very substantial acquisition"
Ordinary Course Transactions
- Asset acquisitions or leases that constitute major transactions but are conducted in the ordinary course of business would no longer require a circular or shareholder approval
Announcement Disclosures
- Ensure investors receive sufficient, meaningful information in a timely manner to assess transactions
- All announcements for notifiable transactions must disclose key transaction terms, principal financial information of the target company, and an explanation of the transaction's impact
- Additional circumstances requiring separate announcements would be introduced
Connected Transactions
- Raise the definition threshold for "connected subsidiaries" from 10% to 30% of voting rights exercisable or controlled by a connected person
- Allow annual caps for continuing connected transactions to be expressed as a percentage of revenue or other financial items, rather than limited to monetary amounts
Source
智通财经Eastern
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HKEX proposes major overhaul of transaction, spin-off rules for listed firms