Notifiable Transaction 200910

7/30/2019 Notifiable Transaction 200910

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Notifiable Transactions

Sammy Chau / Katherine Man

Assistant Vice President

Compliance and Monitoring Department

Listing Division, HKEx


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Agenda

I. General

II. Definition of transaction

III. Classification of transactions and size tests computation

IV. Announcement, circular and shareholder approval requirements

V. Special considerations for transactions


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I. General


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Purposes of NT Rules

Who are subject to NT Rules?

Points to note


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Purposes of NT Rules

Assess the impact of a transaction:

Shareholders are informed

Shareholders can vote on significant transactions

Reinforce the general disclosure principle of price-sensitive information


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Who are subject to NT Rules? (1)

Listedissuer means:

- the listed issuer itself; and

- its subsidiaries.

Subsidiary includes:

(a) subsidiaryundertaking under the Companies Ordinance;

(b) a consolidated subsidiary under HKFRS / IFRS; and

(c) an acquisition target to be consolidated in the next auditedconsolidated accounts.


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Are transactions conducted via a jointly controlled entity (JCE) subject toNT Rules?

Listco A Company X

JCE 1

Listco A Company Y

JCE 2

50% * 50% 51% * 49%

Example 1 Example 2

* Listco A does not have control over JCE 1 and 2

Note: See FAQ Series 7 No. 1


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Are transactions conducted via an associated company subject to NTRules?

Listco A Company Z

Associated Co.

30% 70%

Example


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A notifiable transaction may also be subject to other Rules, e.g.

Disclosure of price-sensitive information

Advances to entities

Connected transactions

Spin-offs

Points to note


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II. Definition of transaction


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Definition oftransaction

Examples


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Definition of transaction

The Rules set out a non-exhaustive list.

They are principally outside the issuers ordinary and usual course of

business and/or have an impact on the issuers operation, e.g.

a) Acquisition or disposal of assets

b) An option to subscribe for shares or buy or sell assets

c) Entering into or terminating a finance lease

d) Entering into or terminating operating leases with significantimpact on the companys operation

e) Providing financial assistance

f) Formation of JV

Exclude some transactions of a revenue nature in the ordinary and usual

course of business


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Example 1 Acquisition of properties

Listco A

Acquisitionof a property

Fact:

Listco A is engaged in property development and property investmentbusinesses.

Is the acquisition of a property by Listco A subject to NT Rules?


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Example 2 Placing & top-up subscription

(Listing Decision 75-3)

Before placing &subscription

After placing, but beforesubscription

After placing &subscription

Listco A

Listco B

46 shares (46%)

Listco A

Listco B

36 shares (36%)

Listco A

Listco B

46 shares (42%)

Whether the placing and top-up subscription constitute a transaction forListco A?

Fact:

Listco B conducts a standard top-up placing and subscription exercise.


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Example 3 Placing deposits to a non-banking company

Does placing of deposits by Listco A to Company X constitute a transaction?

Parent Co.

Listco A(PRC issuer)

Company X(a non banking

finance company)Place deposits

>50%>50%


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Example 4 Treasury activities


Listco A

Appoint a fund manager to manageand invest surplus cash

Whether the above investment activities constitute a transaction?


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Example 5 Self construction of a factory

Listco(Car manufacturer)

Land

BuildingMaterials

Whether the acquisitions of land and building materials will betreated as a transaction?

Car manufacturing

factory

Aggregation does not apply when:

an asset is being constructed, developed or refurbished by or onbehalf of a listed issuer for its own use in its ordinary and usualcourse of businesswhere the sole basis for aggregation is rule14.23(3)*

* Form parts of one asset

Construct into


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III. Classification of transactions and

size tests computation


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Classification of NT

5 size tests

General principles

Specific circumstances

Alternative size tests

Aggregation of transactions


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Classification of NT

NT category Size test results

Share transaction Acquisition of assets and the consideration involvessecurities for which listing is sought

All percentage ratios are less than 5%

Discloseable transaction 5% or above, but all below 25%

Major transaction 25% or above, but all below 75% (for disposal) or 100% (foracquisition)

Very substantial disposal (VSD) 75% or above

Very substantial acquisition (VSA) 100% or above

Reverse takeover(RTO) See definition in MB R14.06(6)/ GEM R19.06(6)

A transaction involving both an acquisition and a disposal will be classified by referenceto the larger of the acquisition or disposal.


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5 size tests (1)

Assets ratio Total assets of the subject of the transaction

Total assets of the issuer

Profits ratio Profits* attributable to the subject of the transaction

Profits* of the issuer

* means net profit before taxation and minority interests

Revenue ratio Revenue** attributable to the subject of the transaction

Revenue** of the issuer

** means revenue arising from the principal activities of the entity


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5 size tests (2)

Consideration ratio Consideration

Issuers total market capitalisation***

*** means the average closing price of the issuers securities for the 5business days immediately before the transaction date

Equity capital ratio Nominal value of the issuers equity capital issued as consideration

Nominal value of the issuers existing equity capital


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General principles (1)

1. The source of issuers figures is its published information.

2. The source of targets figures is its audited accounts or other acceptableaccounts.


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General principles (2)

3. Acquisition/ disposal of equity capital

resulting in consolidation/ de-consolidation?

Yes - 100%

No - % bought or sold

4. Transaction via non wholly owned subsidiary

Same size test computation as for transactions via wholly ownedsubsidiary


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Specific circumstances: Deemed disposal (1)

Assets, profits and revenue ratios

Consideration ratio:

= Value of the shares issued to allottees, excluding those issued for

maintaining the allottees % interest in the subsidiary

Results in de-consolidation fromissuers account

100% of the target

Remain consolidated/ de-consolidated % of the equity interest decreased


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Specific circumstances: Deemed disposal (2)

Before After

Listco A

Subsidiary B

90%(90 shares)

Mr. X

10%(10 shares)

Listco A

Subsidiary B

82%(90 shares)

Mr. X

18%(20 shares)

Numerator for the consideration ratio

No. of shares required for Mr. X to maintain his interest in Subsidiary B

= 110 shares x 10% = 11 shares

Numerator for the consideration ratio:

= (20 shares 11 shares) x fair value of the shares

Example: Computation of consideration ratio


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Specific circumstances: Financial assistance

Assets ratio &Consideration ratio

Value of the financial assistance + any monetaryadvantage

Revenue ratio &

Profits ratio

Annual interest income (if any)

Equity capital ratio NA

How should the percentage ratios apply to provision of financialassistance by an issuer?


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Specific circumstances: Formation of JV


Under the JV agreement:

Total investment cost: RMB330 million

Registered capital: RMB110 million(contributed in cash)

The difference will be funded by proceedsfrom property sales, bank loans orshareholders loan

Listco B JV partner

JV Company

60% 40%

Which percentage ratios are applicable?

What should be the numerator of the percentage ratios?


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Specific circumstances: When the consideration differs from

the asset value (R14.15(1))

Consideration: $50 million

Market price of the consideration shares: HK$70 million

Fair value of the property: HK$100 million

What should be the numerator of the consideration ratio?

Listco CAcquisition of a property

Settled by consideration shares


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Specific circumstances: When the consideration cannot be

determined (FAQ Series 7- No. 8)

Under the agreement, Listco D has to pay:

cash consideration: HK$1 million; plus

future amount payable upon completion,

which is based on the valuation of theTarget at the time of completion

How should Listco D calculate the consideration ratio?

Listco D

Target


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Issuers cannot exercise discretion:

Grant of option a transaction

Exercise or transfer of option not a transaction

Issuers can exercise discretion:

Grant of option normally not a transaction unless there is a premium

Exercise or transfer of option a transaction

Specific circumstances: Option arrangements (1)


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Specific circumstances: Option arrangements (2)

Prior approval for exercise of option

At the time of entering into an option, issuer may seek shareholder approvalfor the exercise of the option.

Shareholder approval is not required upon exercise of the option if: the relevant information is disclosed to shareholders; and

no change of the relevant facts at the time of exercise

No similar provision in the connected transaction Rules


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Alternative size tests

We may disregard a size test calculation if:

it produces an anomalous result; or

it is inappropriate to the sphere of activity of the issuer.

Issuers must provide appropriate alternative tests for our consideration.

We will consider:

substance of transactions and not only their legal form

whether size tests results vary significantly


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Example 1 Acquisition of listed securities as investment

(FAQ Series 7- No. 12)

Size tests Numerators of the alternative test

Assets ratio Fair value of shares being acquired

Profits/ revenue ratio Dividend income

Fact:

Listco A proposes to acquire 5% interest in Target X as an investment whichwill be classified as available for sale financial assets.

Our view:

How should Listco A compute the assets, profits and revenue ratios?


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Example 2 Group restructuring


Before After

Listco B

Subsidiary X Subsidiary Y

Target

100% 70%

Listco B

Subsidiary X Subsidiary Y

Target

100% 70%

Facts:

Disposal of 100% in Target by Listco B (through Subsidiary X)

Acquisition of 100% in Target by Listco B (through Subsidiary Y)

100% 100%


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Aggregation of transactions

Prevent circumvention of Rules by splitting a transaction

Aggregation of a series of transactions:

completed within 12 months or

are otherwise related.

Non-exhaustive factors we consider:

with the same party or parties connected

involve interests in one particular company or group of companies

parts of one asset lead to substantial involvement in a new business


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Points to note (1)

Aggregation is not automatic only because one factor is triggered.

We will also consider the effect of aggregation:

whether aggregation would result in a higher transaction classification.

New classification only applies to current transaction.

FirstTransaction

SecondTransaction

If aggregated Will aggregationresult in a higher

classification?

SecondTransaction

Major Discloseable Major No Discloseable

Major Discloseable VSA Yes VSA

e.g.


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Points to note (2)

Prior consultation with the Exchange

Exceptions:

The issuer has already decided to aggregate the proposed transactionwith the previous transaction(s)

The proposed transaction, even when aggregated with the previoustransaction(s), will not be a NT


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Example 1 Acquisition of machinery from related suppliers


Facts:

Listco A proposes to acquire different models of machinery frommembers of Group X (a major supplier) under different contracts.

The machinery acquired under each contract is functional on its ownand does not form part of an assembled machine.

Each contract was negotiated independently.

Will the Exchange aggregate acquisitions of machinery?


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Example 2 Acquisition of adjacent lands


Facts:

Listco B acquired Land 1 in June.

It acquires Land 2 one month later.

Land 1 and 2 are adjacent to each other.

They will be re-developed into a single residential property for sale.

The 2 acquisitions are not inter-conditional.

Will the Exchange aggregate acquisitions of Land 1 and 2?


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IV. Announcement, circular and shareholder approvalrequirements


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Overview

Suspension

Announcement

Shareholder approval Circular

Documentary requirements for listing applications by listed issuers


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Overview

Transaction

Type

Notify

ExchangeSuspension

Publish

Announce-

ment

Shareholders

approval

Publish

Circular

Accountants

report

Treated

as new

listing

Share

transaction

Yes Yes Yes No if shares

are issued

under general

mandate

No No No

Discloseable Yes No, unless

PSI

Yes No No No No

Major Yes Yes Yes Yes Yes Yes for

acquisition

No

VSD Yes Yes Yes Yes Yes Yes No

VSA Yes Yes Yes Yes Yes Yes No

RTO Yes Yes Yes Yes Yes Yes Yes


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When required?

A short suspension is required for

a share transaction, major transaction, VSA, VSD or RTO; or

any discloseable transaction which is price sensitive,until publication of the announcement.

Suspension


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Announcement (1)

When required?

Initial announcement

After finalisation of the terms of a NT

Further announcements

Expert reports

Exploration for natural resources activities

Profit forecast

within 21 days after discloseable transaction announcement

Poll results

after general meeting


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Announcement (2)

When required?

Further announcements (contd)

Changes after initial announcement: termination of a previously announced NT

material change in terms of the NT

material delay in completion of the agreement

Option arrangements: expiry of the option

option holder notifying the grantor of non-exercise of the option

transfer of the option to a third party


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Announcement (3)

Content requirements

General principle

Information must be clearly presented, and must be accurate andcomplete in all material respects and not be misleading or deceptive

Specific disclosures

e.g. - general nature of the transaction

- description of the target

- terms of the transaction (e.g. consideration)

- reasons for and impact of the transaction


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Announcement (4)

Common pitfalls

Frequent omissions:

Principal business activities of the counterparty

Date of the transaction and independence of the counterparty Value of the subject asset

Net profits of the target asset

Gain or loss on disposal and the basis of calculation

Inadequate disclosures: Basis of consideration

Reasons for entering into the transaction


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Announcement (5)

Waivers from disclosure requirements

Granted only in limited circumstances

We will consider:

materiality of the information

alternative disclosures proposed by the issuer

sufficient information for shareholders/ investors to make an informedinvestment decision

unduly burdensome/ impractical


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Example Waiver from disclosure requirements

Facts

Listco A proposes a major acquisition involving issuance of considerationshares change in control

Listco A must disclose the Targets financial information in theannouncement.

Takeovers Code: Disclosure of unaudited financial information willconstitute profit forecasts, which must be reported by an auditor and/or a

financial advisor.

Will the Exchange grant waiver?


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Shareholder approval (1)

When required?

Major transaction, VSD, VSA and RTO

General principles

Voting should be made on the terms of the subject transaction

All voting at general meetings must be taken by poll

Shareholder approval must be obtained before completion of the transaction

Can an issuer obtain a prior mandate from its shareholders for on-market

disposal of its investments?


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Shareholder approval (2)

Material interest

Any shareholder that has a material interest in the transaction shall abstainfrom voting

Factors determining material interest include: a party to the transaction or his associate?

any benefit confers upon the shareholder or his associate, which is notavailable to other shareholders

No monetary / financial benchmarks for material interest


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Example 1 Material interest in a transaction


>10%

Mr. X

(Director)

Vendor

Listco A Target

2%+CEO

0.5%60%

Facts:

Mr. X is not a party to the VSA

Mr. X had abstained from voting at board meetings

Mr. X is a member of Listco As executive committee

Does Mr. X have material interest in the VSA?

Subject matter of

the VSA


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Example 2 Material interest in a transaction


9%

Mr. Y

Listco A

Listco B

Director & CEO

of Listco B andholding a number of

outstanding options (about

2% of Listco Bs issued

share capital)Facts:

Listco A proposes to privatise Listco B.

a major transaction for Listco A

Do Company X and Mr. Y have material interest in the major transaction?

Company X

>10%

Director &

shareholder

of Listco A


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Written shareholder approval (1)

Allowed for major transactions if:

no shareholder needs to abstain from voting; and

a closely allied group of shareholders, holding more than 50% voting

interest, approves the transaction

A closely allied group of shareholders:

the number of persons in the group

their relationship (e.g. past or present business association)

how long have they been shareholders?

are they parties acting in concert under Takeovers Code?

voting pattern on past shareholders resolutions (other than routine

resolutions at AGM)


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Written shareholder approval (2)

Not allowed for :

VSA, VSD and RTO

qualified opinion on the accountants report

some natural resources acquisitions that become new ventures of theissuer

Other Listing Rules may require shareholder meeting

e.g. specific mandate for issue of consideration shares


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Subsequent change of terms of a transaction

Material changes of the terms of a transaction after shareholder approval require shareholder re-approval?

Example:

Listco A agreed to dispose of a property at a consideration of HK$20million VSD

The VSD was approved by shareholders.

The parties now proposes to reduce the consideration to HK$10million before completion major transaction

Does the change of consideration constitute a material change interms?

Note: See also FAQ Series 7 No. 16


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Circular (1)

When required?

Major transaction, VSD, VSA and RTO

The circular must be despatched:

within 21 days after publication of the announcement; and

at the same time or before the issuer gives notice of the shareholdermeeting (if any)

Any supplementary circular containing material information

at least 14 days before general meeting


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Circular (2)

Content requirements

General principle

Information must be clearly presented, and must be accurate andcomplete in all material respects and not be misleading or deceptive

Sufficient information for shareholders to vote

Specific disclosures

e.g. - 3 year historical financial information of the target

- Pro forma financials of the enlarged/ remaining group

- Other expert reports (e.g. valuation report, mining report)- Information on the target and the issuer

e.g. indebtedness statement, working capital sufficiency statement,information on the financial and trading prospects of the issuer


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Historical financial information of the target (1)

NT category Where the target is a business/

company

Where the target is a revenue-

generating asset with an identifiable

income stream or asset valuation

Major disposal Not required Not required

Major acquisition Accountants report on the target* Profit/ loss statement and (where

available) valuation of the target

VSD Accountants report on the group# Profit/ loss statement and (whereavailable) valuation of the target

VSA and RTO Accountants report on the target* Profit/ loss statement and (whereavailable) valuation of the target

# with separate disclosure of financial information of the disposal target as a discontinuing operation

* No accountants report is required if the target itself is listed on the Exchange


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Accountants report

Prepared by qualified and independent CPA

The accounts must:

adopt accounting policies materially consistent with those of the issuer

conform with HKFRS or IFRS

contain financial statements of the target / group for 3 financial yearsbefore issue of circular

relate to a financial period ended 6 months or less before issue of

circular



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Accountants report relief

We will consider:

Information differences

Assurance differences

Unduly burdensome/ impractical

Specific relief in the Rules:

the target has not or will not become the issuers subsidiary

non-public information related to a target company (which is listed andwill become the issuers subsidiary) is unavailable



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Example - Waiver from accountants report requirements


Facts:

Listco A proposes to acquire a business from a US listed company VSA

Listco A has practical difficulties in preparing an accountants report on the Target

Business.

It proposes to include in its VSA circular:

audited combined financial statements of the Target Business

prepared in accordance with US GAAP, with a reconciliation to HKFRS

audited by the vendors auditors in accordance with US auditing

standard

GAAP reconciliation reviewed by Listco As auditor


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Pro forma financial information (1)

NT category Where the target is a business/

company

Where the target is a revenue-

generating asset with an identifiable

income stream or asset valuation

Major disposal Not required Not required

Major

acquisition

Pro forma statement of assets

and liabilities of the enlargedgroup

Pro forma statement of assets and

liabilities of the enlarged group

VSD Pro forma income statement,balance sheet and cashflow

statement of the remaining group

Pro forma profit and loss statement

and net assets statement on the

remaining group

VSA/ RTO Pro forma income statement,balance sheet and cashflow

statement of the enlarged group

Pro forma profit and loss statementand net assets statement on the

enlarged group


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Pro forma financials must:

clearly state the purpose of their preparation

include all appropriate adjustments

adopt format and accounting policies consistent with those used by theissuer

Pro forma financial information may only be published in respect of:

the current financial period

the most recently completed financial period

the most recent interim period for which information has been published

Point to note:

The pro forma income statement and balance sheet may be prepared fordifferent accounting periods


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The issuers unadjusted information must be derived from the most recent :

audited published accounts, published interim reports, published interim orannual results announcements;

accountants report;

previously published pro forma financials; or

published profit forecast or estimate


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Other expert reports (1)

Report on profit forecast

Profit forecast is not mandatory

A circular containing a profit forecast must include:

reporting accountants or auditors report accounting policies

calculations for the forecast

financial advisers report

forecast has been stated after directors due and careful enquiry


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Report on profit forecast (contd)

Profit forecast includes:

any statement which quantifies the anticipated level of future profits or

losses

any profits/ losses estimate for a financial period which has expired butfor which the results have not yet been published

any valuation of assets (other than land and buildings) or businesses

based on discounted cash flows or projections of profits, earnings or

cash flows


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Technical report for mining activities

applicable to Main Board issuers proposing to explore for natural resources as

a new venture

must be prepared by a qualified technical adviser

must include information e.g.

estimated reserves

evidence on which the estimate is based

details of the technical advisers

must be prepared not more than 6 months before issue of the circular


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Indebtedness statement

statement of indebtedness of the group as at the most recent practicabledate

most recent practicable date normally NOT more than 8 weeks before

group include any company which will become a subsidiary of the

issuer

Working capital sufficiency statement

confirmation if the issuer has sufficient working capital

normally cover the next 12 months

Indebtedness and working capital sufficiency statements


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Recent Rule amendments (Effective 2 November 2009)

simplify Rules for listing applications by listed issuers

remove some existing documentary requirements

revise timeframe for submission of documents

reduce number of copies required for submission

Documentary requirements for listing applications by listed

issuers


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V. Special considerations for transactions


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Reverse takeovers

Spin-off

Distribution in specie

Cash companies

Sufficiency of operations


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MB R14.06(6)/ GEM R19.06(6) (contd)

A reverse takeover normally refers to:

(a) an acquisition or a series of acquisitions (aggregated under rules 14.22 and

14.23) of assets constituting a very substantial acquisition where there is orwhich will result in a change in control (as defined in the Takeovers Code) ofthe listed issuer (other than at the level of its subsidiaries); or

(b) acquisition(s) of assets from a person or a group of persons or any of his/their

associates pursuant to an agreement, arrangement or understanding enteredinto by the listed issuer within 24 months of such person or group of personsgaining control (as defined in the Takeovers Code) of the listed issuer (otherthan at the level of its subsidiaries), where such gaining of control had notbeen regarded as a reverse takeover, which individually or togetherconstitute(s) a very substantial acquisition

Reverse takeovers (2)


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Application of RTO Rule

What is a RTO? (LC Annual Report 2007)

What is the 24 month restriction?

How do we look at change in control?

Reverse takeovers (3)


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We will look at the reason(s) for triggering the general offer obligation whendetermining whether the change in control test is met.

Company X

Vendor Holding Co

Target Listco A

Company X

Vendor

Listco A

Holding Co

Target

>50% >50% >50%

>50%

20%

100%100%100% 100%

Before AfterExample

Example Change in control



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To address circumvention of the RTO rules

An issuer may not dispose of its existing business for a 24 month period

after a change in control, unless

assets acquired after the change in control meet the new listingrequirement

Otherwise, deemed as a new listing applicant

Disposal of existing business after change in control (1)


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Listing Committee Annual Report 2008

The Listing Committee endorsed a waiver:

Disposal will be restricted if :

assets injection by new controlling shareholder at the time of and/or afterthe change in control; and

such asset injection would have resulted in a VSA, taking into accountthe disposal(s)

We will consider whether the issuer structures its transactions to circumvent

the RTO Rules.

Disposal of business after change in control (2)


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A proposal that effects the separate listing on the Exchange or elsewhere of

assets or businesses wholly or partly within its existing group

General principle

one business should not support 2 listing status

Clarifications:

Spin-off can be conducted via acquisition of a listed shell

Holding of interest in Newco after spin-off is not a pre-requisite

Spin-off proposals are subject to the Exchanges approval

Shareholder approval is only required for major or above transactions

Spin-off


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Example Spin- off via acquisition of a shell company

Listco A

Disposed

Group

100%

Listco A

DisposedGroup

80%

Company B

100%

Before Disposal After Disposal

Facts:

Company B does not have material assets or operation.

The disposal aims to consolidate majority of Listco A Singapore assets under

one listed subsidiary (Company B).

(Listed on Main Board) (Listed on Main Board)

(Listed in Singapore)

Does the disposal constitute a spin-off?

Note: See also Listing Decision 3-2


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Distributions in specie to shareholders are normally not notifiable transactions.

We may impose requirements if the distributions are in substance:

circumvention of the Listing Rules disposal of assets by the issuer

against the general principles of investor protection

Distribution in specie


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Example - Distribution in specie


Before After

ParentCompany

Listco A

Subsidiary X(unlisted)

Minorityshareholders

Distribution of all Subsidiary Xs

shares to Listco As

shareholders ( Distribution)

Parent Company will make acash offer to acquire allSubsidiary Xs shares *

(Subsidiary Offer)

ParentCompany

Listco ASubsidiary X

(unlisted)

* Parent Shareholder proposes the Distribution to facilitate the disposal of its controlling

interest in the Listco A.

Minorityshareholders


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Cash companies

Where for any reason the assets of an issuer consist wholly or substantiallyof cash or short-dated securities, it will not be regarded as suitable for listingand trading in its securities will be suspended.

Short-dated securities: securities such as bonds, bills or notes whichhave less than 1 year to maturity.

We will treat the issuers application for lifting of the suspension as if it were anew listing applicant.

Exclude:

investment companies as defined in MB Chapter 21; or

an issuer which is solely or mainly engaged in the securities brokeragebusiness


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For continued listing of its securities, an issuer must demonstrate to theExchange that:

it carries out, directly or indirectly, a sufficient level of operations

it has tangible assets of sufficient value and/or

it has intangible assets of sufficient potential value

Sufficiency of operation


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Compliance reminders


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I. Reminders


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Trading suspension

Black out period

Shareholder meeting notice

Continuing connected transactions

Access to books and records of disposed companies

Board meeting notification

Book closure notification

Disclosures in monthly returns and next day disclosure returns


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Trading suspension

1. Authorised representatives and company secretary should be contactable todeal with suspension related matters:

respond to our press/ price and trading movement / post-vetting

enquiries inform us of the proposed suspension well in advance

submit written suspension request well in advance

Reminders (1)


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Black out period

2. The new black out period will commence:

60 days before publication of results or

if shorter, the period from the financial year end up to the date of

publication

notify the Exchange about the commencement of blackout period

Reminders (2)

31/12/2009(year end

date)

20/3/2010(Date of publicationof annual results)

30/4/2010(Deadline for publication of

annual results MB issuers)

Commencement of black out period: 19 January 2010

Notification must be sent to the Exchange before 19 January 2010


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Shareholder meeting notice

3. Code Provision: Notice of shareholder meeting should be sent

at least 20 clear business days before AGM

at least 10 clear business days before other general meeting

(Introduced on 1 January 2009)

Reminders (3)


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Revised publication deadlines for results announcements (Main Board)

4. Annual results: 3 months after year end

- for financial year ending on or after 31 December 2010

5. Interim results: 2 months after period end- for 6 months ending on or after 30 June 2010

Reminders (4)


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Continuing connected transactions (CCTs)

6. Is there sufficient time for renewing an expiring CCT agreement?

Plan for:

renewal of the agreement

publication of announcement, shareholder meeting, appointment ofIFA and establishment of IBC

7. Will the CCTs exceed the annual cap(s)?

Plan for publication of announcement, shareholder meeting, appointment

of IFA and establishment of IBC

8. Will there be adequate time for auditors and INEDs to review the CCT?

Submit auditors confirmation within 10 business days before bulk-printing of the annual reports

Reminders (5)


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Access to books and records of disposed companies

9. Ensure that the issuer itself and its auditors can have access to the disposedcompanies books and records for the year end audit

Reminders (6)


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Board meeting notification

10. Announce at least 7 clear business days before the meeting date

Reminders (7)


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Book closure notification

11. Announce the book closure date at least 14 days before the closure

12. Disclose the purpose of the book closure (e.g. for dividend entitlements,

attendance at the AGM, etc)

Reminders (8)


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Type of Issue No. of newshares of

issuer issued

during the

month

pursuant

thereto

No. of newshares of issuer

which may be

issued pursuant

thereto as at

close of the

month

6.Repurchaseof shares

Class of share repurchasedCancellation date : (dd/mm/yyyy)

EGM approval date: (dd/mm/yyyy)

Ordinary

(15/11/2009)

(30/11/2009)

(26/06/2009)

(100,000)

(200,000)

N/A

N/A

N/A

(200,000)

13. Other Movements in Issued Share Capital:- 6. Repurchase of shares

No. of shares repurchased (but yet to

be cancelled) as at the end of the

month

Disclosures in Monthly Return Share repurchase and cancellation of

repurchased shares

No. of shares cancelled during

the month

Date of general meeting (e.g. AGM date)

approving the share repurchases

Reminders (9)


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Issues of shares(Notes 6 and 7)

No. of shares

Issued shares as

a % of existing

issued share

capitalbeforerelevant share

issue(Notes 4, 6 and 7)

Issue price

per share(Notes 1 and

7)

Closing market price

per share of the

immediatelypreceding business

day

(Note 5)

% discount/premium of issue

price to market

price

(Note 7)

Opening balance as at(Note 2)

31 October 2009

1,000,000,000

(Note 3)

Placing of new shares

- 20 November 2009

Exercise of options

- 3 November 2009- 5 November 2009

50,000,000

10,000

40,000

5%

0.001%

0.004%

$0.70

$0.50

$0.50

$0.85 (9 Nov 2009)

$0.65 (2 Nov 2009)

$0.75 (4 Nov 2009)

17.65% discount

23.01% discount

33.33% discount

The closing market price per share on the

business day immediately before the

occurrence of the reported item, e.g. issue of

shares on exercise of options

Where shares are allotted or redeemed on multiple dates,

details must be disclosed separately.

Disclosure in Next Day Disclosure Return

14. Closing market price and allotment/repurchase on multiple dates

Reminders (10)


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II. Year end disclosures


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Publication of management accounts

Issuers failing to announce their preliminary results before the publicationdeadline must issue an announcement containing:

a full explanation for its inability to publish a preliminary results

the expected date of announcement of the financial results financial results (if available)

any disagreement with the audit committee on accounting treatmentadopted

Year end disclosures (1)


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Common pitfalls of disclosures in annual results announcements

Omission of information required under MB App 16/ GEM Chapter 18

Ageing analysis and credit policy description

Compliance statement on Corporate Governance (CG) Code

A statement that the results had been reviewed by audit committee

Details of the qualification or modification of the auditors report

The explanatory notes to proposed dividend

Inadequate disclosure of information required under MB App 16/ GEM Chapter 18

Significant balances / fluctuation

Management discussion on the issuer's results



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Common pitfalls of disclosures in annual reports

Omission of information

Disclosures in Corporate Governance Report

e.g. terms of NED appointment, information on remuneration committee

Details of connected transactions

A narrative statement on whether the auditors had reviewed and confirmed compliancewith CCT annual review Rules

Continuing disclosures of advance to entities, financial assistance to affiliatedcompanies, pledge of shares by controlling shareholders, etc

Annual confirmation of INED independence

Inadequate disclosure Description of credit policy and ageing analysis

Analytical and in-depth discussion in MD&A section

Details of share option scheme

Explanation for inconsistency of disclosure relating to auditors remuneration infinancial statements and CG Report

Disclosure on financial instruments (their nature, valuation and risk exposure)



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Dividend information

Provide sufficient information on dividend proposals including the dividendpayment date

Notify shareholders of any withholding tax implication


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Other reference materials

Auditing guideline - Statement 3.340 Prospectuses and the Reporting Accountant,issued by HKICPA(http://app1.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeIII/3_340.pdf)

Accounting Guideline 7 Preparation of Pro Forma Financial Information for Inclusionin Investment Circulars, issued by HKICPAhttp://www.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeII/ag7.pdf

Hong Kong Standard on Investment Circular Reporting Engagements 300Accountants Reports on Pro forma Financial Information in Investment Circulars ,issued by HKICPAhttp://www.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeIII/hksir3

00.pdf

Review report by the Professional Standards Monitoring Committee of the HKICPA(http://www.hkicpa.org.hk/correspondence/2009-06-25/activities_report.pdf)
http://app1.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeIII/3_340.pdfhttp://app1.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeIII/3_340.pdfhttp://www.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeII/ag7.pdfhttp://www.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeIII/hksir300.pdfhttp://www.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeIII/hksir300.pdfhttp://www.hkicpa.org.hk/correspondence/2009-06-25/activities_report.pdfhttp://www.hkicpa.org.hk/correspondence/2009-06-25/activities_report.pdfhttp://www.hkicpa.org.hk/correspondence/2009-06-25/activities_report.pdfhttp://www.hkicpa.org.hk/correspondence/2009-06-25/activities_report.pdfhttp://www.hkicpa.org.hk/correspondence/2009-06-25/activities_report.pdfhttp://www.hkicpa.org.hk/correspondence/2009-06-25/activities_report.pdfhttp://www.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeIII/hksir300.pdfhttp://www.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeIII/hksir300.pdfhttp://www.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeII/ag7.pdfhttp://app1.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeIII/3_340.pdfhttp://app1.hkicpa.org.hk/ebook/HKSA_Members_Handbook_Master/volumeIII/3_340.pdf


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Thank you

Documents

Notifiable Transaction 200910