SEHK will consider waiver applications for exemptions of share buy-backs during restricted period

In a landmark development for the Hong Kong stock market, the Hong Kong Stock Exchange (the “Exchange”) released a new guidance letter on “irrevocable non-discretionary share buy-back programmes” last Friday, shortly following the policy address by the Chief Executive of the Hong Kong SAR in the middle of the week. 

The Hong Kong Listing Rules impose dealing and other restrictions on share buy-backs by a listed issuer on the Exchange, in particular when an issuer is in possession of undisclosed inside information and during the one month before the release of its financial results (the “Restricted Period”). The purpose of these dealing restrictions is to prohibit issuers from using its undisclosed inside information to deal in its shares and to safeguard against price manipulations by an issuer or its agent.
Waiver from strict compliance with the prohibition against buy-back during Restricted Period

To align the Hong Kong market with other international markets, including the US, the UK and the EU, that permit listed companies to continue share buy-back programmes without interruptions throughout Restricted Period, the Exchange has indicated in a new GL117-23 that it will consider waiver applications for irrevocable non-discretionary share buy-back programmes of individual issuers (“Programme”) to continue to operate throughout the issuer’s Restricted Period if the risk of abuse of undisclosed inside information and price manipulation is low.