HKEX will repeal Mixed Media Offer and promote electronic comms between issuers & securities holders

Last Friday, 24 January 2025, the Hong Kong Stock Exchange (the “Exchange”) released the conclusions to its August 2024 consultation regarding the “Proposals to Further Expand the Paperless Listing Regime and Other Rule Amendments”.

The Exchange said all the proposals will be largely adopted as proposed following majority market support, with only very minor changes. Under the new rules, the Exchange will mandate listed issuers to provide electronic communication and payment options available to securities holders. For details on the main proposals, see our previous bulletin.

The effective date for each proposal varies. We have reproduced below Table 2 from the conclusions, which outlines the implementation timeline for each proposal adopted. 

By way of background, USM is the uncertificated securities market regime that gives investors the option to hold securities in electronic form with direct legal ownership without paper documents, adding to the existing nominee structure in CCASS. The introduction of a USM regime aims to eliminate manual and paper-based processes, thereby boosting operational efficiency within Hong Kong’s financial market infrastructure. The Hong Kong regulators anticipate that the USM regime will be implemented at the end of 2025.

The Exchange has helpfully clarified that listed issuers will not be required to offer securities holders with an electronic option for sending instructions that need to be accompanied by physical title instruments, such as a takeover offer where a securities holder will surrender a physical title certificate.

The Securities and Futures Commission has indicated that it will publish a notice in the government gazette to implement the proposed amendments, facilitating changes to the ordinance to repeal the Mixed Media Offer.

Regarding real-time electronic payments to securities holders, the Exchange has decided to scale back its proposal to require listed issuers to provide a CHATS payment option. Instead, listed issuers will have the flexibility to choose their electronic payment methods, so long as securities holders receive funds on the payment date specified in the corporate communication for the relevant corporate action. 

The Exchange sought market views on whether listed issuers should be required to offer securities holders the option to attend general meetings and vote through electronic means. This proposal will not be adopted at present, but the Exchange said it will monitor market developments and may re-consider introducing this option where the physical general meeting will be held outside of Hong Kong. 

Due to concerns about costs and other implementation challenges expressed by respondents, the Exchange will not at present adopt web accessibility guidelines (e.g., WCAG) into the Listing Rules or its guidance materials, although this will remain under review.

Additionally, to align with the repealed requirement for an INED to submit an annual independence confirmation to the Exchange, an INED will no longer need to provide that annual confirmation to the listed issuer.