HKEx Consults on Tightened HKEx Listing Rules on Backdoor Listings and Shell Companies
1. Introduction
The Stock Exchange of Hong Kong Limited (Hong Kong Stock Exchange or HKEx) published a Consultation Paper on Backdoor Listing, Continuing Listing Criteria and Other Rule Amendments (Consultation Paper) on 29 June 2018 containing proposals to tighten the HKEx Listing Rules on reverse takeovers (i.e. backdoor listings) and the criteria for continued listing which are aimed at preventing the listing and continued listing of “shell companies” due to the HKEx’s concerns that these companies may become vehicles for backdoor listings. While the activities targeted by the proposals are confined to a relatively small sector of the market, HKEx notes that “these activities invite speculative trading and can lead to opportunities for market manipulation, insider trading and unnecessary volatility in the market which are not in the interest of the investing public.” Read More…