Hong Kong stock exchange moves to ease spin-offs and shareholder approval rules

The Hong Kong stock exchange has proposed easing requirements for disclosed corporate transactions and shareholder approval, as well as making it easier for companies to spin off businesses. The 10-week consultation, which runs until November 30, suggests removing the profit test currently used to determine whether a transaction requires disclosure or shareholder approval, and instead using market capitalisation or net asset value, whichever is higher.

The proposal would also reduce the number of transactions requiring shareholder approval, allowing deals equivalent to between 25 per cent and 50 per cent of a company’s size to require only disclosure rather than shareholder approval. Additionally, the exchange wants to expand the definition of connected subsidiaries by raising the voting-rights threshold to 30 per cent from 10 per cent, and relax spin-off rules by allowing eligible companies to assess proposed spin-offs without seeking prior approval from the exchange.

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