Appendix I

Paragraph (c) of Appendix 19 to the Listing Rules states that:

In relation to each expert section in the listing document, having made reasonable due diligence inquiries, we have reasonable grounds to believe and do believe (to the standard reasonably expected of a sponsor which is not itself expert in the matters dealt with in the relevant expert section) that:

(i) where the expert does not conduct its own verification of any material factual information on which the expert is relying for the purposes of any part of the expert section, such factual information is true in all material respects and does not omit any material information. Factual information includes:

(A) factual information that the expert states it is relying on;

(B) factual information we believe the expert is relying on; and

(C) any supporting or supplementary information given by the expert or the Company to the Exchange relating to an expert section;

(ii) all material bases and assumptions on which the expert sections of the listing document are founded are fair, reasonable and complete;

(iii) the expert is appropriately qualified, experienced and sufficiently resourced to give the relevant opinion;

(iv) the expert’s scope of work is appropriate to the opinion given and the opinion required to be given in the circumstances (where the scope of work is not set by a relevant professional body);

(v) the expert is independent from the Company and its directors and controlling shareholder(s); and

(vi) the listing document fairly represents the views of the expert and contains a fair copy of or extract from the expert’s report.

Paragraph (d) of Appendix 19 to the Listing Rules states that:

In relation to the information in the expert reports, we, as a non-expert, after performing reasonable due diligence inquiries, have no reasonable grounds to believe and do not believe that the information in the expert reports is untrue, misleading or contains any material omissions.

Paragraph 12 of Practice Note 21 to the Listing Rules sets out the typical due diligence inquiries in relation to the listing applicant’s compliance with the qualification for listing to include:

(a) searching the company registry in the new applicant’s place of incorporation to confirm that the new applicant is duly established in that place and that the new applicant is in compliance with its memorandum and articles of association or equivalent constitutive documents;

(b) reviewing material financial information, including:

(i) financial statements of the new applicant;

(ii) financial statements of all subsidiaries of the new applicant and other companies that are material to the group’s financial statements; and

(iii) the internal financial records, tax certificates and supporting documents to the tax certificates for the trading record period.

Such review would in most cases include interviewing the new applicant’s accounting staff and internal and external auditors and reporting accountants and, where relevant, obtaining comfort from the new applicant’s external auditors or reporting accountants based upon agreed procedures; and

(c) assessing the accuracy and completeness of the information submitted by the new applicant to demonstrate that it satisfies the trading record requirement.

Paragraph 14 of Practice Note 21 to the Listing Rules sets out the typical due diligence inquiries in relation to the expert sections of the listing document to include:

(a) interviewing the expert, reviewing the terms of engagement (having particular regard to the scope of work, whether the scope of work is appropriate to the opinion required to be given and any limitations on the scope of work which might adversely impact on the degree of assurance given by the expert’s report, opinion or statement) and reviewing publicly available information about the expert to assess:

(i) the expert’s qualifications, experience and resources; and

(ii) whether the expert is competent to undertake the required work;

(b) reviewing the expert sections of the draft listing document to form an opinion as to whether the following are disclosed and commented on appropriately:

(i) the factual information on which the expert relies;

(ii) the assumptions on which the expert opinion is based; and

(iii) the scope of work performed by the expert in arriving at his opinion;

(c) verifying factual information for the purpose of making that part of the declaration in rule 3A.13 and Appendix 19(c) to the Listing Rules;

(d) where the sponsor is aware that the new applicant has made formal or informal representations to an expert in respect of an expert section or in respect of a report made in connection with the listing application, assessing whether the representations are consistent with the sponsor’s knowledge of the new applicant, its business and its business plans;

(e) by reference to the sponsor’s knowledge of the new applicant, its business and its business plans assessing whether the assumptions disclosed by the expert as those on which the expert’s opinion is based, are fair, reasonable and complete;

(f) if the expert’s opinion is qualified, assessing whether the qualification is adequately disclosed in the listing document; and

(g) where the standard of independence is not set by a relevant professional body, obtaining written confirmation from the expert that it is independent from the new applicant and its directors and controlling shareholder(s), and being satisfied that there is no cause to inquire further about the truth of this confirmation. This would include confirming that the expert does not have a direct or indirect material interest in the securities or assets of the new applicant, its connected persons, or any associate of the new applicant beyond that allowed by rule 3A.07.

Section 40 of the Companies Ordinance states that:

(1) Subject to the provisions of this section, where a prospectus invites persons to subscribe for shares in or debentures of a company, the following persons shall be liable to pay compensation to all persons who subscribe for any shares or debentures on the faith of the prospectus for the loss or damage they may have sustained by reason of any untrue statement included therein, that is to say-

(a) every person who is a director of the company at the time of the issue of the prospectus;

(b) every person who has authorised himself to be named and is named in the prospectus as a director or as having agreed to become a director either immediately or after an interval of time;

(c) every person being a promoter of the company; and

(d) every person who has authorised the issue of the prospectus:

Provided that where under section 38C the consent of a person is required to the issue of a prospectus and he has given that consent, he shall not by reason of his having given it be liable under this subsection as a person who has authorised the issue of the prospectus except in respect of an untrue statement purporting to be made by him as an expert.

(1A) Subsection (1)(d) shall not apply-

(a) to the Commission;

(b) where the relevant prospectus is authorised by a recognised exchange company pursuant to a transfer order made under section 25 of the Securities and Futures Ordinance (Cap 571), to the Commission or the recognised exchange company; or

(c) where the relevant prospectus is authorised by a recognised exchange controller pursuant to a transfer order made under section 68 of that Ordinance, to the Commission or the recognised exchange controller.

(2) No person shall be liable under subsection (1) if he proves-

(a) that, having consented to become a director of the company, he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent; or

(b) that the prospectus was issued without his knowledge or consent, and that on becoming aware of its issue he forthwith gave reasonable public notice that it was issued without his knowledge or consent; or

(c) that, after the issue of the prospectus and before allotment thereunder, he, on becoming aware of any untrue statement therein, withdrew his consent thereto and gave reasonable public notice of the withdrawal and of the reason therefor; or

(d) that-

(a) as regards every untrue statement not purporting to be made on the authority of an expert or of a public official document or statement, he had reasonable ground to believe, and did up to the time of the allotment of the shares or debentures, as the case may be, believe, that the statement was true; and

(b) as regards every untrue statement purporting to be a statement by an expert or contained in what purports to be a copy of or extract from a report or valuation of an expert, it fairly represented the statement, or was a correct and fair copy of or extract from the report or valuation, and he had reasonable ground to believe and did up to the time of the issue of the prospectus believe that the person making the statement was competent to make it and that person had given the consent required by section 38C to the issue of the prospectus and had not withdrawn that consent before delivery of a copy of the prospectus for registration or, to the defendant’s knowledge, before allotment thereunder; and

(c) as regards every untrue statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement or copy of or extract from the document:

Provided that this subsection shall not apply in the case of a person liable, by reason of his having given a consent required of him by the said section 38C, as a person who has authorised the issue of the prospectus in respect of an untrue statement purporting to be made by him as an expert.

(3) A person who, apart from this subsection would under subsection (1) be liable, by reason of his having given a consent required of him by section 38C, as a person who has authorised the issue of a prospectus in respect of an untrue statement purporting to be made by him as an expert, shall not be so liable if he proves-

(a) that, having given his consent under the said section 38C to the issue of the prospectus, he withdrew it in writing before delivery of a copy of the prospectus for registration; or

(b) that, after delivery of a copy of the prospectus for registration and before allotment thereunder, he, on becoming aware of the untrue statement, withdrew his consent in writing and gave reasonable public notice of the withdrawal, and of the reason therefor; or

(c) that he was competent to make the statement and that he had reasonable ground to believe and did up to the time of the allotment of the shares or debentures, as the case may be, believe that the statement was true.

(4) Where-

(a) the prospectus contains the name of a person as a director of the company, or as having agreed to become a director thereof, and he has not consented to become a director, or has withdrawn his consent before the issue of the prospectus, and has not authorised or consented to the issue thereof; or

(b) the consent of a person is required under section 38C to the issue of the prospectus and he either has not given that consent or has withdrawn it before the issue of the prospectus, the directors of the company, except any without whose knowledge or consent the prospectus was issued, and any other person who authorised the issue thereof shall be liable to indemnify the person named as aforesaid or whose consent was required as aforesaid, as the case may be, against all damages, costs and expenses to which he may be made liable by reason of his name having been inserted in the prospectus or of the inclusion therein of a statement purporting to be made by him as an expert, as the case may be, or in defending himself against any action or legal proceeding brought against him in respect thereof:

Provided that a person shall not be deemed for the purposes of this subsection to have authorised the issue of a prospectus by reason only of his having given the consent required by section 38C to the inclusion therein of a statement purporting to be made by him as an expert.

(5) For the purposes of this section-

(a) the expression promoter (發起人) means a promoter who was a party to the preparation of the prospectus, or of the portion thereof containing the untrue statement, but does not include any person by reason of his acting in a professional capacity for persons engaged in procuring the formation of the company; and

(b) the expression expert (專家) has the same meaning as in section 38C.

(6) This section shall apply to a publication falling within section 38B(2) as if the publication were a prospectus.

(7) It is hereby declared that, for the purposes of this section, persons who subscribe for any shares or debentures (任何股份或債權證的認購人) includes persons specified in the Twenty-second Schedule.

Paragraph 43 of Schedule 3 of the Companies Ordinance states that:

Any report by accountants required by Part II shall be made by accountants qualified under the Professional Accountants Ordinance (Cap 50) for appointment as auditors of a company and shall not be made by any accountant who is an officer or servant, or a partner of or in the employment of an officer or servant, of the company or of the company’s subsidiary or parent undertaking or of a subsidiary of the company’s parent undertaking; and for the purposes of this paragraph the expression “officer” (高級人員) shall include a proposed director but not an auditor.