Chapter 28

Due Diligence Guidelines –

Overall Management of a Public Offer

Appendix I – Mixed Media Offer26

1. The sponsor and the listing applicant should note that a mixed media offer does not exempt the listing applicant from the requirement to distribute printed copies of the prospectus. A mixed media offer only aims to reduce the number of printed copies of prospectuses required.

2. A mixed media offer issuer is not held to a higher standard than that of an issuer not using a mixed media offer. A mixed media offer issuer is only required to demonstrate that it has a reasonable basis for its estimate of printed prospectuses to satisfy requests by members of the public. If this is demonstrated, a temporary shortfall will not be considered as a breach under section 9A of the Companies (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice.27

3. If the sponsor and the listing applicant opt for a mixed media offer, the sponsor should ensure that the listing applicant will:

(a) publish a notification announcement on the Stock Exchange’s website and the listing applicant’s website within five business days before the public offer period, which must include a statement which notifies investors where they can inspect or obtain a copy of the printed prospectus and access the electronic version of the prospectus;28

(b) post the electronic version of the prospectus on the Stock Exchange’s website and on the listing applicant’s website,29 at the start of the public offer and on at least one of those websites thereafter;

(c) provide at least three copies of the printed prospectus for inspection at every location where the paper application forms are distributed30; and

(d) provide copies of the printed prospectus, free of charge, at the request of any investor at: (i) the depository counter of Hong Kong Securities Clearing Company Limited; (ii) the offices of the share registrar, the sponsor or coordinator; and (iii) the designated branches of the receiving banks.

4. The notification announcement, the paper application forms, the electronic version of the prospectus and the paper prospectus must contain specific contents relating to the mixed media offer, including the locations where printed copies are available.30 Although the electronic version of the prospectus will also be made readily accessible on the Stock Exchange’s website, it is not recommended to use application forms downloaded from websites for application purpose. The share registrar should only accept printed application forms provided by the listing applicant.

5. Since a paper prospectus is still required to be provided upon request, the sponsor and the listing applicant are expected to assess the possible demand for paper prospectuses, including locations at which they are most frequently and likely to be collected. The sponsor and the listing applicant should put in place appropriate procedures to enable them to gauge demand, for instance, a pre-order or booking system where investors can register their request for a copy of the paper prospectus. The sponsor should consult the receiving banks in this regard.

6. The sponsor should ensure that the electronic version of the prospectus is readily accessible31 during the public offer period. The typeface, format and contents of the electronic version of the prospectus must be identical to the paper prospectus.32 The electronic version of the prospectus should be reasonably tamper-resistant.

7. If the electronic version of the prospectus is not readily accessible from both the listing applicant’s and the Stock Exchange’s websites after commencement of the public offer period for four consecutive hours or more, then the sponsor and the listing applicant must suspend the mixed media offer by issuing: (i) paper application forms and paper prospectuses; and (ii) an announcement notifying the suspension of mixed media offer. If the above can be met, the public offer is still valid. Once the electronic version of the prospectus is again accessible from either the listing applicant’s or the Stock Exchange’s website, the mixed media offer may resume. To resume a mixed media offer, the listing applicant must issue an announcement notifying the resumption of the mixed media offer.

8. The public offer will end if printed application forms are not accompanied by printed prospectuses during the suspension of the mixed media offer. Therefore, the sponsor should devise contingency plans with the financial printer and receiving banks before the commencement of the mixed media offer, to contain emergency situations where the mixed media offer has to be suspended. The contingency plans should include timeframe, action items, responsible parties, printing and logistical arrangements.

9. The sponsor and the listing applicant should consult the Stock Exchange and/or the SFC as soon as possible on how best to conduct the remaining public offer process if the electronic version of the prospectus becomes not readily accessible during the public offer period.

10. Also see appendices in Exchange Guidance Letter GL81-15 for guidance on announcement for adoption of a mixed media offer, guidance on disclosure on the first page of the Prospectus, guidance on disclosure in the “How to Apply” section of the prospectus and guidance on disclosure in the application forms.

Endnotes

26. See FAQ Series 13 Rules Amendments relating to Mixed Media Offer.

27. Exchange Guidance Letter GL81-15.

28. See section 9A(4)(b), Companies (Exemption of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong), for contents requirement of the notification announcement. The Exchange also provided guidance on announcement for adoption of a mixed media offer in Exchange Guidance Letter GL81-15.

29. Ibid, sections 9A(3)(f), (g) and (h). The listing applicant’s website must provide direct link to the electronic version of the prospectus, contain no promotional material on the prospectus webpage and display a warning notice.

30. Ibid, sections 9A(3)(j), (k), 9A(4) and 9A(9), Exchange Guidance Letter GL64-13 and Exchange Guidance Letter GL81-15. A printed prospectus should be provided within four business hours upon request to the member(s) of the public and the printed prospectus that is provided may be a stapled copy from a photocopy machine which is in black and white, grey-scale or colour. Where it is a black and white or grey-scale prospectus, the sponsor must be satisfied that it provides equivalent information to investors as a colour prospectus.

31. Ibid, sections 9A(5), (6) and (10). “Readily accessible” means “it is capable of being viewed, downloaded, retained and printed as a copy from the website in its entirety, whether as a single file or as multiple files, by the public without a password or paying any charges.” It does not need to be made available on Saturday, Sunday or a public holiday, or between midnight and 6:00 a.m. from Monday to Friday.

32. lbid, section 9A(3)(i).

Disclaimer

HKCFEF Limited and the contributing law firms, accountants and sponsors are not offering these due diligence guidelines as legal, financial or professional advice or services and they should not be relied upon as such. These due diligence guidelines should not be used as a sole basis for any decision, action or inaction and are not meant to serve as a substitute for the advice of qualified professionals. See here for the full terms and conditions.

Due Diligence Guidelines

Listing Prospectus

Mixed Media Offer

Hong Kong Sponsors Due Diligence Guidelines

Electronic Version of Listing Prospectus

Mixed Media Offer Appendix I

Management of Public Offer

Notification Announcement

Due Diligence Checklist

Due Diligence Process

Due Diligence Compliance
Notification Announcement
Electronic IPO
Paper Prospectus

Table of contents