Chapter 11

Due Diligence Guidelines –

Connected Persons and Connected Transactions

1. Introduction

1.1 Background

1.1.1 The focus of this due diligence guideline is on understanding a listing applicant’s connected persons and the transactions that a listing applicant has or intends to enter into with, or which otherwise involve, its connected persons.

1.1.2 To the extent that a connected person is also a controlling shareholder, the sponsor should also refer to Chapter 10 “Due Diligence Guidelines – Controlling Shareholders’ Relationship with the Listing Applicant” on understanding a listing applicant’s controlling shareholders1 and compliance with the listing conditions relating to controlling shareholders.2

Endnotes

1. Based on reasonable due diligence, a sponsor should have a sound understanding of: (i) a listing applicant, including its history and background, business and performance, financial condition and prospects, operations and structure, procedures and systems; and (ii) the personal and business backgrounds of the directors, key senior managers and (where applicable) controlling shareholders of the listing applicant. [Paragraph 17.3(a) of the Code of Conduct]

2. Before submitting an application on behalf of a listing applicant to the Stock Exchange a sponsor should come to a reasonable opinion that: … the listing applicant is in compliance with all relevant listing qualifications under Chapter 8 of the Listing Rules (except to the extent that waivers from compliance with those requirements have been applied for to the Stock Exchange in writing). [Paragraph 17.4(c)(i) of the Code of Conduct]