Due Diligence Guidelines –
The following paragraphs of Part A of Appendix I to the Listing Rules require the inclusion in the listing document of the information set out below.
1. The full name of the listing applicant.
5. The date and country of incorporation or other establishment of the listing applicant and the authority under which the listing applicant was incorporated or otherwise established.
7. The provisions or a sufficient summary of the provisions of the articles of association or equivalent document with regard to:
(1) any power enabling a director to vote on a proposal, arrangement or contract in which he is materially interested;
(2) any power enabling the directors, in the absence of an independent quorum, to vote remuneration (including pension or other benefits) to themselves or any members of their body and any other provision as to the remuneration of the directors;
(3) borrowing powers exercisable by the directors and how such borrowing powers can be varied;
(4) retirement or non-retirement of directors under an age limit;
(5) directors’ qualification shares;
(6) changes in capital;
(7) any time limit after which entitlement to dividend lapses and an indication of the party in whose favour the lapse operates;
(8) arrangements for transfer of the securities and (where permitted) any restrictions on their free transferability; and
(9) any restriction on ownership of securities of the listing applicant.
23. (1) The authorised share capital of the listing applicant, the amount issued or agreed to be issued, the amount paid up, the nominal value and a description of the shares.
(2) The amount of any outstanding convertible debt securities and particulars of the conditions governing and the procedures for conversion, exchange or subscription of such securities.
24. Particulars of and the number of founder or management or deferred shares, if any, and the nature and extent of the interest of the holders in the property and profits of the group.
25. (1) The voting rights of shareholders.
(2) If there is more than one class of share, the rights of each class of share as regards voting, dividend, capital, redemption, and the creation or issue of further shares ranking in priority to or pari passu with each class other than the lowest ranking equity.
(3) A summary of the consents necessary for the variation of such rights.
26. Particulars of any alterations in the capital of any member of the group within the two years immediately preceding the issue of the listing document, including:
(1) where any such capital has been issued or is proposed to be issued as fully or partly paid up otherwise than in cash, particulars of the consideration for which the same has been or is proposed to be issued and in the latter case the extent to which they are so paid up; and
(2) where any such capital has been issued or is proposed to be issued for cash, particulars of the price and terms upon which the same has been or is proposed to be issued, details of any discounts or other special terms granted and (if not already fully paid) the dates when any instalments are payable with the amount of all calls or instalments in arrear,
or an appropriate negative statement.
27. Particulars of any capital of any member of the group which is under option, or agreed conditionally or unconditionally to be put under option, including the consideration for which the option was or will be granted and the price and duration of the option and the name and address of the grantee, or an appropriate negative statement.
Provided that where options have been granted or agreed to be granted to all the members or debenture holders or to any class thereof, or to employees under a share scheme, it shall be sufficient, so far as the names and addresses are concerned, to record that fact without giving the names and addresses of the grantees.
28. (2) If the listing applicant is a member of a group, a brief description of that group covering the listing applicant’s position within that group and, if a subsidiary, the names of and the number of shares held (directly or indirectly) by each holding company of the listing applicant.
(3) If required by the Exchange, particulars of any contracts for the hire or hire purchase of plant to or by any member of the group for a period of over one year which are substantial in relation to the group’s business.
(4) Particulars of any trade marks, patents or other intellectual or industrial property rights which are material in relation to the group’s business and, where such factors are of fundamental importance to the group’s business or profitability, a statement regarding the extent to which the group is dependent on such factors.
29. (1) In regard to every company the whole of, or a substantial proportion of, whose capital is held or intended to be held (either directly or indirectly) by the listing applicant, or whose profits or assets make or will make a material contribution to the figures in the accountants’ report or the next published accounts, particulars of the name, date and country of incorporation or other establishment, whether public or private, general nature of business, issued capital and the proportion thereof held or intended to be held.
(2) In regard to the group, particulars of the location of the principal establishments.
Note: under paragraphs 26, 27, 28, 29 reference to the group is to be construed as including any company which will become a subsidiary of the listing applicant by reason of an acquisition which has been agreed or proposed since the date to which the latest audited accounts of the listing applicant have been made up. (Note 3)
The following Listing Rules require the inclusion of the information set out below:
Listing Rule 19.10(2) requires the listing document for an overseas listing applicant to contain a summary of all provisions of the constitutive documents of the overseas listing applicant in so far as they may affect shareholders’ rights and protections and directors’ powers (using the same subject headings as is required by section 2 of Appendix 13 in respect of certain named jurisdictions). This requirement is modified in the case of an overseas listing applicant which is incorporated or otherwise established in a jurisdiction in respect of which additional requirements are set out in Appendix 13 and which is applying for listing by way of an introduction in the circumstances set out in Listing Rule 7.14(3).
Listing Rule 19.10(3) requires the listing document for an overseas listing applicant to contain a summary of the relevant regulatory provisions (statutory or otherwise) of the jurisdiction in which the overseas listing applicant is incorporated or otherwise established in a form to be agreed upon by the Exchange on a case by case basis and in the Exchange’s absolute discretion. This requirement is modified in the case of an overseas issuer which is incorporated or otherwise established in a jurisdiction in respect of which additional requirements are set out in Appendix 13 and which is applying for listing by way of an introduction in the circumstances set out in Listing Rule 7.14(3).
Listing Rule 19A.27(2) requires the listing document for a PRC listing applicant to contain a summary of all provisions of the constitutive documents of the PRC listing applicant in so far as they may affect shareholders’ rights and protection and directors’ powers (using, and covering at the least, the same subject headings as is required by Section 2 in Part D of Appendix 13 in respect of PRC listing applicants).
Listing Rule 19A.27(3) requires the listing document for a PRC listing applicant to contain a summary of the relevant PRC law in a form to be agreed upon by the Exchange on a case by case basis and in the Exchange’s absolute discretion. The note to Rule 19A.27(3) provides that in general, the relevant PRC law to be summarised normally would be expected to cover matters such as taxation on the PRC listing applicant’s income and capital, tax (if any) deducted on distributions to shareholders, foreign exchange controls or restrictions, company law, securities regulations or other relevant laws or regulations, and any PRC law which regulates or limits the PRC listing applicant’s major business(es) or the industry in which it mainly operates.
Listing Rule 19A.27(4) requires that the documents to be offered for inspection for a PRC listing applicant include a copy of any statutes or regulations which are relevant to the summary of relevant PRC law.
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.