Due Diligence Guidelines –
3. Review of Results, Rectification and Disclosure
The EDD results should be reviewed in the light of the relevant legal and regulatory thresholds, as well as any standards and guidelines followed. Materiality could be measured in strategic, operational or financial terms.2
It will then be necessary to discuss with management the extent to which rectification is possible and, if necessary, consider the scope of disclosure in the prospectus. For low risk items, this could be simply confirming compliance and a brief summary of the EDD undertaken. Where medium and high risk issues or substantial liabilities (whether actual or potential) are identified, discussions should take place as to the extent of specific disclosure in the listing document. In addition to the required disclosure set out in Section E of Appendix I to GL86-16 (that is, the environmental protection policies and material information about an applicant’s environmental obligations under applicable laws and regulations or other voluntarily adopted measures (including the annual cost of compliance with applicable rules and regulations during the track record period and the expected cost of compliance going forward)), the disclosure may include identification of the risks, their impact, associated challenges, monitoring or remedial measures, management approach and expert recommendation (where applicable).
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.