[PDF] FAQs – Main Board Listing Rules – Chapter 3

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FAQs ± Main Board Listing Rules ± Chapter 3

Question:

Authorised Representatives will be required to provide their email addresses to the Exchange. Is this

requirement applicable to existing Authorised Representatives?

Answer:

Yes, it does apply to existing Authorised Representatives.

FAQ Series 17, FAQ No. 9

LR reference: Main BoaUG 5XOHV 3B06 C *(0 5XOHV DB2D

Released on 19/12/2011

Question:

If issuers do not follow the guides named in the Note ("A Guide on Directors' Duties" issued by the

Companies Registry, and the Guidelines for Directors and Guide for Independent Non-executive

Directors published by the Hong Kong Institute of Directors), do they breach the Listing Rules?

Answer:

No. These guides are suggested as resources for directors looking for further guidance on their duties

and responsibilities to an issuer.

FAQ Series 17, FAQ No. 10

LR reference: Main Board Rules NRPH PR 5XOH 3B08 C *(0 5XOHV 1RPH PR 5XOH DB01

Released on 19/12/2011

Question:

The Corporate Governance Guide for Boards and Directors (Guide) published by the Exchange in

December 2021 provides the best practice guidance for the delivery of good corporate governance, if issuers do not follow the Guide, do they breach the Listing Rules?

Answer:

No. The Guide aims to provide practical advice to boards and directors, and in some cases, set out the

expectations placed on directors. However, the Guide does not form a part of the Listing Rules, nor do

2

they amend or vary any Rule requirements, or absolve issuers and/or their directors of any obligations

to make their own judgment.

FAQ Series 17, FAQ No. 10A

LR reference: Main Board Rules NRPH PR 5XOH 3B08 C *(0 5XOHV 1RPH PR 5XOH DB01

Released on 01/01/2022

Question:

Clarify the requirement of "appropriate professional qualifications". Clarify the requirement of "appropriate accounting and related financial management expertise".

Answer:

)RU POH UHTXLUHPHQP RI ³MSSURSULMPH SURIHVVLRQMO TXMOLILŃMPLRQV´ RH normally refer to professional

accounting qualifications.

For a candidate with other professional qualifications, we have set out our expectations in the note to

Main Board Rule 3.10(2)/ GEM Rule 5.05(2). Issuers should also consider whether based on the

experience and expertise of the candidate, the individual can fulfil the requirement under Main Board

Rule 3.10(2)/ GEM Rule 5.05(2).

FAQ Series 17, FAQ No. 10B (Previously published in FAQ Series 1 No.2) LR reference: Main Board RuleV 3B102 C *(0 5XOHV DB0D2

Released on 30/3/2004 (Updated on 28/12/2018)

Question:

Is a professional qualification obtained from an overseas jurisdiction acceptable, such as a PRC or

Singapore qualified accountant?

Answer:

Yes, a professional qualification obtained from a recognised body in an overseas jurisdiction would be

acceptable. 3 FAQ Series 17, FAQ No. 10C (Previously published in FAQ Series 1 No.3) LR reference: Main Board RuleV 3B102 C *(0 5XOHV DB0D2

Released on 30/3/2004

Question:

Can a solicitor be said to have appropriate professional qualifications, or does the individual need to

have the appropriate experience?

Answer:

A legal qualification is not considered to be an appropriate professional qualification even if the person

has obtained some accounting knowledge in the course of their studies. A person with a legal

TXMOLILŃMPLRQ LV MŃŃHSPMNOH LI POH SHUVRQ OMV POH ³MSSURSULMPH MŃŃRXQPLQJ MQG UHOMPHG ILQMQŃLMO

PMQMJHPHQP H[SHUPLVH´ UHTXLUHG XQGer the Rules. The Exchange may question the factors the board has considered when making the decision to accept a person. FAQ Series 17, FAQ No. 10D (Previously published in FAQ Series 1 No.4) LR reference: Main Board RuOHV 3B102 C *(0 5XOHV DB0D2

5HOHMVHG RQ 30C3C2004 (Updated on 28/12/2018)

Question:

Can a person who has served on the audit committee of an issuer for a number of years be considered to have the appropriate accounting and related financial management expertise required under the rules?

Answer:

Please refer to the note to Main Board Rule 3.10(2)/ GEM Rule 5.05(2) as to what the appropriate

expertise means. Prima facie, we would not consider a person whose only experience has been a

member of an audit committee to fulfil the criteria set out in the note to the Rule. FAQ Series 17, FAQ No. 10E (Previously published in FAQ Series 1 No.5) LR reference: Main Board Rules 3B102 C *(0 5XOHV DB0D2)

Released on 30/3/2004 (Updated on 28/12/2018)

4

Question:

Is experience with a non-public company acceptable as having the appropriate accounting and related financial management expertise?

Answer:

Generally no, but the Exchange recognises that experience and scope of duties of a candidate may

demonstrate that the individual is capable of discharging the role required of such person as set out in

Main Board Rule 3.10(2)/ GEM Rule 5.05(2). It is up to the board to evaluate the totality of the

FAQ Series 17, FAQ No. 10F (Previously published in FAQ Series 1 No.6) LR reference: Main Board RuleV 3B102 C *(0 5XOHV DB0D2)

Released on 30/3/2004 (Updated on 28/12/2018)

Question:

How does the board assess if the commitment of an independent non-executive directors (INEDs) or have infrequent changes to their business or group structure) when normally they are not required to be involved in the management of the issuer?

Answer:

The Code recognises that different directors have different roles and functions within the issuer. The

time commitment required from a director varies from issuer to issuer and from year to year, depending

because a NED is not involved in the day-to-day running of the business. According to the Code, the issuer should determine how much time it needs from each of its directors and review whether the director is meeting that requirement.

Governance´B

FAQ Series 17, FAQ No. 11

LR reference: Main Board Rules 3B08 C *(0 5XOHV DB01 Released on 19/12/2011 (Last updated on 01/01/2022) D

Question:

If an existing NED meets the independence requirements, can the NED be re-designated as an INED? Does an announcement need to be made for the re-designation?

Answer:

past relationship with a connected person or the issuer on a case-by-case basis. Where, in order to meet

the Rule requirements, a director needs to comply with any relevant cooling off period under the Rules,

the relevant cooling off period needs to have ended by the date on which the individual confirmation of

independence is given. An announcement will need to be made for the redesignation from being a NED to an INED pursuant to

Main Board Rule 13.51(2)/ GEM Rule 17.50(2).

FAQ Series 17, FAQ No. 11A (Previously published in FAQ Series 1 No.7) LR reference: Main BoMUG 5XOHV 3B13 C *(0 5XOHV DB0E

Released on 30/3/2004 (Updated on 28/12/2018)

Question:

If a NED of an issuer is a legal adviser (say, a partner of a law firm) but for the past two years such

director has not provided any services to the issuer, and also such director fulfils the other factors under

the Main Board Rule 3.13/ GEM Rule 5.09, does this mean that such a NED can be an INED of the issuer?

If the individual is accepted as an INED and in the future the individual provides services to the issuer

again, will the individual continue to be considered independent?

Answer:

provided services to parties set out in Main Board Rule 3.13(3)/ GEM Rule 5.09(3) within two years

As soon as the firm (whether or not the individual is directly involved) provides any services to parties

set out in Main Board Rule 3.13(3)/ GEM Rule 5.09(3), the individual will immediately cease to be considered independent. 6 FAQ Series 17, FAQ No. 11B (Previously published in FAQ Series 1 No.8) LR reference: Main Board Rules 3B13 C *(0 5XOHV DB0E

Released on 30/3/2004 (Updated on 28/12/2018)

Question:

An existing INED is a partner of a law / Certified Public Accountant (CPA) firm and this firm is currently

providing legal / accounting services to parties set out in Main Board Rule 3.13(3)/ GEM Rule 5.09(3).

HV POLV H[LVPLQJ H1(G QRP TXMOLILHG MV ³LQGHSHQGHQP´ MQG GRHV POH LVVXHU QHHG PR MSSRLQP M QHR RQH"

How is materiality of the interest determined when considering independence? Are there any specific definitions or figures (e.g. %) that can be used as reference?

Answer:

The individual is not qualified to act as an INED and the issuer may or may not appoint a new INED

depending on whether the issuer has sufficient INEDs on the board. However, the individual can still act

no specific figure ± materiality needs to be determined on a case-by-case basis. FAQ Series 17, FAQ No. 11C (Previously published in FAQ Series 1 No.9) LR reference: Main %RMUG 5XOHV 3B13 C *(0 5XOHV DB0E

Released on 30/3/2004 (Updated on 28/12/2018)

Question:

independence comprising all the information required by Main Board Rule 3.13 / GEM Rule 5.09, what

information must be included in the INED's annual confirmation of independence required to be provided

to the listed issuer?

Answer:

Each INED is required to submit to the Exchange, at the same time as the submission of Form B/ H in Appendix 5 of the Main Board Rules or Form A/ B in Appendix 6 of the GEM Board Rules, a written Main Board Rule 3.13(a), (b) and (c)/ GEM Rule 5.09(a), (b) and (c). Each INED must provide to the required by Main Board Rule 3.13 (a) and (c)/ GEM Rule 5.09 (a) and (c). 7 FAQ Series 17, FAQ No. 11D (Previously published in FAQ Series 8 No.9) LR reference: Main Board Rules 3B13 C *(0 5XOHV DB0E

Released on 28/11/2008 (Updated on 28/12/2018)

Question:

Can a SPAC issue SPAC Shares at nil consideration for the purpose of remunerating the independent non-H[HŃXPLYH GLUHŃPRUV ³INEDs´"

Answer:

No. Subject to the provisions under Rule 3.13, an INED of a SPAC may subscribe for SPAC Shares with his own resources, provided that: (a) the INED is a Professional Investor; and (b) the number of SPAC Shares held by the INED will not result in the 1% cap on holdings by INEDs under Rule 3.13(1) being exceeded.

FAQ 102-2022 to 117-2022, FAQ No. 110-2022

LR reference: Main Board Rules 3B13 18%B07

Released on 16/09/2022

Question:

For INEDs who fulfilled a one-year cooling off period and were appointed prior to 1 January 2019, would

they be allowed to stay on if, on 1 January 2019, they are short of a two-year cooling off period provided

they would be able to meet all other independence factors?

Answer:

In respect of the revised two-year cooling off period for professional advisers, the revised Rule (Main

Board Rule 3.13(3) and (4) / GEM Rule 5.09(3) and (4)) will be grandfathered for INEDs appointed in

2018. It means that, if an INED was elected at an AGM held in 2018 at which time the INED had met

the one-year cooling off period for a professional adviser, the INED may stay on even if the INED would

not meet the new two-year cooling off requirement as at 1 January 2019. The individual will be able to

serve their full term as an INED (unless there is an early termination).

FAQ Series 17, FAQ No. 11E

LR reference: Main Board Rules 3B133 MQG 4 C *(0 5XOHV DB0E3 MQG 4

Released on 28/12/2018

8

Question:

For any INED appointment to be effected after 1 January 2019, would the Exchange request for

independence confirmation from the immediate family members of those INED?

Answer:

The Listing Rules do not require independence confirmation from the immediate family members of the connection with the issuer in the assessment of their independence.

FAQ Series 17, FAQ No. 11F

LR reference: Main Board Rules 1RPH 2 PR 3B13 C *(0 5XOHV 1RPH 2 PR DB0E

Released on 28/12/2018

Question:

Directors/supervisors are required to provide their contact details to the Exchange using the contact

details form as soon as practicable after their appointment. (i) Can a director/supervisor provide his address in either English or Chinese?

(ii) Can a director/supervisor just provide his office phone number, instead of all the office, home and

mobile numbers?

Answer:

(i) Yes.

(ii) A director/supervisor should provide the mobile number and the telephone number (office or home,

or both).

FAQ Series N/A, FAQ No. 054-2019

LR reference: Main Board Rules 3.20, 19A.07A / GEM Rules 5.13A, 17.91A

Released on 01/03/2019 (Updated in February 2021)

Question:

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Answer:

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Question:

Can a NED who is a connected person of the issuer be a member of the Audit Committee?

Answer:

Although the Rules do not specifically prohibit this, we consider that members of the audit committee

should be independent of connected persons. FAQ Series 17, FAQ No. 11G (Previously published in FAQ Series 1 No.10) LR reference: Main BoaUG 5XOHV 3B21 C *(0 5XOHV DB28

Released on 30/3/2004

Question:

Can the qualified accountant (also executive director) be appointed as the audit committee's secretary?

10

Answer:

We consider that the secretary of the audit committee should not be a person who is involved in the financial reporting function of the issuer. FAQ Series 17, FAQ No. 11H (Previously published in FAQ Series 1 No.11) LR reference: Main Board RuleV 3B21 C *(0 5XOHV DB28

Released on 30/3/2004

Question:

Can the issuer's staff and executive directors be appointed as members of the remuneration committee as long as the committee is chaired by an INED and the majority of its members are INEDs?

Answer:

Yes. The Rules do not restrict issuers from appointing their staff or executive directors to act as members

of the remuneration committee, as long as a majority of the remuneration committee are INEDs and it

is chaired by an INED. However, the staff or executive directors must avoid actual or potential conflicts

of interest. In case such conflicts arise, the staff or executive directors must excuse themselves from

the meeting or abstain from voting on the relevant decisions.

FAQ Series 17, FAQ No. 12

LR reference: Main Board RuOHV 3B2D C *(0 5XOHV DB34

Released on 19/12/2011 (Updated on 28/12/2018)

Question:

remuneration committees? Or are shareholder resolutions required?

Answer:

remuneration committees (and all other committees). 11 FAQ Series 17, FAQ No. 12A (Previously published in FAQ Series 21 No.5) LR reference: Main Board 5XOHV 3B22 MQG 3B26 C *(0 5XOHV DB2E MQG DB3D

Released on 27/3/2013 (Updated on 28/12/2018)

Question:

The new requirement to establish a nomination committee chaired by the chairman of the board or an INED and comprising a majority of INEDs becomes effective from 1 January 2022. What happens if an issuer fails to meet any of the requirements set out in the Rule on 1 January 2022?

Answer:

If the issuer fails to set up a nomination committee or has failed to meet any of the other requirements

in the Rule on 1 January 2022, it must set up a nomination committee and/or appoint appropriate members to the nomination committee to meet the requirement(s) within three months.

From 1 April 2022, if the issuer fails to set up a nomination committee or at any time has failed to meet

any of the other requirements in the Rule, it must immediately publish an announcement containing the

relevant details and reasons. The issuer must set up a nomination committee and/or appoint appropriate

members to the nomination committee to meet the requirement(s) within three months after failing to

PHHP VXŃO UHTXLUHPHQPV ³$UUMQJHPHQP´B 7OLV LV LQ OLQH RLPO POH SUMctice regarding the audit

committee and remuneration committee. The issuer may select the current headline category

³0LVŃHOOMQHRXV ± Other ± FRUSRUMPH *RYHUQMQŃH 5HOMPHG 0MPPHU´ ROHQ VXNPLPPLQJ POH MQQRXQŃHPHQP IRU

publication on the HKEXnews website. The Arrangement would also apply to issuers with a WVR structure in respect of the requirements relating to the establishment and composition of the nomination committee under Rules 8A.27 and

8A.28.

FAQ Series 17, FAQ No. 12B

LR reference: Main Board Rules 327$ 8$B27 MQG 8$B28 C *(0 5XOHV DB36$

Released on 01/01/2022

Question:

Does the Exchange provide any accreditation of professional training for company secretaries which could fulfil the requirement of this Rule?

Answer:

12 The Exchange does not generally provide accreditation of professional training courses although the development training (including their ECPD courses) satisfy the requirements of this Rule.

FAQ Series 17, FAQ No. 13

LR reference: Main Board RulHV 3B2E C *(0 5XOHV DB1D Released on 19/12/2011 (Last updated on 01/01/2022)

Question:

Does an accountant or lawyer acting as an issuer's company secretary fulfil the requirement to attend

relevant professional training each year by attending CPD courses on subjects such as litigation and accounting standards?

Answer:

We intend that the training should be broad rather than restrictive. Where legal and accounting courses

requirement.

FAQ Series 17, FAQ No. 13A

LR reference: Main Board RXOHV 3B2E C *(0 5XOHV DB1D

Released on 19/12/2011 (Updated on 28/12/2018)

Question:

If a person is the company secretary of an issuer that is dual-listed on the Hong Kong and Shanghai

stock exchanges and attends training courses relating to PRC listing requirements and regulations (to

comply with Shanghai Stock Exchange requirements), do those courses count towards the 15-hour training requirement?

Answer:

As the company secretary of a Hong Kong issuer, this person should also undergo training on Hong Kong

rules and regulations. However, the Exchange does not prescribe specific types of courses that a

company secretary should attend, as long as they are relevant to their professional duties. If the training

13 courses are of a general nature (e.g. a course on corporate governance), and not specifically on any PRC rules and regulations, then they may count towards the 15-hour training requirement.

FAQ Series 17, FAQ No. 13B

LR reference: Main Board Rules 3B2E C *(0 5XOHV DB1D

Released on 19/12/2011 (Updated on 28/12/2018)

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