The stock exchange of Hong Kong Limited (“SEHK”) issued a public consultation document on the proposed amendments to the listing rules related to the share plan of the listed issuer.
The proposed amendments include a number of significant changes that will have an impact on the design, governance and management of the share plans of companies listed on the stock exchange.
The proposed changes will apply to new share plans adopted on or after the effective date of the amendment and provide transitional arrangements for the share plans currently in force on the effective date.
Impact on share plan design and management
According to the proposed amendments, At present, the rules governing the listing of securities on the stock exchange of Hong Kong Limited (the “Listing Rules”) only apply to share options ）The scope of application of Chapter 17 will be extended to share awards. Most listed issuers have adopted the salary arrangement of equity incentive. Such companies and other companies planning to implement share plans should consider how the above changes will affect their share plans and whether the relevant plan documents and procedures should be updated accordingly. The main revision proposals and our preliminary views on them are set out below.
Restrictions on the settlement of awards with newly issued shares
All share plans The maximum number of new shares that can be granted under (i.e. share options and share awards) is 10% of the issued shares of the listed issuer. This ceiling can be adjusted every three years. If more frequent adjustments are required, the approval of independent shareholders should be sought first. However, awards settled with shares purchased from the market are not subject to this ceiling. The above changes are designed to prevent shareholders’ loss due to the issuance of new shares The shares were substantially diluted.
Companies involving a large number of shares and option awards should consider the impact of this amendment and, if necessary, the impact of limiting the grant of awards or settling awards with shares purchased from the market
