Hong Kong Stock Exchange: Publication of Consultation Conclusions on Proposed Public Shareholding Amendments to the Listing Rules

The Zhitong Finance App learned that on December 17, the Hong Kong Stock Exchange published a consultation summary on the proposed amendments to the “Listing Rules” relating to continuing public shareholding requirements. The reforms adopted include mainly introducing an alternative to the continuing public shareholding threshold to provide greater flexibility for issuers' capital management. Implement new public shareholding reporting responsibilities for all issuers, and impose additional disclosure requirements on issuers with insufficient public shareholding, thereby improving market transparency. The new continuing public shareholding requirements will take effect on January 1, 2026.

“We are pleased to see that the market strongly supports the proposal to optimize the sustainable public shareholding framework. This is one of HKEx's efforts over the years to help issuers manage capital more flexibly and efficiently, while ensuring an open and transparent market and smooth and orderly transactions. We believe that this reform will complement measures such as the treasury mechanism and automatic share repurchase plan framework established earlier to further enhance the vitality and attractiveness of the market.”

Wu Jieyi continued, “At the same time, we have strengthened issuers' reporting responsibilities on their public shareholding levels and replaced the suspension of trading with more targeted, disclosure-based measures. We also reserve the right to delist shares of issuers that have been in non-compliance for a long time, with a view to more effectively curbing related practices. These measures will help enhance market transparency and enable issuers with insufficient public shareholding to return to the required level in a timely manner. “This reform reflects our determination to protect investors and maintain the proper operation of the market, and further strengthens Hong Kong's position as a leading international financial center.”

Key reforms adopted include:

1. Alternative to the continuing public shareholding threshold: In addition to the percentage threshold required to be met at the time of listing, issuers can choose an alternative threshold to meet the continuing public shareholding requirement: share classes held by the public must (i) account for at least 10% of the total number of issued shares in the listed share class, and (ii) have a market value of at least HK$1 billion to provide greater flexibility for capital management transactions (such as share repurchases)

2. Continued public shareholding requirements for A+H issuers: The public shareholding of H shares must account for at least 5% of the total number of H shares in the category (i.e. A shares and H shares) that have been issued, or reach a market value of at least HK$1 billion to ensure that there is always a sufficient amount of H shares available for public trading;

3. Implement new regular public shareholding reporting requirements for all listed issuers, while requiring issuers with insufficient public shareholding to assume additional disclosure responsibilities and limit corporate actions to enhance transparency and encourage issuers to resume public shareholding in a timely manner; and

4. Identify issuers with seriously insufficient public shareholding by referring to the market value and percentage of the issuer's public shareholding. The Stock Exchange will not suspend trading of these issuers' shares, but will add a share mark (“-PF”) to the name of their shares for identification purposes. If they fail to restore public holdings within the 18-month (GEM: 12 month) remedy period, the Hong Kong Stock Exchange will delist their shares.

The amendments to the Listing Rules to implement the above recommendations will take effect on 1 January 2026 and apply to all listed issuers. These new regulations will replace existing transitional continuing public shareholding requirements. A new guidance letter (HKEX-GL121-26) on public shareholding requirements will also come into effect on the same day to enable issuers to comply with the new requirements of the Listing Rules.