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At a glance

The Hong Kong Stock Exchange (HKEX) is consulting on reforms to the post-listing transaction regime. The proposals focus on notifiable transactions, connected transactions and spin-offs, with the aim of giving listed issuers greater flexibility to pursue corporate transactions, while enhancing transparency and retaining investor safeguards for connected and material transactions. The consultation forms Phase 2 of HKEX’s listing framework competitiveness review to enhance Hong Kong’s attractiveness as a listing venue, with Phase 1 having implemented changes to the IPO regime.

If implemented, the Phase 2 changes would result in fewer transactions requiring shareholder approval, while imposing enhanced disclosure requirements on a broad range of transactions. The consultation period ends on 30 November 2026. HKEX has indicated that any amendments would take effect shortly after publication of the consultation conclusions.

The proposals

Key proposals Key impact

Notifiable transactions (NTs)

Transaction thresholds (see also Appendix 1 to this briefing for a comparison of the current regime versus the proposed regime)

  • Increase the major transaction threshold from 25% to 50% with exceptions*. This means a transaction with a percentage ratio of below 50%* would not require shareholder approval and a circular.
  • Transactions where any percentage ratio is 5% or more but less than 50%* would be classified as disclosable transactions.
  • Remove the Very Substantial Acquisition (VSA) and Very Substantial Disposal (VSD) classifications - these would instead be classified as major transactions.

*Exceptions: major transaction threshold would remain 25% for (i) provision of financial assistance (FA) and (ii) securities or investment activities (being the acquisition / disposal of securities, digital assets or investment products for investment or treasury management purpose).

Percentage ratios:

  • Remove the profits ratio. 
  • Modify the denominator of the consideration ratio to the higher of market capitalisation or NAV[1] (instead of only market capitalisation under current rules).

Ordinary-course exemptions:

  • Introduce a new exemption from shareholder approval and circular requirements for the acquisition or leasing of assets in the ordinary and usual course of business that constitutes a major transaction, provided the assets are used for the issuer's existing principal business as reported for the last two full financial years (amongst other conditions).
  • Extend the ordinary-course exemption for securities transactions to qualifying PRC securities houses regulated under the PRC Securities Law.

Disclosures:

  • Enhanced disclosures in the announcement of all NTs[2] and expanded triggers for subsequent announcements (including completion of the transaction). Codification of the existing guidance on disclosure of business valuations.
  • The proposals would result in fewer transactions requiring an announcement or shareholder approval. 
  • In particular, transactions where any percentage ratio is 25% or more but less than 50%* would be classified as disclosable transactions subject to the announcement requirement only (without the current additional requirements of shareholder approval and circular).
  • Reverse takeovers (RTOs) remain unchanged.
  • The modified consideration ratio would be of most benefit to asset-heavy issuers with relatively lower market capitalisation. The new exemption for acquisition/leasing of assets would be of most relevance to issuers whose ordinary business is capital-intensive.
  • Disclosures in the initial announcement of all NTs would be enhanced, with more detailed target financial information and transaction impact analysis (in both qualitative and quantitative terms).

Connected transactions (CTs)
  • Raise the connected subsidiary[3] threshold from 10% to 30% being held by an issuer-level connected person.
  • Permit annual caps on continuing connected transactions to be percentage-based (not only a fixed monetary amount) – the cap can be expressed as a percentage of an issuer's annual revenue or other financial item in its audited accounts, provided that the transactions are of a revenue nature in the issuer’s ordinary and usual course of business.
  • Changes to the percentage ratios[4] and enhanced announcement disclosures proposed for NTs above would also apply to CTs.
  • Narrower scope of connected persons due to higher threshold for connected subsidiary and removal of profits test from the definition of insignificant subsidiary.
  • Issuer-level connected persons would be able to hold a larger stake (<30%) in a non-wholly owned subsidiary of the issuer without making such subsidiary a connected subsidiary.
  • The modified consideration ratio may enable more issuers to rely on the existing de minimis exemption for CTs.
  • Percentage-based annual caps could provide greater operational flexibility.

Spin-offs
  • Shorten the spin-off moratorium period from three years to one year from listing, save that no moratorium is required for: (i) secondary-listed issuers; and (ii) dual-primary listed issuers that have a two-year listing track record on a PRC or Recognised Stock Exchange.
  • Introduce a self-assessment route for eligible Main Board issuers.[5] This would allow a ParentCo to self-assess its compliance with the spin-off requirements under Practice Note 15, without the need to obtain the Exchange’s prior approval.
  • Remove the requirement to provide existing shareholders with an assured entitlement to shares in the SpinCo.
  • Increase the spin-off materiality threshold to 50% (to align with the proposed major transaction threshold).
  • Enhanced announcement requirements.
  • Core principles and requirements under Practice Note 15 (such as clear delineation between the businesses of ParentCo and SpinCo) remain the same.
  • However, the spin-off regulatory process would be streamlined for larger issuers, and spin-off proposals could be submitted at an earlier stage after listing.
  • The increased materiality threshold and modified percentage ratios would result in fewer spin-offs requiring shareholder approval.

 

Implementation and transitional arrangements

It is proposed that the new regime will generally apply to: (i) NTs and CTs whose terms are agreed on or after the effective date of the amended rules; and (ii) active spin-off proposals on or after the effective date. This would be subject to certain transitional arrangements, including (amongst others): (a) a one-month grace period[6] from the effective date to comply with the enhanced announcement disclosures; and (b) a prescribed announcement (in lieu of shareholder approval) for certain major transactions, VSAs or VSDs agreed within two weeks before the effective date and in respect of which a circular has not been issued before the effective date. Spin-off proposals submitted to the HKEX for vetting before the effective date may not be withdrawn from vetting solely for the purpose of relying on the self-assessment route, unless otherwise agreed with the HKEX.

The consultation period closes on 30 November 2026, but the HKEX has not yet indicated when the conclusions may be published. HKEX has stated that the effective date for any amendments would be shortly after publication of the consultation conclusions.

Listed issuers should monitor the release of the consultation conclusions and consider the implications, including the timing implications, of the final rules on any proposed or live transaction.

Please get in touch with any of the contacts below or your usual Slaughter and May contact if you have any comments or queries on this topic.

 

Appendix

[1] Being the equity attributable to owners of the issuer as shown in its audited accounts or latest published interim report (whichever is more recent).

[2] For example, in case of an acquisition or disposal of a company or business, in addition to the current requirement to disclose book value of the assets and net profits, issuers would also be required to disclose the target’s key financial information such as revenue, assets and liabilities, operating cash flows (where applicable) and any other relevant financial metrics (such as gross profits) for the last two financial years based on audited information where available. Additional disclosure requirements apply where unaudited information is used. An impact analysis disclosure would be required, including qualitative and quantitative analysis of any material effect of the transaction on the listed issuer’s profits and losses, assets, liabilities, liquidity and financial resources as well as financial and trading prospects and strategic direction, together with the principal factors and assumptions.

[3] Under existing rules, a connected subsidiary is a non-wholly owned subsidiary of an issuer where any connected person(s) at the issuer level, individually or together, exercise 10% or more voting power.

[4] The removal of the profits ratio would not affect the calculation of the de minimis exemptions under the CT regime as it is already excluded under current rules. However, the profits ratio would be removed from the definition of an “insignificant subsidiary”.

[5] Eligibility requirements for the self-assessment route for Main Board issuers: (i) ParentCo’s market capitalisation - at least HK$10 billion; (ii) revenue of ParentCo’s principal businesses - at least HK$1 billion; and (iii) revenue and total assets attributable to the remaining group - more than 50% of the issuer group.

[6] For a transaction announced during the one-month period from the effective date, where it has not included all of the enhanced disclosures under the amended rules, such disclosure may be made by way of a supplemental announcement published no later than one month after the initial announcement.