Legal development

Hong Kong Stock Exchange proposals to enhance post-listing rules relating to corporate transactions

September 29, 2026

Summary

The Hong Kong Stock Exchange published a consultation paper in September 2026, proposing enhancements to the post-listing framework governing notifiable transactions, connected transactions and spin-off transactions.

The reforms aim to reduce regulatory complexity, lower compliance costs and provide flexibility for listed issuers whilst maintaining shareholder protections.

The Exchange has proposed that the changes should take effect shortly after publication of their consultation conclusions. Transitional arrangements have also been proposed.

The article will go through the Exchange's key proposals, what you need to consider to prepare for the upcoming changes, and the proposed implementation and transitional arrangements. Details about the Exchange's proposals are set out in the tables at the end of the article.

Parties interested in responding to the Exchange's consultation paper should do so by 30 November 2026.

What do you need to know?

The Exchange is conducting an extensive review of Hong Kong's listing framework to maintain Hong Kong's competitiveness as a financial centre. Earlier this year, it revised its Listing Rules relating to initial listing requirements. This consultation targets post-listing requirements. The Exchange has announced that they will be launching further consultations.

The current proposals represent a significant reform of key areas that impact all Hong Kong listed issuers. The Exchange's overarching aim is to reduce complexity of its rules, lower compliance costs and provide flexibility for listed issuers, whilst preserving strong shareholder protection standards.

A brief overview of the Exchange's proposals is set out below. Tables A, B and C towards the end of this note provide a more detailed summary of the current and proposed positions.

Notifiable transactions: The Exchange has proposed changes to the percentage ratios for measuring transaction size and the thresholds for classifying transactions. This means that fewer transactions will qualify as discloseable or major transactions. Transactions classified as major transactions under current rules may be classified as discloseable transactions under the proposed rules. The Very Substantial Acquisition (VSA) and Very Substantial Disposal (VSD) categories will be removed, and these transactions will be classified as major transactions. A new exemption for acquisitions or leasing of assets in the ordinary and usual course of business will be introduced, allowing issuers greater flexibility to plan and manage capital expenditure to support their business operations and expansion. To maintain shareholder protection, the Exchange has proposed to enhance disclosure requirements for all notifiable transactions.
Connected transactions: The scope of connected persons will be narrowed. There will be alternative options to express annual caps for continuing connected transactions. The proposed rules on percentage ratios and disclosure requirements for notifiable transactions are also proposed to apply to connected transactions.
Spin-off transactions: The scope of Practice Note 15 (PN 15) will be narrowed. Certain spin-off proposals may no longer require Exchange approval. The assured entitlement requirement will be abolished. Depending on the type of issuer, the moratorium period for spin-offs post-listing will be shortened or removed.

What do you need to do?

Issuers and directors should closely monitor how the Exchange's proposals develop. They should also pay attention to the Exchange's proposed implementation and transitional arrangements (see next section), especially if they intend to undertake corporate transactions in the near future. The Exchange's proposals will impact upon how issuers manage corporate transactions, including risk management and internal control, monitoring compliance with Listing Rules, and obtaining information to meet enhanced disclosure standards.

Despite enhanced disclosure standards, the level of information disclosed for transactions with a percentage ratio between 25% and 50% would be less than that under the current major transaction regime – in particular, the accountants' report contained in a circular would not be available. Boards are ultimately responsible for ensuring the financial information disclosed provides a reasonable basis for investors to assess the transaction.

If an issuer intends to rely on the new exemption for acquisitions or leasing of assets in the ordinary and usual course of business, boards should ensure sufficient controls are in place, and assess the relevant transaction carefully, to prevent misuse of the exemption.

Issuers that wish to respond to the Exchange's consultation should complete the Exchange's questionnaire on or before 30 November 2026.

What are the Exchange's proposed implementation and transitional arrangements?

The Exchange proposed that the revised Listing Rules will take effect shortly after the publication of its consultation conclusions (the Effective Date). It has also proposed the following transitional arrangements.

Notifiable transactions and connected transactions with terms agreed on or after the Effective Date

The amended Listing Rules would generally apply if the transaction terms are agreed on or after the Effective Date.
For notifiable / connected transactions announced during the one-month period beginning on the Effective Date, if any information required under the new rules was not available at the time of the initial announcement, the issuer may disclose it in a supplemental announcement (or, where applicable, in a circular) as soon as practicable and no later than one month after the initial announcement.

Notifiable transactions with terms agreed before the Effective Date

Generally speaking, the old rules (i.e. rules in effect before the Effective Date) apply. The old rules apply if the issuer had agreed to the terms of the major transaction, VSA or VSD before the Effective Date, and the issuer had not yet published the relevant announcement before the Effective Date.
If the issuer had agreed to the terms of the major transaction, VSA or VSD within two weeks before the Effective Date and had not published the circular before the Effective Date, it may, based on the percentage ratios originally computed when the transaction terms were agreed, opt for the following.

Transaction subject to shareholders' approval under the old rules but not under the new rules: Publish an announcement about the change in shareholders' approval arrangement. The announcement should also include details required under the new rules that were not included in its initial announcement – this should be announced as soon as practicable and no later than one month after publication of the initial announcement.
Transaction subject to shareholders’ approval under both the old rules and the new rules: Apply the circular and shareholders’ approval requirements based on the transaction classification under the new rules.
If the new exemption for acquisition or leasing of assets in the ordinary and usual course of business applies: The circular and shareholders’ approval requirements would not apply, provided that the issuer publishes an announcement detailing how the exemption conditions would be met.

Spin-off transactions

New rules apply to all active spin-off proposals on or after the Effective Date.
Transitional arrangements:

Assured entitlement: New rules on assured entitlement do not automatically apply if the record date and distribution ratio for assured entitlements were announced on or before the Effective Date. Issuers who opt to adjust their spin-off proposal regarding assured entitlement should announce the change of the assured entitlement arrangements together with the implications of the change.
New self assessment route: This is not available for spin-off proposals that were submitted to the Exchange for vetting before the Effective Date. Unless otherwise agreed with the Exchange, an issuer should not withdraw a spin-off proposal solely to rely on the new self-assessment route.
Shortened moratorium period: Applies to all listed issuers from the Effective Date, including issuers that listed before the Effective Date.
Exemption from moratorium period for secondary / dual-primary listed issuers: Applies to issuers that list in Hong Kong on or after the Effective Date. Issuers that listed in Hong Kong prior to the Effective Date should rely on any relevant waivers or exemptions that were granted to them.

Detailed summary of the current and proposed positions

Table A: Proposed changes relating to notifiable transactions

Item / Topic	Current requirement	Key Proposals
(1) Percentage ratios	5 percentage ratios: asset / revenue / profits / consideration / equity capital ratio. For the consideration ratio: the percentage ratio is to be derived by the consideration divided by the total market capitalisation of the listed issuer. Transaction is classified where one or more of the percentage ratios exceed the applicable threshold.	Remove the profits ratio, which is most likely to produce anomalous results. Modify the consideration ratio. Allow issuers to compare the consideration for the transaction with the higher of their market capitalisation or their net asset value. This modification benefits asset-heavy issuers – comparing the consideration of the transaction against net assets (rather than market capitalisation) may better reflect the financial impact and the materiality of the relevant transaction.
(2) Transaction classifications and materiality thresholds	Discloseable transactions (i.e. where applicable size tests are ≥5% but ˂25%) require an announcement. Major transactions (i.e. where applicable size tests are ≥25% but ˂75% (for disposal) or ˂100% (for acquisition)) require announcement, circular and shareholders' approval. VSDs and VSAs (i.e. where applicable size tests are ≥75% (for disposal) or ≥100% (for acquisition)) require announcement, circular and shareholders’ approval. VSDs and VSAs are subject to higher content and other requirements, compared with major transactions (mainly relating to financial disclosure).	Increase the materiality threshold for major transactions from 25% to 50% and amend related requirements. Discloseable transactions (i.e. where applicable size tests are ≥5% but ˂50%) are subject to enhanced announcement disclosure requirements, in particular, relating to key financial information, adequate explanation of the target and the expected impact of the transaction on the issuer. Major transactions (i.e. where applicable size tests are ≥50%) require announcement, circular and shareholders' approval. VSAs and VSDs – These categories will be removed i.e. they will be treated as major transactions. Applicable requirements under the re-defined "major transaction" category: Major transactions may be approved by written shareholders’ approval in lieu of holding a general meeting. The exception is where any of the applicable percentage ratios are ≥ 100% (for acquisitions) or ≥75% (for disposals and other transactions such as provision of financial assistance). For any acquisition where any percentage ratio is 100% or more, a PIE Auditor (as defined under the Listing Rules) issued accountants' report should be included in the circular. The pre-vetting requirement previously applicable to VSA and VSD announcements will not apply. For a summary of the proposed position, refer to Table 5 under paragraph 79 of the consultation paper. Exceptions (i.e. no change to current approach) The increased materiality threshold for classifying a major transaction will not apply to transactions involving provision of financial assistance and/or securities or other investment activities. The threshold for classifying these types of transactions as major transactions will remain at 25%. For notifiable transactions with applicable percentage ratio of 25% or more which involve specific types of assets (including property interests, mineral or natural resources, and infrastructure assets), the existing requirement to include additional assets-specific disclosure (e.g. property valuation reports) will continue to apply.
(3) Transactions in the ordinary and usual course of business	The definition of “transaction” captures transactions of a capital nature that are conducted by listed issuers in their ordinary and usual course of business, for example, acquisitions or leasing of fixed assets. Exemptions from the shareholders’ approval requirement and certain disclosure requirements may apply to a Qualified Property Acquisition and a Qualified Aircraft Leasing Activity (both as defined under the Listing Rules).	Introduce an exemption for acquisition or leasing of assets in the ordinary and usual course of business of the listed issuer, which constitutes a major transaction, from the circular and shareholders' approval requirements, subject to: the assets to be acquired or leased are being used, or to be used, for the listed issuer's existing principal business, which has been reported as a continuing principal business activity in the issuer’s published financial statements for the two full consecutive financial years immediately preceding the transaction; and the board of directors having confirmed the fairness and reasonableness of the transactions. The above proposed exemption does not apply to transactions involving acquisitions or disposals of companies, businesses or securities, formation of joint ventures, provision of financial assistance, or securities or other investment activities (including wealth management products, digital assets and other investment products). The exemption for Qualified Property Acquisitions will also be modified. In particular, Qualified Issuers (as defined under the Listing Rules) are required to have been engaged in property development as a principal business for the two full consecutive financial years immediately preceding the transaction. The requirement to publish a circular will be removed.
(4) Announcement requirements relating to notifiable transactions	Prescribed information required for inclusion in transaction announcement, with additional information to be provided in circular where shareholders' approval is required. Further announcement required where a transaction previously announced is terminated or there is any material variation of its terms or material delay in the completion of the agreement.	Enhance disclosure requirements in announcements for all notifiable transactions, including material transaction terms, key financial information, and explanation of transaction impact. The Exchange has introduced a number of drafting improvements to the Listing Rules to enhance disclosure, together with the newly added requirements below. An explanation of the impact of the transaction on the listed issuer, including qualitative and quantitative analysis of any material effect 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 key factors and assumptions underlying that effect. In the case of an acquisition or disposal of a company or business, information in relation to the revenue, assets and liabilities (both on a current and total basis), cash flow from operating activities (where applicable) of the company or business for the two financial years immediately preceding the transaction, together with any other key financial metrics commonly used in the relevant sector (such as gross profits) and adequate explanation(s) for shareholders and investors to better understand its performance during those financial years and any material subsequent changes. If audited financial information is not available, the board should provide adequate explanation, together with the basis on which the directors consider it reasonable to enter into the transaction based on the unaudited information and the reliability of such information. The source of the financial information and the basis on which the information was prepared also needs to be disclosed. Require further announcement in relation to the following areas: Extension of long stop date of a transaction. Change in payment schedule. Where consideration (including any deferred consideration) is not a fixed amount, the amount of the consideration when determined. Completion of a notifiable transaction. Note that the above enhanced disclosure requirements for both initial announcements and further announcements apply to connected transactions as well.
(5) Circular requirements relating to major transactions	Major transactions, VSAs and VSDs are subject to similar disclosure requirements. The differences mainly relate to the scope of financial information disclosed in the circular	Align and enhance the circular disclosure requirements by broadly extending the existing requirements applicable to VSAs/VSDs (as such classifications are proposed to be removed) to major transactions with certain refinements. The refinements include the following: Regarding financial information / management discussion & analysis (MD&A) to be included in circulars for acquisitions / disposals, refer to the tables in paragraph 141 of the consultation paper, which summarises the current position and proposed position. New requirement to include material risk factors relating to the proposed transaction (including any atypical terms) and any new risks to the issuer group as a result of the proposed transaction. Remove the disclosure requirement for material contracts entered into by the issuer within the last two years before publication of the circular. Permit the issuer to incorporate general information relating to the directors and chief executive by reference to other documents published by the issuer into the circular. This proposal would also apply to connected transactions. Codify the requirement to include the independent valuation report in the circular, if the consideration (or other material terms) of the transaction is primarily based on an independent valuation.
(6) Exemption for securities transactions of a revenue nature conducted by securities houses	Acquisition or disposal of securities which are of a revenue nature, carried out in the ordinary and usual course of business by a securities house that is mainly engaged in regulated activities under the Securities and Futures Ordinance, are fully exempt from the notifiable transaction requirements.	Extend the exemption to PRC securities houses that are regulated under the PRC Securities Law. For acquisitions or disposals of securities carried out by a securities house regulated by other overseas legislation or authority, the Exchange will consider such transactions on a case-by-case basis.

Table B: Proposed changes relating to connected transactions

Item / Topic	Current requirement	Key Proposals
(1) Scope of connected persons	Captures any connected person(s) at the issuer level, individually or together, that can exercise or control the exercise of ≥10% of the voting power in such subsidiary.	Modify the definition of "connected subsidiary" under the Listing Rules by increasing the threshold for a connected person's shareholding (individually or together) in the subsidiary from 10% to ≥30%.
(2) Percentage ratios and announcement requirements relating to connected transactions	See items (1), (4) and (5) in Table A above.	Apply the following proposals applicable to notifiable transactions to connected transactions. Modify the consideration ratio to allow listed issuers to compare the consideration for the transaction with the higher of their market capitalisation or their net asset value. Apply the enhanced disclosure requirements for notifiable transaction announcements (for both initial announcements and further announcements) to connected transactions. Permit listed issuers to incorporate general information relating to the directors and chief executive by reference into the circular.
(3) Connected transaction requirements applicable to PRC issuers only	An associate of a connected person includes any joint venture partner of a cooperative or contractual joint venture, in which the connected person holds 30% or more in the capital or assets contributions, or the contractual share of its profits or other income (the 30% threshold). For this purpose, the interests held by (i) a connected person, (ii) his immediate family members (or where the connected person is a company, its subsidiary or holding company or a fellow subsidiary of the holding company) and (iii) the trustees will be included in determining whether they collectively meet the 30% threshold.	Remove this connected transaction requirement that applies to PRC issuers only.
(4) Annual caps for continuing connected transactions	Annual caps must be expressed in monetary terms, although the Exchange may waive the requirement if the issuer is able to disclose an alternative cap.	Allow annual caps for continuing connected transactions to be expressed as a percentage of a listed issuer's revenue and other financial items in its audited accounts, provided that the transactions are of a revenue nature in the issuer’s ordinary and usual course of business. Where an issuer adopts a percentage-based cap, the issuer must disclose the basis for determining the annual cap by reference to the financial item and the internal control procedures to monitor the transaction value as a percentage of the prevailing financial item from time to time.

Table C: Proposed changes relating to spin-off transactions

Item / Topic	Current requirement	Key Proposals
(1) Scope of applicability of PN15	If the spin-off is effected by a Hong Kong listed issuer that is a subsidiary (listed subsidiary) of another listed issuer (listed holding company), both the listed holding company and the listed subsidiary are subject to PN15.	Refine the scope of applicability so that PN15 does not apply to the listed holding company, where both the listed holding company and the listed subsidiary are Hong Kong listed. However, any material disposal by the listed holding company (through its interests in the listed subsidiary) resulting from the spin-off would continue to be subject to the notifiable transaction requirements.
(2) Regulatory process for spin-offs	All spin-off proposals require the Exchange's prior approval.	Introduce a new self-assessment route. The listed issuer effecting the spin-off (ParentCo) would not need to obtain prior Exchange approval if all the following conditions are satisfied when the entity to be spun-off by the ParentCo (SpinCo) lodges its new listing application: the ParentCo, based on self-assessment, is satisfied that the spin-off proposal satisfies PN15; the ParentCo has a market capitalisation of at least HK$10 billion together with principal business(es) of a revenue of at least HK$1 billion; and the revenue and total assets attributable to the business(es) of the remaining group account for more than 50% of the issuer group. A ParentCo relying on the self-assessment route must comply with specific submission and notification requirements.
(3) Announcement requirements	No specific content requirement when the ParentCo announces a spin-off.	Introduce specific disclosure requirements covering key information, including the business activities of the SpinCo and the remaining group, SpinCo's financials, listing venue and structure of the spin-off, funds raised, and reasons for and benefits of the spin-off.
(4) Assured entitlement	ParentCo must provide existing shareholders with an assured entitlement to shares in the SpinCo. The assured entitlement requirement may be waived by a resolution of the minority shareholders of ParentCo.	Remove the assured entitlement requirement for all spin-offs, regardless of the venue to which the SpinCo will be listed, and whether the ParentCo is primary or secondary listed.
(5) Moratorium period for spin-offs after listing	A spin-off proposal would not normally be considered within three years of the ParentCo's initial listing (other than secondary listed issuers).	Shorten the moratorium period from three years to one year after the ParentCo's initial listing. The timing is assessed by reference to the time when the SpinCo lodges its new listing application. No moratorium period will apply to (a) secondary listed issuers; and (b) dual-primary listed issuers that have been listed on a PRC stock exchange or a Recognised Stock Exchange (as defined under the Listing Rules) for at least two consecutive financial years immediately before their listing in Hong Kong.
(6) Threshold for shareholder approval	Under PN15, shareholder approval is required for spin-offs if any of the percentage ratios under the notifiable transaction regime is 25% or more.	Align the threshold for shareholder approval with the revised notifiable transaction regime (i.e. raise it from 25% to 50%).

For further information, please contact the persons below or your usual Ashurst Perkins Coie contact.

The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.