Disclosure of interests
You may hold shares in a listed company or be considering investing in shares in a listed company. It is your right to have timely access to information to enable you to identify the persons who control, or who are in a position to control, interests in shares in a listed company.
What are the disclosure requirements under the Securities and Futures Ordinance (SFO)?
These are contained in Part XV of the SFO and an outline giving guidance on these new disclosure requirements can be found on the SFC website. Here, we explain some of the more important changes to the disclosure of interests regime.
The notification period for those with a notifiable interest is reduced from 5 days to 3 business days. The disclosure threshold for substantial shareholders is reduced from 10% to 5%. Further movements which take their interests through a whole percentage level (e.g. 6%, 7%) are also discloseable.
Example 1: Where the holding of a substantial shareholder increases from 5.9% to 6.2%, notification will be required as the change results in the interest crossing over a whole percentage number i.e. 6%. But where the interest increases from 6.1% to 6.9%, no disclosure will be necessary as the holding does not cross over a whole percentage number.
Substantial shareholders must disclose short positions and long positions separately and these cannot be netted off. A person with a short position will first be required to make a disclosure if the percentage level of his short position reaches 1% or more. Thereafter, as with long positions, a disclosure is only prompted by a change that results in the short position crossing over a whole percentage number which is above 1%, or by the substantial shareholder ceasing to have a short position of at least 1%.
Example 2: Where a substantial shareholder takes a short position of 1.2%, disclosure will be required as it is above 1%. Where the short position increases from 1.2% to 1.9%, no disclosure will be prompted. But where the short position reaches 2.1%, disclosure will be required as the change results in the short position crossing over a whole percentage number i.e. 2%. Disclosure will also be prompted where the short position is closed out.
Directors and chief executives of listed companies must disclose interests or short positions in shares and debentures of their company and any associated company of that company. There is no disclosure threshold for them and all dealings must be notified.
In addition, there are requirements for the disclosure of interests in shares arising under all types of derivatives, and for disclosure of changes in the nature of an interest in shares (e.g. on exercise of an option). Such interests must be included when calculating the percentage level of a person's interest. All these requirements will enable you to have a more complete picture of dealings by substantial shareholders and directors.
What is the reporting procedure?
One of 6 standard disclosure of interests forms must be completed and sent to both the Stock Exchange of Hong Kong (SEHK) and the listed company concerned. There are notes on choosing the appropriate form. The forms can be downloaded from the SFC website or the HKEx website.
Where can I get the information on disclosure of interests?
You can access the information disclosed to SEHK on the HKExnews website.