Past version: effective up to 14/02/2018
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(1) A person or group of persons shown by the listing document issued at the time of the issuer's application for listing to be controlling shareholders of the issuer shall not and shall procure that the relevant registered holder(s) shall not:—
(a) in the period commencing on the date by reference to which disclosure of the shareholding of the controlling shareholders is made in the listing document and ending on the date which is 6 months from the date on which dealings in the securities of a new applicant commence on the Exchange, dispose of, nor enter into any agreement to dispose of or otherwise create any options, rights, interests or encumbrances in respect of, any of those securities of the issuer in respect of which he is or they are shown by that listing document to be the beneficial owner(s); or
(b) in the period of 6 months commencing on the date on which the period referred to in rule 10.07(1)(a) expires, dispose of, nor enter into any agreement to dispose of or otherwise create any options, rights, interests or encumbrances in respect of, any of the securities referred to in rule 10.07(1) (a) if, immediately following such disposal or upon the exercise or enforcement of such options, rights, interests or encumbrances, that person or group of persons would cease to be a controlling shareholder.
Any offer for sale contained in a listing document shall not be subject to such restrictions.
(2) For the purpose of this rule, a person is treated as the beneficial owner of securities if he has the ultimate beneficial ownership or control of the securities, whether through a chain of companies or otherwise.
(1) Controlling shareholder(s) is/are free to purchase additional securities and dispose of securities thus purchased in the relevant period, subject to compliance with the requirements of rule 8.08 to maintain an open market in the securities and a sufficient public float.
(2) Nothing in this rule shall prevent a controlling shareholder from using securities of the issuer beneficially owned by him as security (including a charge or a pledge) in favour of an authorised institution (as defined in the Banking Ordinance) for a bona fide commercial loan.
(3) Controlling shareholder(s) of a new applicant must undertake to the issuer and the Exchange that, within the period commencing on the date by reference to which disclosure of the shareholding of the controlling shareholder(s) is made in the listing document and ending on the date which is 12 months from the date on which dealings in the securities of a new applicant commence on the Exchange, he/they will:—
(i) when he/they pledge(s)/charge(s) any securities beneficially owned by him/them in favour of an authorised institution pursuant to Note (2) to rule 10.07(2), immediately inform the issuer of such pledge/charge together with the number of securities so pledged/charged; and
(ii) when he/they receive(s) indications, either verbal or written, from the pledgee/chargee that any of the pledged/charged securities will be disposed of, immediately inform the issuer of such indications.
The issuer must inform the Exchange as soon as it has been informed of matters referred to in rule 10.07 (2) Note 3 (i) and (ii) by a controlling shareholder and disclose such matters by way of an announcement which is published in accordance with rule 2.07C as soon as possible.
(3) Any share lending arrangement entered into by a controlling shareholder pursuant to an agreement in relation to the public offering of equity securities to facilitate settlement of over-allocations shall not be subject to the restrictions of rule 10.07(1) provided the following requirements are complied with:
(a) the share lending arrangement is fully described in the initial listing public offering document and must be for the sole purpose of covering any short position prior to the exercise of the underwriter's over-allotment option in the initial public offering placing;
(b) the maximum number of shares to be borrowed from the controlling shareholder by the underwriter is the maximum number of shares that may be issued upon full exercise of the over-allotment option;
(c) the same number of shares so borrowed is returned to the controlling shareholder or its nominee (as the case may be) within 3 business days after the last day on which the over-allotment option may be exercised or, if earlier, the date on which the over-allotment option is exercised in full;
(d) borrowing of shares pursuant to the share lending arrangement will be effected in compliance with applicable listing rules, laws and other regulatory requirements; and
(e) no payments will be made to the controlling shareholder by the underwriter in relation to the share lending arrangement.
(4) The provisions of 10.07(1)(a) and (b) shall not apply to an issuer that has successfully transferred its listing from GEM to the Main Board pursuant to Chapter 9A.