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On 26 July 2019, The Stock Exchange of Hong Kong Limited (SEHK) published the Consultation Conclusions on Backdoor Listing, ContinuingListing Criteria and other Rule Amendments together with three new guidance letters. SEHK adopts the amendments to the Listing Rules proposed in its Consultation Paper with modifications to reflect market responses. The rule amendments will come into effect on 1 October 2019.

On the same day, the Securities and Futures Commission (SFC) published the Statement on the SFC’s approach to backdoor listings and shell activities. In deciding whether to exercise its powers of investigation under the Securities and Futures Ordinance or its powers under the Securities and Futures (Stock Market Listing) Rules to object a listing application and direct SEHK to suspend a listed issuer's shares in cases involving backdoor listings and shell activities, the SFC will take into account factors including (i) whether there are any red flags indicating concealed arrangements or understandings between the parties involves; (ii) whether the true nature or extent of the business, affairs and plans of the listed issuer/ listing applicant has been disclosed; (iii) whether there are any fundamental issues relating to the target assets or businesses; (iv) whether there are any concerns that the directors might not have fulfilled their fiduciary duties; and (v) whether sufficient due diligence has been conducted on the target assets or businesses.

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