End of Batch A Posts

Citic Pacific’s Reverse Takeover and Back Door Listing of SOEs in HK

By Mak Ho Yin

Background

Earlier this year, Citic Group had injected essentially all its assets to its wholly owned unit, Citic Pacific. Afterwards the latter had proposed to acquire Citic Limited, a main operating unit from the Group at HKD36.4 million. Citic Pacific is a Hong Kong listed company, and since Citic Limited remains a division of Citic Pacific after the acquisition, it would de facto become listed in Hong Kong under the name of Citic Pacific. This process is generally called ‘back door listing’. Being the first SOE to use this strategy to go public in Hong Kong, the deal was described as the pioneer of future SOEs’ reformation and aroused much concerns about the potential legal issues behind the transaction.

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Hong Kong’s New Companies Ordinance and Its Impact on Corporate Governance

By To Tsz Hei, Henry

Background

The new Hong Kong Companies Ordinance has come into effect on 3 March this year. The key goals of the new Ordinance are to enhance corporate governance and ensure better regulation by modernizing the law to reduce ambiguity, complexity, as well as duplication with other regulatory frameworks, for example HKFRSs issued by the HKICPA.

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HK is ready for ‘No par value regime’

By Wan Lai Wa

Background

Hong Kong Airlines applied for listing approval from Hong Kong Stock Exchange and raising US$500 million initial public offering in two currencies, HKD and RMB, which is the first dual-currency IPO in Hong Kong. It aims to expand further into China and enhance its competitiveness in the market. (Ho, 2014) According to the new Company Ordinance (Cap 135), all local companies, including Hong Kong Airlines have to implement ‘no-par’ system for share capital.

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Director signed a circular without reading – Are investors’ interests being well protected?

By Fong Hoi Yan

Background

Citic is now being sued by the Securities and Futures Commission (SFC) for providing misleading information to investors over losses in 2008 and about 4500 investors lost over HK$1.9 billion due to this (Yiu, 2014).

In September that year, the company issued a circular saying that there was not “any adverse material change in the financial or trading position of the group” (Yiu, 2014). A month later, Citic announced that it had suffered great losses of around HK$15.5 billion from the forex contracts. The commission alleges that the company was conscious of the potential risks brought by the forex investment before issuing the circular (Yiu, 2014).

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End of Batch 10 Posts and Semester 2 Posts

Alibaba setting Hong Kong-style base fee as 1.1% for underwriters of U.S IPO

By Zhu Haipeng Harry

Background:

After the failure of IPO in the Hong Kong market, Alibaba is planning to reschedule the IPO plan in the U.S market. This time the China’s biggest e-commerce company still plans to use its Hong Kong standard, which is 1.1 percent of the total IPO proceeds as base fee together with another one third of comes in the form of incentive bonuses, as the underwriters’ fee. According to the estimated valuation of $20 billion Alibaba could raise in the sale, the pool fee can be potentially more than $220 million.

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