Key Regulatory Updates for Hong Kong Listed Companies — July/August 2026

Introduction

This edition summarises key developments for Hong Kong listed companies in July and August 2026, including the Stock Exchange’s Consultation Conclusions on its Listing Framework Competitiveness Review, which came into effect on 24 July 2026, and the publication of a new Guidance Letter (GL122-26) on digital asset-related activities addressing the potential Listing Rule implications for issuers engaging in activities such as investments in digital assets, stablecoin issuance, tokenisation, and the creation of blockchain-based platforms. The Stock Exchange also announced a temporary waiver extending the validity period of eligible new listing applications from six months to 12 months, and added Bursa Malaysia as a Recognised Stock Exchange for secondary listing purposes. Enforcement developments during the period reinforced regulatory expectations regarding directors’ duties, including obligations to safeguard issuer assets, conduct proper due diligence before providing financial assistance, maintain adequate and effective internal controls, exercise active oversight over delegated financial functions, and cooperate fully with regulatory investigations. 

Consultation Conclusions

1. Stock Exchange Published Consultation Conclusions on Listing Framework Competitiveness Review (July 2026)

The Stock Exchange of Hong Kong Limited (the Stock Exchange) has published consultation conclusions (the Consultation Conclusions) to its Consultation Paper on the Listing Framework Competitiveness Review (the Consultation Paper). The Listing Rule amendments implementing the Consultation Conclusions came into effect immediately upon publication of the Consultation Conclusions on 24 July 2026. For further details on the Consultation Conclusions, see our Client Alert.

To reflect (i) the relevant Listing Rules amendment as set out in the Consultation Conclusions, (ii) the relevant enhancements set out in the consultation conclusions on “Board Lot Framework Enhancements in the Hong Kong Securities Market” published on 30 June 2026, and (iii) the new Guidance Letter (GL122-26) on digital asset-related activities, the Stock Exchange has further updated the following guidance materials:

• Guide for New Listing Applicants
• GL111-22 (Guidance for overseas issuers)
• GL112-22 (Change of listing status from secondary listing to dual-primary or primary listing on the Main Board)
• GL79-14 (Guidance on authorised collective investment schemes)
• GL69-13 (Guidance to issuers contemplating (i) a spinoff and separate listing of businesses or assets on the Stock Exchange, or (ii) a reverse takeover where the issuer is deemed a new listing applicant)
• LD103-2016 (Whether the Stock Exchange would approve the proposed share subdivision and increase in board lot size shortly after the listed issuer completed a rights issue and a share consolidation)

Guidance Materials by the Stock Exchange

1. New Guidance Letter (GL122-26) on Digital Asset-Related Activities (July 2026)

The Stock Exchange has published a new Guidance Letter, HKEX-GL122-26, on digital asset-related activities. The Guidance Letter covers the potential implications under the Listing Rules for new listing applicants and listed issuers engaging in activities such as investments in digital assets, stablecoin issuance, tokenisation, and the creation of blockchain-based platforms. See below the key highlights.

Terminology

• “Digital assets” are defined as assets that (i) are a digital representation of value, (ii) depend primarily on cryptography and distributed ledger technology or similar technologies, and (iii) can be used for payment or investment purposes or to access goods or services.
• Non-exhaustive examples of “digital assets” include tokenised real-world assets (including tokenised traditional financial instruments), stablecoins, and cryptoassets such as Bitcoin.
• Digital asset treasury companies (DATs), as observed in overseas markets, generally refer to listed companies that invest in and accumulate substantial digital asset holdings as their principal business, and typically either have no other substantive operating business or hold digital assets unrelated to their other business activities.

Suitability for Listing / Continued Listing

• New applicants: Where an applicant primarily adopts a DAT-like model involving primarily buying and holding digital assets, it will unlikely be considered to have a business suitable for listing under Chapter 8 of the Listing Rules. Such applicants should also consider whether their activities may constitute a collective investment scheme (CIS) under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (SFO), noting that an unauthorised public offering of interests in a CIS in Hong Kong may be unlawful.

Listed Issuers

• Sufficiency of operations: Acquisitions or disposals of digital assets for investment purposes are generally treated like securities and other comparable investments (i.e., excluded from the sufficiency-of-operations assessment). An issuer adopting a DAT-like model will likely not be considered to have a business of substance suitable for listing, and the Stock Exchange may suspend dealings or cancel the listing.
• Cash companies
  • Digital assets held for investment purposes will likely fall within “cash and/or short-term investments” for cash company assessment purposes.
  • A listed issuer holding a substantial portion of digital assets for investment may raise cash company concerns, particularly where such holdings represent a very large portion of total assets.
  • The Stock Exchange applies a principle-based approach, considering the issuer’s business, operations, financial position, and reasons for holding the digital assets.
  • If found to be a cash company, trading will be suspended, and the issuer must satisfy new listing requirements (including issuing a new listing document) to lift the suspension.
• Circumvention of new listing requirements
  • An acquisition of a business holding substantially digital assets of significant size may be treated as a reverse takeover if the issuer’s existing principal business becomes immaterial after the transaction.
  • Large-scale issuances of new securities for cash used to acquire/develop a digital-asset business may also be refused approval if viewed as a means to circumvent new listing requirements. This includes transformations of an issuer’s business into one primarily holding digital assets without other substantive business.

Notifiable and Connected Transactions

• Acquisitions or disposals of digital assets are generally considered as acquisitions or disposals of assets subject to the notifiable and connected transaction rules under Chapters 14 and 14A of the Listing Rules, regardless of whether the transaction is conducted for investment or treasury purposes, or for the purpose of future distributions to reward their shareholders.
• The applicable aggregation rule should be observed where transactions involving the same type of digital assets occur within a 12-month period.
• Advance “blanket approval” from shareholders with no key transaction terms is generally not acceptable.
• The Stock Exchange will examine issuers’ proposals to seek “advance shareholders’ mandate” with key transaction terms cautiously and will not accept any proposal that exhibits characteristics of abuses or non-compliance with the Listing Rules.
• Acquisitions/disposals of digital assets classified as cash or cash equivalents which are central bank digital currencies, or other forms of digital representation of monetary value that are authorised or otherwise subject to prudential supervision by a central bank, monetary authority, or other competent financial regulator in the relevant jurisdiction, where such digital representation of value is designed primarily for payment or settlement purposes and are redeemable at par value in the relevant fiat currency, would not normally be treated as a Chapter 14 transaction.

Recommended Disclosure

• Disclosure is not mandatory solely because an issuer engages in digital asset-related activities; the guidance in Section C of the GL122-26 applies where disclosure is otherwise required under the Listing Rules or other laws, or made voluntarily.
• Recommended disclosure items include:
  • a detailed description of the activities and underlying operations (including roles of key parties);
  • the issuer’s strategy, rationale, board explanation, and expected source of funding;
  • management’s relevant expertise and experience;
  • material risks and mitigation measures;
  • risk management and internal control systems (including custody/security arrangements);
  • applicable legal/regulatory requirements and compliance confirmation; and
  • the timeline and key milestones.
• For acquisitions resulting in substantial digital asset holdings, issuers should disclose whether the assets are (i) integral to business operations (with specific purposes and deployment breakdown), or (ii) held for treasury/investment purposes (in which case, issuers should disclose the issuer’s overall treasury strategy, investment limits/caps, and source of funds).
• For tokenisation of real-world assets, issuers should disclose the token issuer’s identity, information on the underlying assets and custodian arrangements, rights attached to the tokens, trading arrangements, and other principal terms of the arrangements.
• Issuers should avoid misleading or unrealistic disclosure at a preliminary/conceptual stage (while still providing recommended disclosure and regular updates) and avoid generic or boilerplate descriptions.

Other Listing Rule Implications

• Distribution in specie: Issuers distributing digital assets to shareholders by way of distribution in specie must ensure fair and equal treatment. The Stock Exchange will have concerns where the rationale is unclear, no reasonable cash alternative is offered, certain shareholders cannot receive the distribution due to restrictions, or there are doubts as to shareholders’ ability to hold title to or realise value from the tokens.
• When listed issuers propose to issue equity securities to fund any acquisitions of digital assets for their business operation, the announcement should, in addition to the information required under the Listing Rules in the case of securities issuance for cash, include the relevant disclosure referred to under Section C of GL122-26.
• Listed issuers should also report on their use of proceeds in subsequent annual reports, including the details of the digital assets acquired and the purposes for which they are used during the financial year.
• For listed issuers holding digital assets, the annual report disclosure requirement applicable to significant investments would apply if the holding of a particular digital asset represents a value of 5% or more of the issuer’s total assets as at the relevant year-end date.

Risk Management and Internal Control (RMIC)

• Issuers engaging in digital asset-related activities should identify, evaluate, and manage the specific risks involved, with RMIC measures to commensurate with the nature, scale, and complexity of the activities.
• Key measures include:
  • compliance assessment covering the Listing Rules, licensing/regulatory requirements (SFC/HKMA), and AML/CTF requirements;
  • appropriate delegation of supervision to a sufficient number of designated staff with the necessary experience, expertise, and capability to oversee the activities, with approval thresholds and risk exposure limits set with regard to price volatility / liquidity risk;
  • due diligence and ongoing monitoring of counterparties / service providers;
  • proper safeguarding of digital assets, including custodian/wallet arrangements, secure storage of seeds and private keys, anti-fraud controls, and cybersecurity safeguards commensurate with asset form (e.g., bearer form warranting more robust safeguards); and
  • processes to identify and escalate material issues or red flags to the board/management, including when to involve professional advisers (e.g., auditors, legal advisors).

For further details, please refer to GL122-26.

Disciplinary Actions by the Stock Exchange for Failure to Comply With Disclosure Requirements

1. Stock Exchange’s Disciplinary Action Against Redco Healthy Living Company Limited and Its Directors (July 2026)

Key Points

The Stock Exchange takes cases involving the provision of financial assistance without proper due diligence or risk assessment very seriously. Directors must be mindful of their director’s duties and obligations under the Listing Rules, which include the duty to safeguard the issuer’s assets and interests and procure the issuer’s compliance with the Listing Rules. Comprehensive record-keeping is an indispensable part of good corporate governance.

The Stock Exchange censured:

• Redco Healthy Living Company Limited (the Company);
• Mr Tang Chengyong, executive director of the Company (Mr Tang); and
• Ms Wong Yin Man, executive director of the Company (Ms Wong).

Further, Mr Tang and Ms Wong were each directed to attend 27 hours of training on regulatory and legal topics and Listing Rule compliance within 90 days from the date of publication of the statement.

Facts

• The Company was listed on the Stock Exchange on 31 March 2022.
• When auditing the Company’s annual results for the year ended 31 December 2022, the Company’s then auditors raised audit issues that remained unresolved by 31 March 2023, resulting in a delay in publishing the annual results and a trading suspension of its shares from 29 March 2023.
• The audit issues arose from fund flows and transactions of the Company’s subsidiaries between March 2022 and June 2023, across four issues.
• Audit Issue 1: Shortly before listing, the Company’s subsidiaries (the Group) entered into a cooperation agreement with an independent third party, Rich Well, to identify property management companies for potential acquisition. Between April and December 2022, the Group paid earnest money of RMB 100 million to Rich Well. This sum was fully refunded to the Group in June 2022, but was paid to Rich Well and refunded to the Group again in July and December 2022. The payment of RMB 100 million constituted an advance to an entity; however, the Company did not announce this advance to an entity under Rules 13.13 and 13.15.
• Audit Issue 2: In late 2022, the Group entered into framework agreements with nine target companies and their owners (the Nine Targets) and paid RMB 30.8 million to the Nine Targets in refundable deposits. The Nine Targets then loaned these deposits to an independent borrower, and the Group guaranteed the borrower’s repayment obligations, which constituted a disclosable transaction that was not announced under Rule 14.34. Further, the compliance adviser was not consulted under Rule 3A.23. The framework agreements were terminated in mid-2023 and the deposits were fully refunded.
• Audit Issue 3A: In 2022, the Group paid earnest monies totalling RMB 61.5 million to the Company’s parent group (ParentCo) on behalf of two potential investors under strategic cooperation agreements, which were later terminated with the monies refunded in full; this constituted an advance to an entity and a disclosable and connected transaction requiring an announcement, a circular, a written agreement, independent shareholders’ approval, and consultation with the compliance adviser, none of which the Company complied with.
• Audit Issue 3B: Between September and December 2022, the Group borrowed and promptly repaid short-term bridging loans from ParentCo totalling approximately RMB 102.95 million. While this did not trigger Listing Rule requirements, the Group failed to keep proper records and documentation of the loans.
• Mr Tang and Ms Wong, who were also directors of certain relevant subsidiaries, were primarily responsible for the above fund flows and transactions.
• The Company, Mr Tang, and Ms Wong admitted their respective breaches and accepted the sanctions set out in the statement.

Findings of Breach

• The Company breached Rules 3A.23, 13.13, 13.15, 14.34, 14A.34, 14A.35, 14A.36, and 14A.46.
• Mr Tang and Ms Wong breached Rules 3.08 and 3.09B(2) for their respective failure to exercise reasonable skill, care, and diligence, and to use best endeavours to procure the Company’s compliance with the Listing Rules.
• On Audit Issue 1, Mr Tang negotiated, approved, and re-approved the earnest money payments without adequate due diligence or risk assessment to safeguard recoverability, while Ms Wong signed and approved the relevant cooperation agreements and payments but relied on Mr Tang without exercising independent judgment on the merits of the relevant agreements, adequacy of due diligence conducted, and measures to safeguard the Company’s interests. Both Mr Tang and Ms Wong failed to inform the board of the dealings with Rich Well and the fund movements to/from Rich Well.
• On Audit Issue 2, Mr Tang approved the deposit payments and negotiated the guarantee arrangement (which had no commercial rationale and constituted unsecured financial assistance and a disclosable transaction) without adequate due diligence, while Ms Wong approved the payments relying on Mr Tang’s representations without independent verification; neither reported the matter to the board.
• On Audit Issue 3A, Mr Tang approved the strategic cooperation agreements and earnest money payments to ParentCo, which were not made in the Company’s interests and effectively constituted financial assistance to ParentCo, without procuring compliance with the applicable Listing Rules. Ms Wong, though she was not involved in approving the payments, ought to have known about them but took no steps to safeguard the Company’s interests.
• On Audit Issue 3B, Mr Tang, as the key contact with ParentCo on the bridging loans, failed to procure the Company to keep proper documentation of the loans.

Conclusion

• The Listing Committee decided to impose the sanctions and directions set out above.

For further details, please refer to the statement of disciplinary action.

2. Stock Exchange’s Disciplinary Action Against Three Former Directors of Jiayuan Services Holdings Limited (July 2026)

Key Points

Directors must act in the interests of an issuer and its shareholders as a whole, as opposed to its controlling shareholders. To safeguard the issuer’s interests, directors must exercise reasonable skill, care, and diligence to properly monitor the issuer’s affairs, and to ensure that the issuer establishes and maintains appropriate and effective risk management and internal control systems. Whilst delegation is permissible, directors must supervise the discharge of the delegated functions. They must acquire and maintain sufficient knowledge of the delegated matters and follow up on anything untoward that comes to their attention. The Stock Exchange is committed to holding directors accountable for their failure to discharge these important directors’ duties. Such failure calls into question whether the individual concerned is suitable to be a director of the issuer.

The Stock Exchange imposed a director unsuitability statement against Mr Zhu Hongge, former chairman, chief executive officer, and executive director (ED) of Jiayuan Services Holdings Limited (the Company, together with its subsidiaries, the Group) (Mr Zhu); and imposed a prejudice to investors’ interests statement and censured against Mr Bao Guojun, former ED of the Company (Mr Bao) and Mr Pang Bo, former ED of the Company (Mr Pang).

Facts

• The relevant directors breached their directors’ duties under the Listing Rules in respect of the Group’s provision of financial assistance of approximately RMB 1,994,957,000 to various entities controlled by Mr Shum Tin Ching, the Company’s founder and then controlling shareholder (Shareholder Shum), from January 2021 to December 2022.
• Prior to the Company’s listing, Shareholder Shum operated a centralised fund management system pooling and reallocating funds across entities he controlled; the Company represented in its listing application that this had been discontinued and that it would maintain financial independence post-listing, but the evidence indicated otherwise.
• Between 4 January 2021 and 29 December 2022, the Group transferred approximately RMB 1,994,957,000 (including listing proceeds) through 398 payments to entities controlled by Shareholder Shum (the Unauthorised Fund Transfers), without reporting to or obtaining approval from any of the Company’s directors, and received back approximately RMB 1,351,138,000 from those entities.
• The transfers were effected by the Company’s finance resource centre under Shareholder Shum’s instructions, which overrode the Company’s internal control system.
• The Company could not recover net Unauthorised Fund Transfers of approximately RMB 644 million and wrote this off in full, causing a significant financial loss to the Company.
• In December 2021, Mr Zhu approved an action demanding that the Headquarters (i.e., various investment holding companies, including China Jiayuan Group Limited, which was wholly owned by Shareholder Shum) repay RMB 114,598,183 (representing the then outstanding Unauthorised Fund Transfers), but a further RMB 50,251,817 was transferred to Shareholder Shum’s entities before year-end; the balance was then offset by a repayment of RMB 164,850,000 on 30 and 31 December 2021, such that the Company’s auditors did not discover the transfers during the 2021 annual audit.
• In March 2023, Mr Zhu signed a written proposal from the finance resource centre to inflate the Company’s bank balances, forge bank statements, and forge bank chops for use in bank confirmations, in respect of the outstanding transfers as at 31 December 2022.
• The irregularities on the Group’s cash and bank balances were discovered during the 2022 annual audit and reported to Mr Zhu and Mr Pang in November 2023. The Company’s full board was made aware in December 2023, almost three years after the first Unauthorised Fund Transfer.
• The Group’s actual cash and bank balances were found to be RMB 24 million only as at 31 December 2022, as opposed to RMB 509 million, which was recorded in its accounting records, representing a 95% overstatement.
• Mr Bao and Mr Pang admitted that, prior to discovery, they performed little or no oversight of the Group’s financial affairs and had little knowledge of its cash and bank balances over the years.
• A post-discovery internal control review found that the Company lacked genuine financial independence, as the Headquarters continued to exert control over its finance resource centre, and the finance resource centre failed to identify and report connected transactions to the board in breach of its internal policy.

Findings of Breach

• Mr Zhu breached Rules 3.08 and 3.09B by (i) failing to procure the Company’s compliance with Chapters 14 and 14A of the Listing Rules once put on notice of the transfers, (ii) over-relying on the finance resource centre without adequate supervision, (iii) approving the March 2023 proposal to inflate bank balances and forge documents, and (iv) failing to procure effective internal controls at the Company.
• A reasonable director in Mr Zhu’s position would have sought more information on the transfers, which would have led to a train of inquiry revealing details of the relevant financial and internal control irregularities.
• The Stock Exchange considers Mr Zhu unsuitable to occupy a position as director or within senior management of the Company or any of its subsidiaries as a result of these serious and/or repeated failures to discharge his responsibilities under the Listing Rules.
• Mr Bao and Mr Pang breached Rule 3.08 by failing to exercise reasonable skill, care, and diligence to properly monitor the Group’s financial affairs, having delegated financial review functions to the finance resource centre and auditors with no or insufficient supervision, and by failing to procure appropriate and effective internal controls, notwithstanding that the issues persisted from January 2021 to December 2022 and involved almost RMB 2 billion.
• The Stock Exchange considers that Mr Bao’s and Mr Pang’s continued occupation of a director or senior management position at the Company or any of its subsidiaries may cause prejudice to investors’ interests.

Conclusion

• The Listing Committee decided to impose the sanctions set out above.

For further details, please refer to the statement of disciplinary action.

3. Stock Exchange’s Disciplinary Action Against Ever Reach Group (Holdings) Company Limited, Directors. and Senior Management Members (July 2026)

Key Points

Establishing and maintaining strong corporate governance practices are essential to safeguard the issuer’s assets and ensure regulatory compliance. Directors and senior management must lead by example and foster a sound corporate governance culture, even at times when issuers face economic pressure; they cannot prioritise commercial considerations over compliance with regulatory requirements and their internal control framework. Failure to adhere to these principles can result in breaches of directors’ duties and expose the issuer to avoidable financial and regulatory risks.

The Stock Exchange censured Ever Reach Group (Holdings) Company Limited (the Company); Mr Li Xiaobing (Mr Li), ED of the Company; Mr Wang Zhenfeng, ED of the Company; Mr Wang Quan, ED of the Company; Ms Qi Chunfeng (Ms Qi), former ED of the Company; Ms Yu Liping (Ms Yu), financial controller of the Company; Mr Cao Hongwei (Mr Cao), vice president of the Company and general manager of a subsidiary of the Company; Mr Zhang Hao (Mr Zhang), former general manager of a subsidiary of the Company; Mr Lu Jianchao (Mr Lu), deputy general manager of a subsidiary of the Company; and Ms Shen Shuju (Ms Shen), general manager of a subsidiary of the Company.

Facts

• The Company failed to publish its audited annual results for the year ended 31 December 2023 within the time prescribed by the Listing Rules.
• Trading in its shares was suspended on 2 April 2024.
• The then auditor resigned on 9 August 2024, citing unresolved audit issues, which included commercial rationale of various prepayments to suppliers in the aggregate amount of approximately RMB 320 million around year-end 2023.
• Investigations found that prepayments formed part of a circular fund flow whereby the Company (i) sought bank loans allegedly for future construction projects, (ii) transferred the loan proceeds to suppliers as prepayments, (iii) requested refunds from the suppliers, and (iv) used the refunds to finance its non-designated ongoing project work.
• Such circular fund flow arrangement contravened local regulations and the Company’s then applicable internal control policies, resulting in documentation gaps that contributed to audit delays.
• These issues arose due to weak internal controls. The Company’s internal control review identified a number of deficiencies that directly contributed to the audit delays and the suspension of trading, including inadequate monitoring of prepayments, insufficient board and management oversight, and poor document management processes.
• The Company subsequently appointed a new auditor, and published all outstanding financial results on 18 July 2025. Trading in its shares resumed on 19 September 2025. In parallel, the Company remediated all the issues identified in the internal control review.
• The directors were aware that the fund‑flow arrangement did not comply with internal and regulatory requirements, yet they approved and/or permitted its implementation and oversaw the redistribution of refunds to other projects. Through this conduct, the directors failed to procure the Company’s compliance with the Listing Rules and breached their directors’ duties.
• At the subsidiary level, the relevant management members implemented the circular fund flow. These arrangements contributed to significant risks to the Company’s assets and led to the Company’s failure to publish its financial results on time.

Findings of Breach

The Listing Committee found that:

• The Company breached Rules 13.46(2)(a), 13.48(1), 13.49(1), and 13.49(6) for the significant delay in publishing financial results.
• The directors breached (i) Rule 3.08, as they failed to discharge their directors’ duties to safeguard the Company’s assets and ensure the Company had adequate internal controls in place, and (ii) Rule 3.09B, as they failed to procure the Company’s compliance with Rules 13.46(2)(a), 13.48(1), 13.49(1), and 13.49(6).
• The relevant management members were liable under Rule 2A.10B, as they, as members of senior management, caused, by action or omission, the Company’s contravention of Rules 13.46(2)(a), 13.48(1), 13.49(1), and 13.49(6).

Conclusion

• The Listing Committee decided to impose the sanctions and directions set out in the above.

For further details, please refer to the statement of disciplinary action.

Disciplinary Actions by the Stock Exchange — Others

1. Stock Exchange’s Disciplinary Action Against a Former Director of China Aoyuan Group Limited (August 2026)

Key Points

Independent non-executive directors (INEDs), who are often members of the audit committee, bear primary responsibility for monitoring and ensuring that the issuer (including its listed and unlisted subsidiaries) has established and maintained adequate and effective internal control systems to safeguard its assets and ensure compliance with the Listing Rules, as well as other applicable laws, rules, and regulations. Passive reliance on certain personnel to escalate issues or take the initiative to establish and implement internal controls does not absolve INEDs of their duties and responsibilities.

The Stock Exchange censured Mr Tsui King Fai (Mr Tsui), former INED of China Aoyuan Group Limited (China Aoyuan), and further directed Mr Tsui to attend 17 hours of training on regulatory and legal topics and Listing Rule compliance.

Facts

• China Aoyuan was listed on the Main Board in October 2007 and was engaged in property development in the PRC.
• Mr Tsui was an INED and a member of the audit committee of China Aoyuan (the Audit Committee) between September 2007 and January 2023.
• In March 2019, China Aoyuan spun off Starjoy Wellness and Travel Company Limited (stock code: 3662) (Starjoy Wellness) for separate listing on the Main Board. Starjoy Wellness remained a consolidated subsidiary of China Aoyuan until July 2023, when its controlling stake was sold to an independent third party.
• Trading in the shares of China Aoyuan and Starjoy Wellness (together, the Companies) was suspended on 1 April 2022 for delay in announcing their annual results for the financial year ended 31 December 2021 due to unaddressed audit issues about the commercial substance and business rationale of fund flows between the Companies. Trading remained suspended for more than 16 months.
• In or around 2021, China Aoyuan faced an imminent liquidity issue with substantial outstanding liabilities.
• Between 1 January 2021 and 31 March 2022, Starjoy Wellness and its subsidiaries (SW Group) provided financial assistance totalling RMB 3.3 billion to China Aoyuan and its subsidiaries (excluding SW Group) (CA Group) via 147 transactions (the Transfers), without approval or knowledge of the boards of the Companies, or compliance with the applicable announcement, circular, and independent shareholders’ approval requirements under the Listing Rules.
• The Transfers were decided and arranged by the Finance and Treasury Centre of China Aoyuan, which performed a centralised liquidity and working capital management function (the Treasury Function) for the whole group.
• Mr Guo Zi Ning (Mr Guo ZN), then ED of China Aoyuan and non-executive director (NED) of Starjoy Wellness, was the ultimate decision-maker and approver of all 147 Transfers.
• Mr Chen Zhi Bin (Mr Chen), as then NED of Starjoy Wellness and/or ED and CFO of China Aoyuan, approved 118 of the 147 Transfers.
• The internal controls and procedures of the Treasury Function were found to be materially deficient.
• Mr Tsui was not found to have knowledge of or involvement in the Transfers, but he was aware of the Treasury Function (which had been in place for at least 10 years), its operations, and the leadership and approval authority of Mr Guo ZN and Mr Chen.
• Mr Tsui submitted that he relied on the operational teams, internal audit department, and the auditors to escalate or report any related issues to him.
• He also assumed that Starjoy Wellness itself, as a separately listed issuer, had in place adequate and effective risk management and internal controls.

Findings of Breach

• Mr Tsui breached Rule 3.08 due to his failure to exercise reasonable skill, care, and diligence, and to procure the Group to have in place adequate internal controls and procedures at the material time.
• Notwithstanding that Mr Tsui was a long-standing INED and Audit Committee member since China Aoyuan’s listing in 2007, and that the Treasury Function had been in place for at least 10 years, he failed to take an active interest in the operations of the Treasury Function, or in the adequacy and effectiveness of the Group’s relevant risk management and internal controls.
• In particular, there was no evidence that Mr Tsui had taken adequate action, in contemplation of (and after) Starjoy Wellness’s separate listing in March 2019, to assess or review:
  • the risks (regulatory and otherwise) that might arise from the continued operation of the Treasury Function after Starjoy Wellness’s listing, or
  • the adequacy and effectiveness of the relevant internal controls and procedures to ensure the Group’s compliance with the Listing Rules.

Conclusion

• The Listing Committee decided to impose the sanction and direction set out above.

For further details, please refer to the statement of disciplinary action.

2. Stock Exchange’s Disciplinary Action Against a Former Director of Silver Grant International Holdings Group Limited (July 2026)

Key Points

Directors must cooperate with the Stock Exchange in its investigation, even after they have ceased to be directors. Failure to cooperate in the Stock Exchange’s investigation is a serious breach of the Listing Rules and may result in the imposition of the most serious disciplinary sanction.

The Stock Exchange imposed a director unsuitability statement and censured against Mr Wang Ping, former ED of Silver Grant International Holdings Group Limited (the Company) (referred to below as the Director).

Facts

• As part of an investigation into, amongst other things, whether the Director had discharged the duties and obligations under the Listing Rules, the Listing Division (the Division) sent investigation and reminder letters to the Director.
• The Director did not respond to the Division’s enquiries.

Findings of Breach

• The Listing Committee found as follows:
  • The Director breached the Listing Rules by failing to cooperate with the Division in the investigation.
  • The Director’s failure to discharge the responsibilities under the Listing Rules was serious.
• The Listing Committee reminds directors that their obligation to provide information reasonably requested by the Stock Exchange does not lapse after an issuer ceases to be listed on the Stock Exchange or after they cease to be directors of a listed issuer.

Conclusion

• The Listing Committee decided to impose the sanctions set out in the above.

For further details, please refer to the statement of disciplinary action.

Other Publications by the Stock Exchange

1. Stock Exchange Announced Extension of Validity Period of New Listing Applications (August 2026)

The Stock Exchange announced that it will grant a temporary waiver to extend the validity period of eligible New Listing applications from six months to 12 months from the date of the listing application form (the Temporary Waiver).

Conditions for the Temporary Waiver

• The Stock Exchange has not indicated in its comment letter(s) that vetting was or has been suspended; and
• No direct requisition letter (under the Securities and Futures (Stock Market Listing) Rules) and/or major concerns letter has been issued by the SFC and/or the Stock Exchange.
• However, if the issues raised in any such regulatory letter are fully resolved to both regulators’ satisfaction prior to the expiration of the initial six-month validity period, the relevant New Listing application shall still be granted the Temporary Waiver.

Key Safeguard

• If there is a change of sponsor during the extension period that triggers a requirement to resubmit the application under the Listing Rules, the New Listing application lapses immediately on the date of that change.

Scope

• The Temporary Waiver applies for a fixed period of three years, from 21 August 2026 to 20 August 2029.
• The Temporary Waiver will be applicable to all New Listing applications that satisfy the prescribed conditions that (a) remain valid as of 21 August 2026, or (b) are filed or refiled on or after 21 August 2026.
• Reverse takeovers deemed to be new listings and REIT listings are excluded.

For further details, please refer to the Stock Exchange’s announcement.

2. Listing Regulation and Enforcement Newsletter (Issue 14) (July 2026)

The Stock Exchange has published its Listing Regulation and Enforcement Newsletter (Issue 14) for July 2026. Key highlights are set out below:

New Board Lot Framework

• The Stock Exchange has introduced enhancements to the board lot framework for equities and REITs with effect from 2 July 2026, comprising (i) reduction of the board lot value floor guidance from HK$2,000 to HK$1,000, (ii) introduction of a board lot value ceiling guidance of HK$50,000, and (iii) standardisation of board lot units to one of eight prescribed options (1, 50, 100, 500, 1,000, 2,000, 5,000, and 10,000 share(s)).
• The changes are being implemented in two phases: Phase 1 (from 2 July 2026) requires all issuers to comply with the revised floor and new ceiling guidance. Phase 2 (from 16 November 2026, when the Uncertificated Securities Market (USM) regime is expected to be implemented) requires issuers to adopt one of the standardised board lot units within six months after completing their USM transition.
• The Stock Exchange will review compliance with the ceiling guidance over rolling six-month assessment periods (January–June and July–December), with the first period running from July to December 2026. Issuers whose average daily closing board lot value exceeds the HK$50,000 threshold will be contacted in January 2027 and expected to reduce their board lot value by June 2027. Issuers with board lot units of 100 shares or below are not required to comply with the ceiling guidance.
• The floor guidance applies only on initial listing, when the board lot unit is changed, or where a share consolidation or sub-division is undertaken.

USM Regime

• The USM regime is targeted to go live on 16 November 2026 (the USM Implementation Date). All issuers must appoint an Approved Securities Registrar (ASR) by that date, failing which dealings in their securities will be suspended.
• Issuers should notify the SFC and the Stock Exchange three months in advance of any subsequent change of ASR and announce the change as soon as practicable thereafter.
• Issuers incorporated in Bermuda, Cayman Islands, Hong Kong, or Chinese Mainland (the Specified Jurisdictions) should review and, if needed, amend their constitutional documents or terms of issue within one year of the USM Implementation Date or by their next annual general meeting, whichever is later.
• Issuers will need to consult their ASR to agree a “Specified Date” for transition, and make a series of announcements (the Specified Date, the USM Transition Plan, and a reminder 21 business days before transition), as well as maintain a dedicated USM webpage for at least a year after its USM participation.
• Issuers are strongly advised not to conduct corporate action activities during the “Moratorium Period” (a period starting 13 business days immediately preceding, and ending 10 business days immediately following, their participation date), though this does not preclude cash dividend payments or general meetings during that window.
• Issuers incorporated outside the Specified Jurisdictions should obtain independent legal advice on the compatibility of their home jurisdiction laws with the USM regime and consider voluntary participation.

HKEX Issuer Access Platform (HKEX IAP)

• Onboarding will be rolled out in phases: Adviser registration has already commenced; issuer registration is expected to commence in October 2026, rolled out in batches over 10 months, with issuers receiving a notification letter around three months before their registration window; and listing applicants with a hearing date on or after 1 October 2026 must complete onboarding two business days before listing.
• Issuers should familiarise themselves with the platform, identify internal users and assign roles (Administrator, Submitter, Approver), review internal workflows, and prepare necessary internal approvals (e.g., a board resolution) and acceptance of the HKEX IAP Terms and Conditions.

Audit Disclaimer Solely Due to Going-Concern Issues

• While 95% of issuers published financial statements with an unmodified audit opinion this year, 3% were subject to a disclaimer of opinion solely due to going-concern issues, with one case having persisted for 14 years.
• Whilst shares of such issuers may generally continue to trade, the investors have to rely on financial information upon which the auditors have not expressed an opinion. Issuers’ disclosures on the assumptions, basis, and remedial actions supporting their going-concern assessment are often found to be overly generic and lacking detail. The Stock Exchange is looking into this issue with other regulators and intends to issue further guidance later this year.

Auditor Changes and Fees

• The Stock Exchange has observed a growing number of issuers changing auditors close to, or after, the financial year-end, often citing fee disagreements, which places incoming auditors under time pressure and raises concerns about opinion shopping and governance weaknesses.
• FAQ16 – No. 5 was updated in April 2026 to clarify that issuers are expected to agree audit fees at the time of appointment/re-appointment and disclose the agreed fee (as a specific amount or range), together with the basis of determination and key assumptions.
• Notwithstanding improved disclosure since the update, the Stock Exchange has observed disclosures that merely list broad factors without explaining in the issuer’s own circumstances how the fee was arrived at or why it differs from prior years.
• Issuers should therefore provide more meaningful and issuer-specific disclosure. In particular, where audit fees have changed, the circular should explain the key drivers of the change by reference to the issuer’s actual circumstances, such as changes in audit scope, business complexity, timetable, operations, or other relevant developments, rather than simply reciting generic factors.
• Issuers may seek shareholders’ authorisation at the time of appointment for the board to approve subsequent fee adjustments with the same auditor (avoiding the need for further shareholder approval), provided such adjustments are reasonable and proportionate, with material adjustments announced promptly.
• Where an issuer causes an auditor’s resignation in substance amounting to a removal (e.g., by citing a materially lower fee quote from another auditor and requesting the incumbent auditor to resign if it is unwilling to reduce its fee accordingly), this should be treated as a “removal in disguise” requiring shareholders’ approval, with the accompanying circular to contain clear, issuer-specific disclosure of the reasons and the audit committee’s assessment of the incoming auditor.

Governance and Safeguards for Chapter 21 Investment Companies

• Chapter 21 investment companies (Chapter 21 Companies) are not listed on the basis of an underlying operating business, and their fund-like nature requires arrangements such as robust investment policies, effective risk controls, measures to mitigate investor eligibility and concentration risks, and asset safeguarding arrangements, including an acceptable custodian or trustee.
• A recent Stock Exchange review found that a majority of Chapter 21 Companies did not clearly disclose their investment policies/objectives or custodian/trustee arrangements.
• Chapter 21 Companies should clearly disclose:
  • their investment policies and objectives, with details including the scope of permitted investments, selection criteria, and other key parameters and controls guiding investment decisions; and
  • details of any custodian or trustee, or explain alternative asset-protection measures if none is appointed.
• Beyond disclosure, the Stock Exchange expects Chapter 21 Companies and their management to maintain sound arrangements across all material aspects of their operations, including compliance with Listing Rule safeguards, adherence to stated investment objectives unless changes are approved by shareholders, robust investment decision making and risk management processes, proper management of corporate funds, and effective arrangements for asset protection.
• The Stock Exchange will continue to monitor Chapter 21 Companies’ activities and management conduct, and may take regulatory or disciplinary action where material deficiencies or misconduct are identified.

For further details, please refer to the Listing Regulation and Enforcement Letters (July 2026).

3. Stock Exchange Adds Bursa Malaysia as Recognised Stock Exchange (July 2026)

The Stock Exchange has added Bursa Malaysia as a Recognised Stock Exchange. This will enable public companies with a primary listing on Bursa Malaysia’s main market to apply for a secondary listing in Hong Kong under Chapter 19C of the Listing Rules. The recognition increases the number of Recognised Stock Exchanges in Southeast Asia to four, with the others being the Indonesia Stock Exchange, the Singapore Exchange, and the Stock Exchange of Thailand.

For further details on secondary listing, please refer to the Stock Exchange’s webpage on secondary listings in Hong Kong and press release. 

Conclusion

Listing applicants should review the Consultation Conclusions on the Listing Framework Competitiveness Review and the updated guidance materials to assess any impact on their eligibility for listing. New listing applicants that satisfy the prescribed conditions may benefit from the temporary waiver extending the validity period of their applications to 12 months. Issuers engaging in or contemplating digital asset-related activities should carefully consider the implications set out in GL122-26, including the guidance on suitability for listing, notifiable and connected transaction requirements, recommended disclosure, and risk management expectations. The disciplinary actions published during this period highlight the importance of directors maintaining proper oversight over financial affairs and delegated functions, conducting adequate due diligence before providing financial assistance, ensuring the issuer has in place robust internal controls, and cooperating fully with regulatory investigations.