Key Regulatory Updates for Hong Kong Listed Companies — March/April 2026

Introduction

This edition summarises the key developments for Hong Kong listed companies in March and April 2026, including a consultation paper by Hong Kong Exchanges and Clearing Limited (HKEX) on accelerating the settlement cycle for the Hong Kong cash market from T+2 to T+1, and a consultation paper from the Stock Exchange of Hong Kong Limited (the Stock Exchange) on the first phase of its listing framework competitiveness review, proposing targeted reforms to the weighted voting rights regime and the regime for overseas-listed issuers. 

Enforcement developments during the period reinforced regulatory expectations regarding directors’ duties, including obligations to ensure accurate and complete disclosures during the listing process, exercise proper oversight over delegated functions and subsidiary operations, and cooperate with the Stock Exchange’s investigations. Other highlights include the Stock Exchange’s publication of practical tips on effective risk management and internal control systems, the Securities and Futures Commission (SFC) Enforcement Reporter (Issue No. 7) addressing sponsor and fund manager misconduct, and the targeted launch of the uncertificated securities market regime in November 2026. 

Consultation Papers and Conclusions

1. HKEX Consultation Paper on Accelerated Settlement for Hong Kong Cash Market (April 2026)

HKEX published a Consultation Paper on Accelerated Settlement for the Hong Kong Cash Market (the Settlement Consultation Paper), which outlines the proposed operational model to shorten the trade settlement cycle for Hong Kong’s cash market to T+1 from the current T+2, and seeks public comment.

Scope of Application

T+1 in the Hong Kong cash market will be applicable to the following products and transactions:

• All exchange trades in the secondary market, including:
  • Equities (examples are ordinary shares, preference shares, stapled securities, SPAC shares, and SPAC warrants)
  • Authorised collective investment schemes, notably REITs and ETPs, including ETFs and leveraged and inverse products across various asset classes
  • Structured products
  • Debt securities
  • Securities traded via the Southbound Stock Connect programme
• Physical settlement of equities upon the exercise and assignment of stock options
• For primary transactions of ETPs (i.e., creation and redemption), settlement arrangements should, where feasible, align with the T+1 cycle used in the secondary market. Where full alignment isn’t operationally achievable, settlement timelines should move as close to T+1 as practicable.

The following will be excluded from the T+1:

• Other primary transactions in the cash market, which are:
  • IPOs
  • Structured products issuance and final settlement at expiry
• Chinese Mainland securities traded via the Northbound Stock Connect programme

Details of the Operational Model

Trading

• The proposed T+1 settlement cycle transition primarily affects post-trade activities conducted after the close of trading on T-day.
• The processes for order placement, trading hours, and trade execution will remain unchanged.
• The T-day trade amendment window is proposed to be extended so that exchange participants (EPs) can submit amendment applications to HKEX no later than T-day 5 p.m. (an extension from T-day 4 p.m.), while removing the trade amendment window on T+1 day. As a result, the clearing and settlement process can occur earlier.

Clearing

• Clearing activities should begin earlier, with positions being cleared within T-day.
• It is proposed that the Final Clearing Statement (FCS) will be generated on T-day 8 p.m. (brought forward from T+1 2 p.m. under the current settlement cycle).

Settlement

• Settlement will occur on T+1 day (instead of T+2 day under the current settlement cycle).
• It is proposed that the settlement instructions input and matching window be extended, with the window ending on T-day 10 p.m. for input and T-day 9:30 p.m. for the matching window (instead of T-day 7 p.m. for input and T-day 6 p.m. for the matching window, respectively, under the current settlement cycle).

Risk Money

• The daily risk payment obligation report will be delayed to 10 p.m. on T-day (instead of 8:30 p.m. on T-day).

Please refer to the table on page 17 of the Settlement Consultation Paper for the proposed operational timetable for T+1, and to Appendix F for the table of key differences between the current T+2 model and the proposed T+1 operating model. 

Corporate Actions

• For corporate actions commencing after T+1 implementation, the ex-date for a corporate action such as dividend, bonus issue, and rights issue will shift from one settlement day prior to the last registration date (or record date where there is no book closure) under the T+2 settlement cycle to the same day as the last registration date (or record date where there is no book closure) under the T+1 settlement cycle.
• Please refer to the table on page 21 of the Settlement Consultation Paper for an example of the corporate action timetable under T+1.

Stamp Duty

• It would be necessary to review how the stamp duty arrangements would operate under T+1. HKEX is engaging with the relevant authorities on this topic.
• It is expected that, while the stamp duty exemption submission deadline will remain unchanged on T+1 10:15 a.m., form SD-1 submission and payment will be moved forward by one day to T+1.
• Please refer to the table on page 22 of the Settlement Consultation Paper for a summary of the proposed changes to stamp duty arrangements. 

Implementation

• Transition to T+1 implementation is intended to take place in Q4 of 2027.
• Following the consultation, HKEX intends to include the following steps leading up to the launch of T+1 in Hong Kong:
  • Publication of consultation conclusions
  • Publication of specifications documents, including publication of an information paper
  • Industry engagement
  • Market testing and simulation
  • Readiness of the industry
  • Regulatory approvals
  • Launch of T+1 in Hong Kong
• HKEX encourages market participants to begin assessing their operational readiness, systems, and processes as soon as practicable.
• Upon finalising the T+1 framework, HKEX will also make subsequent amendments to its Exchange Rules, Clearing House Rules, and Listing Rules. In particular, amendments to the Listing Rules will be made to (a) replace references to the “T+2 settlement system” with references to the “T+1 settlement system”; and (b) reflect the corresponding timeline for ex-entitlement trading under the proposed T+1 model, whereby there will be only one ex-date before the book-close date, or (when there is no book closure) the ex-date will be the record date.

For further details, please refer to the Settlement Consultation Paper. 

2. Stock Exchange Consultation Paper on Listing Framework Competitiveness Review (March 2026)

On 13 March 2026, the Stock Exchange published a Consultation Paper on the Listing Framework Competitiveness Review (the Listing Framework Consultation Paper), which represents the first phase of the Stock Exchange's competitiveness review of Hong Kong's listing framework and seeks market feedback on a series of targeted reforms. The proposals are intended to create a more diverse and dynamic market environment, provide greater investment opportunities, and meet the needs of both investors and issuers. 

The proposals in the Listing Framework Consultation Paper cover three key areas: (i) enhancing the weighted voting rights (WVR) listing regime, including lowering financial eligibility thresholds, relaxing the voting power ratio cap, and refining the innovative company requirements; (ii) optimising the regime for overseas-listed issuers, including lowering the eligibility thresholds for secondary listings and introducing further measures to facilitate overseas issuers' listings in Hong Kong; and (iii) enhancing initial listing requirements and listing arrangements, including improving the listing pathway for commercialised biotech and specialist technology companies, expanding the scope for confidential filing of listing applications to cover all new applicants, and refining the return mechanism.

For further details, please refer to our Client Alert and the Listing Framework Consultation Paper. 

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

1. Stock Exchange’s Disciplinary Action Against Datang Group Holdings Limited, a Director, and a Senior Management Member (April 2026)

Key Points

Every director must understand and, at all times, be aware of their duties and responsibilities as a director of an issuer under the Listing Rules and applicable laws. In particular, where a transaction or arrangement relating to a connected person is contemplated, each director must ensure full compliance with Chapter 14A of the Listing Rules. Commercial reason or ignorance of the Listing Rules is no defence to breaches of the Listing Rules. Senior management plays an important role in the issuer’s compliance with the Listing Rules and corporate governance. The Stock Exchange may sanction any senior management member found to have caused, by action or omission, or knowingly participated in a contravention of the Listing Rules.

The Stock Exchange censured Datang Group Holdings Limited (the Company) and imposed a prejudice to investors’ interests statement. It also issued a censure against Mr. Wu Di, executive director and chairman of the Company at the time of the Company’s delisting (Mr. Wu); and Mr. Liu Weiping, senior management member and vice president of the Company at the time of the Company’s delisting (Mr. Liu).

Facts

• The Company and its subsidiaries (the Group) were found to have conducted a land compensation transaction of RMB 1.76 billion with the PRC government, and provided financial assistance in the total sum of RMB 1.03 billion to its controlling shareholder and her related entities (CS Group) in 2022, without complying with the major transaction and connected transaction requirements under Chapters 14 and 14A of the Listing Rules, respectively.
• At the material time, Mr. Wu was responsible for the Group’s overall strategic development and major business decisions. Mr. Liu was responsible for the Group’s funds and financial management.
• Mr. Wu allowed the Group to execute the relevant transactions without complying with the Listing Rules and the Group’s internal controls and procedures, and without informing the board of the Company.
• Under Mr. Wu’s purported authority, Mr. Liu procured the Group to provide financial assistance to CS Group without (i) going through the Group’s office automation approval system and reporting mechanisms, and (ii) complying with the Listing Rules.
• Mr. Wu and Mr. Liu asserted that the financial assistance was provided against the background that the Group had received financial support from CS Group from time to time.

Findings of Breach

Company

• The Company breached Rules 14.34, 14.38A, 14.40, 14A.35, 14A.36, and 14A.46 for failing to comply with the announcement, circular, and (independent) shareholders’ approval requirements applicable to the land compensation transaction and the financial assistance.

Mr. Wu and Mr. Liu

• Mr. Wu breached Rules 3.08 and 3.09B(2) for failing to fulfil his fiduciary duties and duties of skill, care, and diligence, and failing to use his best endeavours to procure the Company’s compliance with Chapters 14 and 14A applicable to the land compensation transaction and the financial assistance.
• Mr. Liu caused, by action or omission, or knowingly participated in the Company’s provision of financial assistance to CS Group, in contravention of the announcement, circular, and independent shareholders’ approval requirements under Chapter 14A, for which he was liable under Rule 2A.10B(3).
• Their assertions about the background of the financial assistance and their ignorance of the Listing Rules implications did not constitute a valid defence to their breaches.
• The Listing Committee considered that the occupying of the position of director or senior management of the Company or any of its subsidiaries by each of Mr. Wu and Mr. Liu may cause prejudice to the interests of investors.

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. 

2. Disciplinary Action Against Cloud Factory Technology Holdings Limited and Directors (April 2026)

Key Points

The information in all documents submitted during a listing process, including a listing applicant’s prospectus and forecast memorandum, must be accurate and complete in all material respects and not misleading or deceptive. The Stock Exchange and public investors rely on such information to make proper and informed assessment of the business sustainability, activities, financial position, profitability, management, and prospects of the listing applicant. A listing applicant must therefore disclose all material information in its listing documentation. To determine what information is material may require a degree of judgement. The listing applicant and its directors shall consult its sponsor. They shall also take adequate steps to assist its sponsor so that the sponsor can perform independent due diligence and satisfy itself on the relevant disclosure in the listing documentation.

The Stock Exchange censured:

• Cloud Factory Technology Holdings Limited (the Company)
• Mr. Sun Tao, executive director (ED), chairman, and CEO of the Company
• Mr. Jiang Yanqiu, ED of the Company
• Mr. Ji Lijun, ED of the Company
• Mr. Zhu Wentao (Mr. Zhu), former ED of the Company

Facts

• On 14 June 2024, the Company was listed on the Stock Exchange.
• Among other documents, the Company submitted to the Stock Exchange a memorandum on profit forecast and working capital forecast on 31 May 2024 (the Forecast Memorandum) and published a prospectus on 5 June 2024 (the Prospectus).
• The Stock Exchange found that there were material discrepancies between the disclosures in the Prospectus and the Forecast Memorandum prepared by the Company during its listing process and its then actual financial position.
• The Prospectus and the Forecast Memorandum failed to disclose that at that time, the Company had already planned or entered into bank loans and capital expenditure each of over RMB 160 million (the Bank Loans).
• Further, the Prospectus and the Forecast Memorandum disclosed that from 1 January 2021 to 30 April 2024, the Group had prepayments, other receivables, and other assets ranging from RMB 10 million to RMB 48 million. No information was disclosed about the Group’s prepayments after 30 April 2024. The Group’s total forecast payments for purchase of property, plant, and equipment for 2024 would be RMB 47 million. In fact, on 5 and 10 May 2024, the Group entered into equipment purchase agreements for its principal business (the Purchase Agreements), under which the Group had, before listing, made additional prepayments of RMB 169 million (the Prepayments).
• The directors were aware of these transactions. Nevertheless, they did not inform the sponsor of the same, or otherwise ensure the Company disclosed the same in the Prospectus or the Forecast Memorandum where relevant.
• The directors explained that they mistakenly believed that these transactions were not required to be disclosed, in part because none of the transactions would cause a material adverse impact on the Company’s financial position or performance.

Findings of Breach

Company

The Company breached the Listing Rules set out below:

• Rules 2.13 and 11.07 — The Prospectus was materially inaccurate, incomplete, and misleading, and it did not contain all information necessary to enable an investor to make an informed assessment, as the Prospectus failed to disclose the Bank Loans, the Purchase Agreements, and the Prepayments.
• Rule 9.11A — When providing the Forecast Memorandum to the Stock Exchange, the Company failed to update it to reflect the Bank Loans and the Prepayments.
• Rule 3A.05 — The Company failed to assist its sponsor to perform its role by failing to inform the sponsor of the Bank Loans, the Purchase Agreements, and the Prepayments.

Directors

The relevant directors breached Listing Rules 3A.05 and 3.08.

• Directors of a listing applicant are responsible for ensuring the information contained in all documents submitted during the listing process is accurate and complete in all material respects and not misleading or deceptive. They are also under a duty to assist the sponsor to perform its role.
• Despite the relevant directors’ knowledge of the transactions in question, they failed to inform the sponsor of the same.
• They also failed to take steps to ensure that proper disclosures relating to the Bank Loans, the Purchase Agreements, and the Prepayments were made in the Prospectus and the Forecast Memorandum.

Conclusion

The Listing Committee decided to impose the sanctions set out in the above. It was further directed that:

• The Company appoint a compliance adviser for two years
• Each of the relevant directors (save for Mr. Zhu) attend 18 hours of training on regulatory and legal topics and Listing Rule compliance
• Mr. Zhu attend 18 hours of training, as a prerequisite of any future appointment as a director of any company listed or to be listed on the Stock Exchange

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

3. Disciplinary Action Against Enterprise Development Holdings and Six Directors and a Subsidiary’s Director (March 2026)

Key Points

Acquisition or disposal of securities and financial assets is subject to Chapter 14 of the Listing Rules, with very limited exceptions. Compliance with Listing Rule obligations in a timely manner is an important element of issuers’ regulatory responsibilities. Issuers must promptly comply with the disclosure and other requirements under the Listing Rules to ensure the market is fully informed. Directors of issuers engaging in, or contemplating engaging in, securities trading as a business must ensure that the issuers possess the necessary infrastructure and controls, which entail, among others, controls and procedures for (i) robust oversight by directors; (ii) Listing Rule compliance; (iii) the keeping of up-to-date and complete records; and (iv) ongoing training to directors and relevant personnel responsible for transactions that may be subject to the Listing Rules. 

The Stock Exchange will continue to take disciplinary action where necessary to enforce compliance with these requirements and duties. Such disciplinary action may cover not only the issuer concerned and its directors, but also any senior management member or director of the issuer’s subsidiary found to have caused, by action or omission, or knowingly participated in a contravention of the Listing Rules.

The Stock Exchange censured Enterprise Development Holdings Limited (the Company); Mr. Yu Hui, ED and CEO of the Company (Mr. Yu); Ms. Li Zhuoyang, ED of the Company (Ms. Li); Mr. Liu Yang, former ED of the Company (Mr. Liu); Mr. Cai Jinliang, independent non-executive director (INED) of the Company (Mr. Cai); Mr. Chin Hon Siang, INED of the Company (Mr. Chin); Mr. Chen Kwok Wang, INED of the Company (Mr. Chen); and Mr. Luo Jiaqi (Mr. Luo), sole director of Enterprise Development (Hong Kong) Holdings Limited (EDHK), an indirect wholly owned subsidiary of the Company.

Facts

• At the material time, EDHK’s securities investment business was material to the Company.
• Mr. Luo, the sole director of EDHK, was responsible for managing the securities investment business.
• Between 10 January and 14 February 2024, the Company published five announcements in relation to seven disclosable transactions (on an aggregated basis) involving EDHK’s purchases and disposals of US-listed securities, which took place between 9 May 2023 and 12 February 2024 (the Announcements).
• However, in respect of EDHK’s other purchases and disposals of US-listed securities conducted between June 2023 and October 2025, the Company did not comply with the announcement, circular, and/or shareholders’ approval requirements under Chapter 14 of the Listing Rules. These securities dealings, on an aggregated basis, constituted one very substantial disposal, five major transactions, and 32 disclosable transactions (collectively, the Transactions).
• The Company asserted that this was attributable to:
  • the failure of the Company’s directors to properly monitor or supervise the securities investment business of EDHK and procure the Company to have in place adequate and effective controls and procedures to ensure that EDHK’s securities dealings were conducted in full compliance with the Listing Rules; and
  • the failure of Mr. Luo, EDHK’s sole director, to report the securities dealings to the board of the Company in a timely manner, and/or adopt a systematic approach to keep track of all securities dealings.
• The Company has since implemented various remedial measures to address its Listing Rule breaches and to prevent the occurrence of similar breaches.

Findings of Breach

Company 

• The Company breached Rules 14.34, 14.38A, 14.40, 14.48, and 14.49 for failing to comply with the announcement, circular, and/or shareholders’ approval requirements applicable to the Transactions.

Relevant Directors

• Each of Mr. Yu, Ms. Li, Mr. Liu, Mr. Cai, Mr. Chin, and Mr. Chen breached Rules 3.08 and 3.09B(2) for failing to exercise reasonable skill, care, and diligence and failing to use their respective best endeavours to procure the Company’s compliance with the Chapter 14 requirements applicable to the Transactions:
  • Directors must exercise reasonable care, skill, and diligence in monitoring the listed issuer’s business operations and ensuring that it has adequate and effective internal controls.
  • The relevant directors were aware of the Listing Rule implications applicable to securities dealings. However, they failed to properly supervise the securities investment business of EDHK.
  • They did not ensure that the Company had adequate and effective controls and procedures for monitoring EDHK’s securities dealings.
  • They did not ensure that they and Mr. Luo, the sole director of EDHK, had sufficient understanding of the relevant Listing Rules.
• By reason of Mr. Luo’s omission to report the relevant Transactions to the board in a timely manner and/or adopt a systematic approach to keep track of all securities dealings, Mr. Luo caused the Company’s contravention of the relevant requirements under Chapter 14 of the Listing Rules. 

Conclusion

The Listing Committee decided to impose the sanction set out in the above. It was further directed that each of the relevant directors and Mr. Luo attend 18 hours of training on regulatory and legal topics and Listing Rule compliance.

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

4. Disciplinary Action Against CHK Oil Limited and a Former Director (March 2026)

Key Points

Financial information published by listed issuers is essential for investors to make fully informed investment decisions. Listed issuers and directors must ensure that the information is materially accurate and complete and not misleading. Directors are expected to exercise independent judgement and take proactive steps to report any significant matter to the board of directors in a timely manner, so that it is able to fairly appraise the issuers’ positions and procure the issuers’ compliance with the Listing Rules. In addition, when delegating duties, directors must monitor and supervise the discharge of the delegated functions. This requires the directors to continue to take an active interest and acquire sufficient knowledge of the delegated matters and follow up on issues that come to their attention.

The Stock Exchange censured CHK Oil Limited (the Company), imposed a prejudice to investors’ interests statement, and censured Mr. Yu Jiyuan (Mr. Yu), former ED, CEO, and Chairman of the Company.

Facts

• The Company’s subsidiary (the Subsidiary) held an exploitation interest in certain gas and oil fields in the United States of America through leases (held by production) with a US government bureau (the Bureau).
• Mr. Yu, also a director of the Subsidiary, was responsible for overseeing the Subsidiary and reporting to the Company’s board of directors (the Board) any significant matter that would require its decisions.
• By way of written orders, the Bureau required restoration of oil production under some of the leases in June 2022 and, due to a lack of response to such requirements, terminated the leases in November 2022.
• At the material time, Mr. Yu was aware of the written orders and the termination, but did not escalate them to the Board, which first became aware of them only in August 2024.
• Mr. Yu had taken some actions in response to the written orders, but such actions were far from sufficient to discharge his director’s duties.
• Mr. Yu allowed the Company to continue to book the terminated leases in its consolidated financial statements and publish the same in the annual results and reports for the years ended 31 December 2022 and 2023, and the interim results and reports for the six months ended 30 June 2023 (Financial Results and Reports), which were therefore materially inaccurate, incomplete, and/or misleading.
• When the Board became aware of the termination in August 2024, the Company published an announcement restating the Financial Results and Reports. The announcement revealed, among others, that the Company’s failure to exclude the terminated lease from its balance sheets had caused an overstatement of the Group’s total assets by about 65.5% and 58.1% for the years ended 31 December 2022 and 2023, respectively.

Findings

• The Company breached Rule 2.13(2) for publishing the Financial Results and Reports, which were materially inaccurate, incomplete, and/or misleading.
• Mr. Yu breached Rules 3.08 and 3.09B(2), and the breaches were serious. In particular:
  • He failed to escalate the written orders or the termination to the Board, the audit committee, or the auditors for over two years.
  • He failed to take proactive action to address the written orders and procure the restoration of oil production under the leases. Instead, he placed excessive and unreasonable reliance on the US staff to handle the matter without (i) ensuring that the US staff was sufficiently competent to do so, and (ii) continuing to take an active interest and giving sufficient supervision over the delegated matters.
  • There were many occasions on which Mr. Yu could have escalated the written orders and the termination to the Board, the audit committee, or the auditors. However, he did not do so, nor did he properly handle the auditors’ related enquiries.

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.

Disciplinary Actions by the Stock Exchange — Others

1. Stock Exchange’s Disciplinary Action Against Former Directors of China Bright Culture Group (Delisted) (April 2026)

Key Points

Cooperation with the Stock Exchange is essential. Failure to cooperate in the Stock Exchange’s investigations is a serious breach of the Listing Rules and may result in the imposition of the most serious disciplinary sanction. A director’s obligation to cooperate and provide up-to-date contact information does not lapse after the delisting of the issuer.

The Stock Exchange imposed a director unsuitability statement and censure against the following former directors of China Bright Culture Group (the Company):

• Mr. Liu Mu, former ED, chairman, and CEO of the Company at the time of the Company’s delisting
• Mr. Xia Rui, former ED of the Company at the time of the Company’s delisting (Mr. Xia)
• Ms. Yao Li, former INED of the Company at the time of the Company’s delisting (Ms. Yao) (collectively, the Directors)

Facts

• As part of an investigation into, amongst other things, whether the Directors had discharged the duties and obligations under the Listing Rules, the Division sent investigation and reminder letters to each of the Directors. The Directors did not respond to the Division’s enquiries.
• The Division was able to speak to Mr. Xia once by phone. During the phone conversation, the Division’s representative requested Mr. Xia to provide his up-to-date email address, but he refused to do so.

Findings

The Listing Committee found as follows:

• The Directors breached the Listing Rules by failing to cooperate with the Division in the investigation.
• Mr. Xia breached the Listing Rules by failing to keep the Stock Exchange informed of his up-to-date contact details.
• The Directors’ failure to discharge the responsibilities under the Listing Rules was serious.

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. 

2. Stock Exchange’s Disciplinary Action against Former Director of China Longevity Group Company Limited (Formerly Known as Sijia Group Company Limited) (March 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 censure against Mr. Huang Wanneng, former ED (the Director), a former director of China Longevity Group Company Limited (formerly known as Sijia Group Company Limited) (the Company).

Facts

• As part of an investigation into, amongst other things, whether the Director had discharged his duties and obligations under the Listing Rules, 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.

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

Other Publications by the Stock Exchange and SFC 

1. Stock Exchange Practical Tips to Effective Risk Management & Internal Control Systems (April 2026)

The Stock Exchange published Practical Tips to Effective Risk Management & Internal Control Systems (Practical Tips), which is intended to assist the board, management, and the audit committee of an issuer to discharge their responsibilities and serves as a quick reference to some of the key issues that need to be considered when issuers develop and implement their risk management and internal control (RMIC) systems. The Practical Tips has three sections: 

• Key questions to consider when making decisions (i) for general corporate transactions; and (ii) in the context of the money lending business
• General internal controls and governance practices in relation to (i) transfer and use of funds; (ii) delegation of duties; and (iii) documentation and record retention
• Quick reminders to the board, management, and audit committee of issuers

Key Questions for General Corporate Transactions 

• For general corporate transactions, issuers should consider whether the transaction is in the issuer's best interests, including the commercial rationale, financial impact, and transactional risks (e.g., counterparty creditworthiness and execution risks).
• Consider whether the due diligence scope is wide enough to cover financial, legal, operational, and human resources aspects, and whether the board and management applied sufficient scepticism when reviewing the purpose, terms, and benefits of transactions. 
• Consider whether the terms of the transactions are fair and reasonable, including the basis for consideration, adequacy of safeguards against non-performance, and whether common clauses (e.g., conditions precedent, representations and warranties, indemnity, liability limitations, negative covenants, and termination) are at arm's length or in line with market practice. 
• Consider whether internal controls and regulatory compliance have been followed, including obtaining necessary board/shareholder approvals, ensuring the board has been given sufficient, accurate, and up-to-date information, declaring conflicts of interest, and considering compliance with applicable laws and the need for independent professional advice.

Key Questions for Money Lending

• Issuers engaged in the money lending business should ensure operational readiness (including obtaining relevant licences and implementing specific RMIC policies and procedures); conduct comprehensive pre-loan due diligence (i.e., covering KYC, AML checks, assessment of loan terms, and identification of red flags); and maintain regular post-loan monitoring of repayment status, recoverability, portfolio concentration risk, and timely escalation of material issues.

General Internal Controls and Governance Practices 

• Transfer and use of funds: Issuers should set clear approval hierarchies proportionate to the nature, complexity, and materiality of the matter (e.g., monetary thresholds, dual signatures, and multiple approvers); implement appropriate cash and treasury controls (e.g., segregation of duties, safeguarding of company chops and banking tokens, and maintaining audit trails); and ensure continuous monitoring to identify red flags such as circular payments, suspicious recipients, or unreported transactions.
• Delegation of duties: Issuers should consider whether the nature and risk of the matter justify delegation; assess whether the delegate has the requisite knowledge, experience, and capability; clearly define and record roles and responsibilities; set up clear communication channels for timely reporting; and periodically reassess whether delegation remains appropriate. 
• Documentation and record retention: Issuers should implement comprehensive record-keeping policies with clear retention periods, ensure safe storage with end-to-end traceability for key records, maintain robust IT controls and backup arrangements, and conduct periodic internal audit and compliance reviews. 
• Board papers and minutes: Directors should have access to board papers with sufficient information (including supporting documents) that clearly articulate key risks, assumptions, and considerations. Minutes should be prepared in a timely manner and should completely and accurately record discussions, decisions, dissenting views, and follow-up actions.

Reminders to the Board, Management, and Audit Committee

• The board, management, and audit committee are jointly responsible for establishing and maintaining effective RMIC systems, the effectiveness of which should be monitored on an ongoing basis, with the board confirming their effectiveness at least annually. 
• RMIC systems must be implemented by adequately resourced and qualified staff, with professional advice and technological assistance deployed where appropriate.
• Issuers should provide regular compliance training to all relevant personnel of the issuer and its subsidiaries. 

The Stock Exchange has also updated the Corporate Governance Guide for Boards and Directors to reflect the Practical Tips. For further details, please refer to the Practical Tips. 

2. SFC Enforcement Reporter (Issue No. 7) (April 2026)

The SFC published Enforcement Reporter (Issue No. 7). Please see below for the key highlights:

Sponsor Misconduct

The SFC holds sponsors to demanding due diligence standards. The Enforcement Reporter cited two recent cases of sponsor’s misconduct:

• RaffAello Capital Limited 
  • Paprika Holdings Limited (Paprika) was seeking a GEM listing, with RaffAello Capital Limited (RaffAello) acting as sole sponsor.
  • RaffAello overlooked clear indicators of fabricated retail sales — suspicious consecutive cash transactions within short periods of time across different retail stores, bulk credit card purchases by linked individuals, and invoices treated as revenue — failing to apply professional scepticism or independent verification beyond management’s explanations.
  • RaffAello relied heavily on documents provided by Paprika and did not properly verify whether the reported sales were genuine.
  • Key counterparties had prior ownership ties to one of Paprika’s substantial shareholders; RaffAello did not sufficiently probe independence, commercial substance, or circular transaction risks.
  • Due diligence relied excessively on untested management representations, despite red flags.
  • RaffAello identified some of the issues, but failed to carry out sufficient follow-up investigation to resolve the concerns.
  • RaffAello was reprimanded and fined HK$4 million.
  • The Securities and Futures Appeals Tribunal dismissed RaffAello’s appeal, and affirmed that the SFC’s findings of misconduct and the sanction were appropriate, underscoring that failing to respond properly to red flags in core financial metrics (like revenue) is a serious sponsor breach.
  • The SFC also imposed a two-year industry re-entry ban on the sponsor principal.
• Changjiang Corporate Finance (HK) Limited
  • Changjiang Corporate Finance (HK) Limited (CJCF) acted as sponsor on six separate listing applications within a period of 27 months. The SFC’s investigation concluded that, across these mandates, CJCF’s sponsor work suffered from “serious and extensive failures” rather than isolated or one-off errors.
  • The SFC found systemic weaknesses in CJCF’s policies, procedures, and execution of due diligence, covering key areas such as business model understanding, customer and supplier verification, financial information testing, and internal supervision of sponsor work.
  • CJCF repeatedly failed to perform reasonable due diligence on core business risks and ignored regulatory red flags.
  • CJCF failed to ensure prospectuses disclosed material information required for an informed assessment by regulators and investors. Crucial omissions included key regulatory developments, core profit drivers, and critical details underlying complex financing arrangements and liquidity risks.
  • CJCF failed to critically assess the reliability and commercial credibility of documents.
  • CJCF failed to maintain proper audit trails, verification notes, or documented analyses. Consequently, it could not evidence compliance with its sponsor obligations or demonstrate that material issues were properly considered.
  • CJCF was reprimanded and fined HK$20 million for its serious and extensive sponsor failings.
  • The SFC also imposed a partial suspension of CJCF’s licence barring new SEHK sponsor work for one year, or until the SFC is satisfied that controls are adequate, whichever is later.
  • The SFC also banned a former responsible officer of CJCF from re-entering the industry for seven years for his role in the failings.

Fund Manager Misconduct

• The SFC keeps a close watch on Hong Kong’s asset management industry.
• The SFC continues to take firm and proportionate enforcement action where misconduct is uncovered. This includes imposing significant financial penalties, revoking licences, issuing industry bans, or restricting operations to ensure compliance with regulatory requirements, deter systemic threats, and preserve confidence in Hong Kong’s financial markets.
• The Enforcement Reporter cited a number of recent SFC disciplinary actions in relation to fund manager misconduct. 

For further details, please refer to the SFC Enforcement Reporter (Issuer No. 7). 

3. Uncertificated Securities Market Regime — Launching in November 2026 (March 2026)

The SFC announced that the uncertificated securities market (USM) regime is targeted to be launched on 16 November 2026. Key developments to date are as follows:

• Market participants will be invited to participate in testing in the coming months.
• HKEX and the Federation of Share Registrars Limited (FSR) have also updated their respective Information Papers on USM to include key fee changes under the new regime.
• The SFC is reviewing applications from six FSR members who seek to become Approved Securities Registrars (ASRs). Information on the status of their applications will be published on the SFC’s website in the coming weeks.

A commencement notice will be tabled before the Legislative Council in the second quarter of 2026. The Stock Exchange has amended the Listing Rules to facilitate: the implementation of USM, the establishment of the HKEX Issuer Access Platform (IAP), and housekeeping Rule amendments. The amended Main Board Listing Rules will take effect from the following dates:

• Part A: the day on which Section 7 of the Securities and Futures and Companies Legislation (Amendment) Ordinance 2021 comes into operation — for the implementation of USM;
• Part B: the day of the official launch of the IAP — for the IAP Rule amendments; and
• Part C: 31 March 2026 — for the housekeeping Rule amendments.

Please click here to see the amendments to the Listing Rules. 

Takeover Matters

1. Takeovers Bulletin (Issue No. 76) (March 2026)

The SFC has published takeovers bulletin (Issue No. 76). Please see below the key highlights:

• The SFC observed a number of cases in which advisers engaged by offerors or offeree companies appeared to lack sufficient understanding of the requirements of the Codes on Takeovers and Mergers and Share Buy-backs (the Codes), as shown by sub-standard drafts and incomplete responses.
• When guiding their clients in complying with the Codes, advisers should exercise independent judgement and professional assessment of the implications of the Codes for the transaction in question, rather than simply acting as a middleman to relay their clients’ requests or copying inapplicable precedent disclosures.
• As stated in Section 1.7 of the Introduction to the Codes, if the Executive considers that a financial adviser is not able to meet the expected standard, it may not allow that adviser to act in that capacity.
• Failure to adhere to the requirements of the Codes is likely to result in longer processing time and could lead to disciplinary action against relevant parties.

For further details, please refer to the takeovers bulletin (issue no. 76). 

Conclusion

In summary, issuers and market participants should closely monitor HKEX’s consultation on accelerating settlement to T+1, including the proposed operational model, corporate action timetable changes, and stamp duty arrangements, and assess their operational readiness as the consultation progresses. Potential listing applicants should review the Stock Exchange’s consultation paper on the listing framework competitiveness review. In particular, listing applicants should note the proposed reduction in market capitalisation thresholds for WVR listings, the refinement of the innovative company requirements into two clearer routes (technology and business model), the new option for commercialised biotech and specialist technology companies to list under the applicable specialist chapters, and the expansion of confidential filing to all new applicants. 

Recent enforcement activity highlights expectations on directors’ duties: ensuring accurate and complete disclosures in listing documentation, exercising proper oversight of subsidiary operations and securities dealings, maintaining robust internal controls and compliance infrastructure, escalating significant matters to the board in a timely manner, and cooperating fully with the Stock Exchange’s investigations — an obligation that continues even after the delisting of the issuer or a director’s cessation of office. Issuers should refer to the Stock Exchange’s practical tips on effective risk management and internal control systems which serve as a quick reference to some of the key issues that need to be considered when issuers develop and implement their RMIC systems and prepare ahead for the launch of the uncertificated securities market regime targeted for November 2026.