HONG KONG Law and Practice Contributed by: Vincent Sum and Sylvia Leung, Mayer Brown
tor the refund received from the relevant issuer, although the arranger may charge a reasonable administrative fee for such services. In addition to the SFC’s Code of Conduct, inves - tors may also rely on the protections provided in relation to disclosure laws and regulations appli - cable to the issuance of debt securities (see 4.2 General Disclosure Laws or Regulations ). SFC’s regulatory powers The SFC is the principal regulator. Under the SFO, the SFC has broad investigation and enforcement powers in relation to violations of the SFO or non-compliance with SFC’s Code of Conduct. If the SFC finds that a regulated per - son’s conduct suggests misconduct or demon - strates that they are not fit and proper, it has the authority to impose sanctions, which can include public reprimands, fines, or even revocation of licences. The SFC’s Disciplinary Fining Guidelines provide a framework for determining the level of fines, taking into account factors such as the seri - ousness of the misconduct, its impact, and the regulated person’s conduct after the violation. The specific penalty depends on the nature and severity of the violation, and the SFC assesses each case individually. Investor protection under the HKEx regime If debt securities are issued publicly, they are usually listed on the Hong Kong Stock Exchange (HKEx) (although they could be listed on a for - eign stock exchange) and subject to the Listing Rules of the HKEx on the listing of debt securi - ties, including: • in an offering to retail investors, if the shares of the issuer or the guarantor (in the case of a guaranteed issue) are not listed, the issuer
or the guarantor must have total sharehold - ers’ funds of at least HKD100 million, and the nominal amount of each class of debt secu - rities for which listing is sought must be at least HKD50 million; and • in an offering to professional investors, effective from 1 November 2020, the issuer (whether a corporation or an investment trust) must have minimum net assets of HKD1 billion (unless it is a state corporation or its shares are listed) and is subject to a minimum issue size requirement of HKD100 million. Disclosure obligations – Chapter 37 of HKEx’s Listing Rules Under the Listing Rules, certain disclosure requirements and continuing obligations apply specifically to the issuer and guarantor (if any) of the listed debt securities. For example, under Chapter 37 of the Listing Rules, issuers and guarantors are required to, without limitation: • respond promptly to the HKEx’s enquiries in relation to unusual movements in the price or trading volume or the possible development of a false trading market or any other matters in relation to the listed debt securities, and, if requested, to publish announcements to inform the market or to clarify such matters; • announce any information that may have a material effect on their ability to meet their obligations under the listed debt securities; and • publish announcements relating to: (a) a default on its listed debt securities, which would include but is not limited to any cross-default of the listed debt securities triggered by a default on other obligations of the issuer or the guarantor; and (b) the appointment of a receiver or man - ager, a winding-up, a liquidation and/or
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