SEHK issues guidelines for companies with negative/neglible NTAs

HONG KONG (AFX-ASIA) - The Stock Exchange of Hong Kong has issued a set of guidelines governing companies listed on the exchange with negative or negligible net tangible assets.	    In a statement, the exchange said main board companies with negative or negligible NTAs may apply for a de minimis concession and/or a modification in the calculation of the assets test and consideration tests for the purpose of classifying notifiable transactions.	    The guidelines are aimed at striking a balance between investor protection and allowing companies with negative or negligible NTAs the "appropriate flexibility to carry on their business activities".	    The stock exchange, however, said the modified tests are an interim measure. It is currently considering whether the use of the NTA is still suitable as the basis for reporting, disclosure and shareholders' approval requirements under its listing rules.	    Under the de minimis concession, the assets and consideration tests will not apply, and the value of each transaction should not exceed 1 mln hkd.	    Those with negative or negligible NTAs due to factors other than operating losses can apply for a modified calculation concession, whereby the assets test and consideration test would be calculated based on the gross assets of the company, less intangibles and liabilities.	    In addition, a different set of indicative percentage ratios will be used to determine applicable disclosure or approval requirements, it said.	    The SEHK will consider each application based on its own merits, using the guidelines. Once an application is approved, the company is required to inform investors of the concession given and the period for which it is applicable.	    The approved concessions will be valid from the date of approval to the publication or the due date of the next annual report of the company, whichever is earlier, it said.	    The SEHK said it may also impose further conditions on individual companies, where appropriate. 	    It will not consider applications for concessions from companies that have not released their final or interim results, it said.	    Further, it will not approve an application where there have been unusual market fluctuations in the price and/or volume in the company shares. 

Related stock : (NIL)