HKEX Releases Phase 2 Consultation Paper on Listing Regime Review, Proposes Raising Notifiable Transaction Threshold to 50%
nashnova research
HKEX published a consultation paper on September 21 proposing to raise the notifiable-transaction threshold from 25% to 50%, while tightening disclosure and board accountability — this means Hong Kong-listed companies can close deals faster, but transparency requirements actually go up.
What is this reform actually about?
HKEX launched Phase Two of its listing-regime review, targeting corporate-transaction rules for listed issuers — notifiable transactions, connected transactions, and spin-off requirements.
The consultation runs ten weeks, closing November 30, 2026.
The core logic is "loosen one side, tighten the other": cut compliance costs while strengthening disclosure and board accountability. This means → the shift is not deregulation but a pivot from pre-approval gatekeeping to transparency plus after-the-fact accountability.
How are the transaction thresholds changing?
The notifiable-transaction threshold jumps from 5%–25% to 5%–50%; the major-transaction threshold rises from 25% to 50%. In plain terms = deals that used to trigger heavy disclosure now fall below the bar — only truly large transactions will require the full process.
HKEX proposes dropping the "profits ratio" test — the metric most prone to anomalous results — and letting issuers benchmark the consideration ratio against the higher of market cap or net asset value. This means → companies with volatile earnings will no longer be forced into heavier approval procedures by a single extreme ratio.
The "very substantial disposal" and "very substantial acquisition" categories would be eliminated entirely, simplifying the classification framework.
How much lighter does day-to-day business get?
Asset acquisitions or leases made in the ordinary course of business would be exempt from circulars and shareholder approval, even if they cross the major-transaction threshold.
This reflects HKEX's view that routine operations should not be caught by transaction-classification triggers designed for extraordinary deals.
Are disclosure and connected-transaction rules actually getting stricter?
All notifiable-transaction announcements must disclose material deal terms, key financials of the target, and a statement on deal impact — with new situations requiring separate follow-up announcements.
The "connected subsidiary" definition threshold rises from 10% to 30% of voting power controlled by a connected person. In plain terms = a connected person holding a small minority stake no longer automatically triggers the connected-transaction regime.
Annual caps for continuing connected transactions can now be set as a percentage of revenue or other financial metrics, not just a fixed monetary amount — giving issuers more flexible cap-setting.
What does this mean for the market?
HKEX Listing Head Bonnie Y. Chan stated the reform aims to give issuers greater flexibility and certainty, cutting deal cost and time while maintaining investor protection.
This means → if the final rules land as proposed, compliance paths for M&A and connected transactions will shorten significantly — but disclosure quality and board responsibility will ratchet up.
The market still needs to track how the final rules define boundary cases — especially how the 50% threshold applies in practice — throughout the consultation period.
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