Standard Codes


EXPLANATORY NOTES TO DI NOTICES

FORM 2  – CORPORATE SUBSTANTIAL SHAREHOLDER NOTICE

 

General Notes

 

 

1.                    These Explanatory Notes explain the entries that can be seen on a search report that shows a DI notice “Form 2 - Corporate Substantial shareholder Notice”.  Form 2 is for use by a corporation disclosing a notifiable interest in a Hong Kong listed corporation under Part XV of the Securities and Futures Ordinance (Cap.571)(“the Ordinance”).  The substantial shareholder must file the notice with The Stock Exchange of Hong Kong Limited (“SEHK”) and the listed corporation concerned at the same time or one immediately after the other. 

 

2.                    A series of numbers and titles appears on the screen starting with “1. Name of listed corporation”. The numbers correspond to the numbers on the boxes of Form 2 and the titles are the descriptions of the boxes on Form 2. The information opposite the titles, or shown in the boxes on the search report, is the information that has been entered by the substantial shareholder on the Form. The information on the form is not checked before being entered on the database and if incorrect information is disclosed by the substantial shareholder then the same information will be reproduced in the search result, uncorrected.

 

3.                    Substantial shareholders are only required to complete boxes that apply to them so you may find several numbers/boxes are blank. In addition, boxes 8 to 12 contain business registration/certificate of incorporation numbers and contact information that cannot be viewed by the public. Unless a substantial shareholder has disclosed that he has a short position the rows on Form 2 entitled “short position” are also not shown on the search report. You can download a blank copy of Form 2 and the detailed Notes giving directions and instructions on completing the Form by visiting the HKEx web-site at  https://sdinotice.hkex.com.hk

 

4.                    Each Form 2 should have been completed in accordance with the directions and instructions in the Notes to the form. These explanatory notes mirror the directions and instructions in the Notes to Form 2. The information on the form can also be viewed by inspecting the register of Register of Interests in Shares and Short Positions of Substantial Shareholders maintained by the listed corporation concerned. 

 

Meaning of “notifiable interest”, “shares”, ”substantial shareholder” in these Notes.

 

5.                    A “notifiable interest” is an interest of 5% or more of the voting shares of a Hong Kong listed corporation (in Form 2 and these Notes shortened to “shares”).  Form 2 and these Notes use the term “substantial shareholder” to describe a person with a notifiable interest.  

 

“Relevant event”

 

6.                    A substantial shareholder must give notification of interests in shares of a listed corporation, and any “short position” (explained in note 12 below) on the occurrence of certain events - called “relevant events” (see s. 308 of the Ordinance).   Relevant events include :

 

(i)                   When a substantial shareholder first becomes interested in 5% or more of the shares of a listed corporation (i.e. when it first acquires a notifiable interest).

(ii)                 When its  interest drops below 5% (i.e. it ceases to have a notifiable interest ).

(iii)                When there is an increase or decrease in the percentage level of its holding that results in its interest crossing over a whole percentage number which is above 5% (e.g. its interest increases from 6.8% to 7.1% - crossing over 7%).

(iv)               When a substantial shareholder has a notifiable interest and the nature of its interest in the shares changes ( e.g. on exercise of an option).

(v)                 When a substantial shareholder has a notifiable interest and it come to have, or cease to have, a short position of more than 1% (e.g. it is it is already interested in 6.8% of the shares of a listed company and take a short position of 1.9%).

(vi)               When a substantial shareholder has a notifiable interest and there is an increase or decrease in the percentage level of its  short position that results in its short position crossing over a whole percentage number which is above 1%. (e.g. it is it is already interested in 6.8% of the shares of a listed company and increases its  short position from 1.9% to 2.1%).

(vii)              If a substantial shareholder has an interest in 5% or more of the shares of a corporation that is being listed, shares of a class that is being listed, or shares of a class which are being given full voting rights..

(viii)            On commencement of the Ordinance, if a substantial shareholder has an interest in 5% or more of the shares of a listed corporation, or if it has a notifiable interest and a short position of 1% or more, which has not previously been disclosed.

(ix)                If the 5% threshold is reduced or the 1 % threshold for short positions is reduced.

 

A notification of relevant events (vii) to (ix) is described in Form 2 and these Notes as an “Initial Notification”.

 

Relevant event (iv) may not always give rise to a duty to give a notification. The change in the nature of its  interest is not required to be reported if the percentage level of its  interest that has not changed, and the percentage level of its interest at the last notification given by it is the same. For example, if a substantial shareholder has an interest in 5.6% of the shares of a listed corporation and lends 0.5% the percentage level of its  interest that has not changed is 5.0% (i.e. 5.6% less 0.5% equals a percentage figure of 5.1% which is then rounded down to a percentage level of 5.0%) and no notification need be made. However, if it has an interest in 5.6% of the shares of a listed corporation and lend 1.0% the percentage level of its interest that has not changed is 4.0% (i.e. a percentage figure of 4.6% rounded down to a percentage level of 4.0%) and a notification must be made.

 

Timing of notification

 

6.             In the case of events (i) to (vi) in Note 5, a substantial shareholder must give the notification within 3 business days of the day on which it became aware of the relevant event. The term “business day” means a day other than a public holiday and a day on which a black rainstorm warning, or a gale warning, is in force i.e. it would normally include Saturdays but not Sundays. The period is calculated excluding the day that the relevant event occurred.

 

For an Initial Notification, a substantial shareholder must normally give the notification on this Form 2 within 10 business days after the relevant event.  However, if at that date it was not aware that it had a notifiable interest, or a short position, then it must give the notification within 10 business days of the day it became aware that it had such an interest or short position.

 

The period allowed for filing a notice runs from the time the substantial shareholder knows of the facts that constitute the event (e.g. the purchase of the shares, the delivery of the shares, the buy back of shares by the listed corporation), not the day that it realizes that the event gave rise to a duty of disclosure under Part XV.

 

Working out the percentage figure of its  interest

 

7.             In Boxes 18 and 19 of Form 2 a substantial shareholder is asked to state the percentage figure of itsinterest. To work this out it expresses the total number of shares in which it is interested as a percentage of the number of shares of the listed corporation in issue (i.e. the number in Box 4). This figure is then rounded to two decimal places. To work out the percentage level of an interest you simply round down the percentage figure of the interest to the next whole number.

 

8.             In calculating the total number of shares in which a substantial shareholder is interested it must include all joint interests (see Note to Box 23 below) interests through derivatives  (see Note 10 below) and any such interests in shares of the same listed corporation that any of the following persons and trusts have :

 

(i)                   A corporation which it controls (i.e. a corporation is a “controlled corporation” if it controls one-third or more of the voting power at general meetings of the corporation, or if the corporation or its directors are accustomed to act in accordance with it’s directions) (see notes to Box 22);

(ii)                 A trust, if it is a trustee of the trust (other than a trust where it is a bare trustee i.e. where it have no powers or duties except to transfer the shares according to the directions of the beneficial owner) (see notes to Box 24);

(iii)                A discretionary trust, if it is the “founder” of the trust (e.g. it had the trust set up or put assets into it and can influence how the trustee exercises his discretion (see notes to Box 24);

(iv)               A trust of which it is a beneficiary (discretionary interests may be ignored);

(v)                 All persons who have agreed to acquire interests in shares in the listed corporation, if it is a party to the agreement (see notes to Box 25).

 

9.                    A substantial shareholder must also count as its short position any short positions that the persons and trusts mentioned in Note 8 have.  This may create a short position (if it does not have a short position already) or increases the size of its short position.

 

10.                 In calculating the level of its interest in shares a substantial shareholder must add together both direct and indirect interests. It must not net off long positions and short positions but must disclose these separately.  Indirect interests include interests in shares underlying “equity derivatives”. Equity derivatives include instruments such as options, warrants, stock futures and are referred to in these notes as “derivatives”. “Underlying shares” are the shares that may be required to be delivered to a person, or by a person, under the derivatives, and include the shares used to determine the price or value of the derivatives (e.g. In the case of an issue of “European Style Cash Settled Call Warrants 2001-2002 relating to ordinary shares of HK$10.00 each in XYZ Ltd. issued by ABC Investment Bank” the “underlying shares” are ordinary shares of HK$10.00 each in XYZ Ltd.).

 

“Long positions” and “short positions”

 

11.                 A substantial shareholder have a “long position” if it has an interest in shares , including interests through holding, writing or issuing  derivatives under which, for example :

 

(i)                   it has a right to take the underlying shares;

(ii)                 it is under an obligation to take the underlying shares;

(iii)                it has a right to receive money if the price of the underlying shares increases; or

(iv)               it has a right to avoid or reduce a loss if the price of the underlying shares increases.

 

12.                 A substantial shareholder has a “short position” if it borrows shares under a securities borrowing and lending agreement, or if it holds, writes or issues financial instruments (including derivatives) under which, for example:

 

(i)                   it has a right to require another person to take the underlying shares;

(ii)                 it is under an obligation to deliver the underlying shares;

(iii)                it has a right to receive money if the price of the underlying shares declines; or

(iv)               it has a right to avoid a loss if the price of the underlying shares declines.

 

13.                 The number of shares in which a substantial shareholder is taken to be interested, or to have a short position, through derivatives is:

 

(i)                   the number of shares required to be delivered to it, or by it, under the derivatives;

(ii)                 the number of shares by reference to which the amount payable under the derivatives is derived or determined; or

(iii)                (in the case of stock futures contracts) the contract multiplier times the number of contracts it holds. 

If any party to a derivative can choose whether to settle in cash or by delivery then use (i) to work out the number of shares in which it is interested. If it is not possible to determine the number of shares in which a substantial shareholder is taken to be interested (or have a short position) at the date when it first acquires an interest in the underlying shares through an equity derivative then it need not file a notice. However, it should file a notice when it first becomes aware of the number of shares that will be delivered to him/will be required to be delivered by him. For example, if the number of shares that it will receive under an equity derivative is determined by the price of the shares on a given date in the future (and there is no minimum or maximum number that it is bound to get) then no duty of disclosure arises on entering into the derivative. Once the number of shares that it will receive is known a duty of disclosure arises.

 

 

16.           Persons are asked not to send copies of share purchase agreements and other documents to SEHK or the listed corporation concerned when filing Form 2 (except as indicated in the Notes to Box 25). Attaching a document that explains the transaction in question does not discharge the duty to complete the prescribed form. Copies of any documents that are sent to SEHK are maintained in a register and are available for inspection by the public. To inspect these documents please contact SEHK.

 

17.           The “Outline of Part XV” (“Outline”) published by the Securities and Futures Commission (“SFC”) gives further guidance on the situations in which a notice has to be filed under Part XV. A copy of the Outline can be downloaded from the SFC’s web site http://www.hksfc.org.hk.

 

Specific Notes

 

 

If the substantial shareholder is giving notification that it has ceased to have a notifiable interest then it need only complete boxes 1 to 19 and 27 of Form 2.  In the case of other events all boxes which apply to it should be completed.  If there are some boxes in the Form that do not apply to a substantial shareholder it is directed that these should be either left blank or he should insert “NIL”.

 

Persons giving notice under section 5(4) of the Securities and Futures (Disclosure of Interests – Securities Borrowing and Lending) Rules (L.N. 219 of 2002) should read the notes on page 11.

 

Box 1      A substantial shareholder is directed to complete the name of the listed corporation in whose shares it is interested.

 

Box 3      A few corporations have two classes of share capital, each with voting rights (e.g. “A” and “B” shares).  A substantial shareholder is directed to state the class of shares in which it is interested.  If it it has an interest in 5% or more of two classes of shares then it should complete a separate notice for each class of shares.

 

Box 4      A substantial shareholder is directed to state the number of shares (in the class of shares in which it is interested) which have been issued at the date of the relevant event.  If the number of shares in issue is greater immediately after the relevant event than it was immediately before that event then it should state the higher figure. It can find the number of shares issued on the HKEx Web Site or it can ask the corporation.

 

Boxes 5 to 12. A substantial shareholder should have stated the details as indicated. It is asked to state its company name in full as it appears on the certificate of incorporation. It should only complete Box 8 if it has a Hong Kong business registration number. In Box 9 it should state the place where it was incorporated and give the number on the certificate of incorporation. The data entered in Boxes 8 to 12 is not be available for viewing by the public when searching the DI pages of the HKEx web-site. 

 

Box 13    If it is a listed corporation it should state the name of the exchange on which it is listed.

 

Box 14    If its parent company is a listed corporation it should state the name of its listed parent and the exchange on which it is listed. If its parent company is listed on several exchanges it should give the primary listing.

 

Box 15    A substantial shareholder is directed to state the date of the relevant event (explained in Note 4) which gave rise to the duty of disclosure. 

 

Box 16    In the case of events (i) to (vi) in Note 5, if it became aware of the relevant event on a date later than the date that it occurred, then it should put the date that it became aware of the  event that triggers the reporting obligation in Box 16.

 

For an Initial Notification, if it was not aware that it had an interest, or a short position at the date of the relevant event, or was not aware that it had 5% or more of the shares of the listed corporation, then it should have put the date that it became aware that it had such an interest in the shares in Box 16.

 

Box 17    Box 17 asks for details of the relevant event.  This is the event that triggers the Notice.  In the case of relevant events (i) to (viii) in Note 5 the details that it must give in Box 17 relate to the shares bought/sold or involved at that time – not the shares which it already has. Where the relevant event is prompted by a transaction that forms part of a series of transactions effected on the same day, the details of the relevant event that it gives in Box 17 shall relate to all shares in which it acquired an interest, ceased to have an interest or the nature of its interest changed on that day as a result of that series of transactions.

 

In the case of an Initial Notification in Box 17 it need only complete column 2 (as the notification is not prompted by the acquisition or disposal of an interest in shares).

 

In Box 17 column 2 it should have entered the Code from Table 1 below which best describes the relevant event. It will see from Note 8 above that if a person connected with the substantial shareholder acquires an interest in shares their interest will be treated as its interest.  For example, if a company that it controls first acquired 5% or more of the shares of a listed corporation the controlled corporation would use Code 101 and the substantial shareholder should  treat the acquisition as his acquisition and use the appropriate Code – in this case Code 101 if it did not already have a notifiable interest itself.

 

A substantial shareholder is directed to use the row entitled “short position” if it is filing the notice because of a change in a short position. The normal position is that either a long position or a short position will give rise to a duty of disclosure (not both simultaneously). However if the transaction creates both a long and a short position simultaneously (such as borrowing shares which gives rise to both a long and a short position) then it can complete both rows.  

 

 

 

Table 1 – Event or change

 

Code

LONG POSITIONS

 

First acquiring a notifiable interest

 

First becoming interested in 5% or more of the shares of the listed corporation.  This includes all acquisitions whether by purchase or gift, or by rights/bonus issue and taking steps to enforce rights in respect of shares held by way of security

101

Ceasing to have a notifiable  interest

 

Ceasing to have an interest in at least 5% of the shares of the listed corporation

102

Change in the percentage level of its interest

 

Acquisition or disposal resulting in the percentage level of its interest crossing over a whole percentage number (e.g. its interest increases from 6.8 % to 7.1 % - crossing over 7 %)

103

Event (other than an acquisition or disposal) resulting in the percentage level of its interest in shares of the listed corporation crossing over a whole percentage number (e.g. there is a change in the issued share capital of a listed corporation so that its interest reduces from 7.1 % to 6.8 % - crossing over 7 %)

104

Changes in nature of an interest

 

Exercise of a right or an option if it has 5% or more of the shares of the listed corporation

105

Lending of shares under a securities borrowing and lending agreement if it has 5% or more of the shares of the listed corporation

106

Return of shares of the listed corporation lent under a securities borrowing and lending agreement if it has (or had immediately before the return of the shares) 5% or more of the shares of the listed corporation

107

Other events

 

On listing of the corporation if it has 5% or more of the shares of the corporation

108

On listing of a class of shares of a listed corporation if it has 5% or more of the shares of that class

109

On commencement of the Ordinance if it has 5% or more of the shares of a listed corporation and such interest was not disclosed under the Securities (Disclosure of Interests) Ordinance (Cap.396) before its repeal

110

SHORT POSITIONS

 

Coming to have a short position of 1% (if it also has 5% or more of the shares of the listed corporation).  This includes a short position through holding derivatives and borrowing shares under a securities borrowing and lending agreement

111

Ceasing to have a short position of 1% (if it also has 5% or more of the shares of the listed corporation)

112

Acquisition or disposal or other event resulting in the percentage level of its short position crossing over a whole percentage number which is above 1%  (if it also has 5% or more of the shares of the listed corporation) e.g. its short position increases from 1.9% to 2.1% - crossing over 2%

113

On commencement of the Ordinance if it has a short position in the shares of a listed corporation of 1% or more (if it also have 5% or more of the shares of the listed corporation)

114

MISCELLANEOUS  (long and short positions)

 

Voluntary disclosure

115

Notice under section 5(4) of the Securities and Futures (Disclosure of Interests – Securities Borrowing and Lending) Rules (L.N. 219 of 2002)

116

Other (This covers any notifiable event not mentioned above)

117

 

 

 

A substantial shareholder is directed to select from Table 2 below the Code which best describes the capacity or nature of its interest and enter the Code in Box 17 column 3 and/or 4. If it has disposed of an interest in shares it should choose the Code describing the capacity in which it held the shares immediately before it disposed of them and enter this Code in Box 17 column 3. If it has acquired an interest in shares it should choose the Code describing the capacity in which it held the shares immediately after it acquired them and enter this Code in Box 17 column 4. If it is giving notice of a change in the nature of its  interest in shares, it should complete the Codes describing the capacity in which it held its  interest in those shares before and after the relevant event i.e it must complete both columns 3 and 4.  If it is, or was, the beneficial owner but another Code also applies, a substantial shareholder is directed to use the latter Code rather than Code 201.       

 

A substantial shareholder is directed to use the row entitled “short position” if it is filing the notice because of a change in a short position.

 

 

Table 2 – Capacity

 

Code

Beneficial owner

201

Investment manager 

202

Person having a security interest in shares

203

Interests by attribution

 

Interest of corporation controlled by  the substantial shareholder

205

Trusts and similar interests

 

Nominee for another person (other than a bare trustee)

206

Trustee (other than a bare trustee)

207

Custodian corporation/approved lending agent 

208

Founder of a discretionary trust

209

Beneficiary of a trust (other than a discretionary interest)

210

Persons acting in concert

 

Interests of any parties to an agreement to acquire interests in a particular listed corporation required to be disclosed under s.  317 (1)(a) and s. 318

211

Interests of any parties to an agreement to acquire interests in a particular listed corporation required to be disclosed under s.  317 (1)(b) and s. 318 (controlling shareholder providing cash/making a loan to other parties to such an agreement)

212

Miscellaneous

 

Interests held jointly with another person

213

Other

214

 

 

In Box 17 column 5 it should have stated the number of shares concerned (e.g. the number of shares it bought that triggered the Notice).  For a change in the nature of an interest (e.g. on exercise of an option) it should have stated the number of shares affected by the change.

 

In Box 17 column 6 it should have chosen the currency in which the price for the interest in shares described in column 5 was paid or received. 

 

Lastly, it should have stated the consideration per share paid or received (for the interest in shares described in column 5) in columns 7/8 or 9/10 of Box 17 under “On Exchange” or “Off Exchange” as appropriate. In column 7 it should state the highest price per share whilst in columns 8 and 9 it should state the average price/consideration per share.  An acquisition or disposal is made “On-Exchange” when the transaction took place in the ordinary course of trading on a recognized exchange and “Off-Exchange” covers all other transactions. If no price or consideration has been paid or received, or if the consideration is services provided,  the price or consideration should be stated as “0”. Codes describing the principal types of consideration for Off-Exchange transactions are set out in Table 3 below. Using Table 3 it should have selected the Code which best describes the nature of the consideration it paid or received and entered it in Box 17 column 10.  If the transaction that prompts disclosure is a change in the nature of its interest in shares (e.g. a securities borrowing and lending transaction), a transaction in derivatives, or a change in a short position, the highest price per share and the average price per share (average amount and nature of the consideration for off-exchange trades) should have been left blank.

 

 

Table 3 -Nature of consideration

Code

Nature of consideration

 

Code

Cash

301

Surrender of rights to shares

303

Assets other than cash

302

Services

304

               

 

Example of how to complete Box 17.

 

We have set out below an example of how Box 17 should have been completed.  Assume that the person completing the form is a substantial shareholder who already owns 4,500,000 shares in the listed corporation or 4.5% of the shares in issue.  On 31st December 2003 it purchased (through the Stock Exchange) 400,000 shares for HK$800,000 and 100,000 shares for HK$210,000 (all shares to be held beneficially) increasing its total shareholding to 5%.  As the two transactions are a series of transactions on the same date the details of the relevant event that it should give in Box 17 relate to the purchase of 500,000 shares - which is the relevant event. The date of the relevant event to be inserted in Box 15 would be “31.12.2003” and it should complete Box 17 in the following manner.  The Codes to be used are described below.

 

 

17. Details of relevant event

 

 

Relevant event code describing circumstances ( see Table 1)

Code describing capacity in which shares were held (see Table 2)

Number of shares bought/ sold or involved

Currency

On Exchange

Off Exchange

 

Before relevant event

 

After relevant event

 

 

Highest price per share

Average price per share

Average consideration per share

Consideration Code  (see Table 3)

Long position

101

 

201

500,000

HKD

2.10

2.02

0

 

Short position

 

 

 

 

 

 

 

 

 

 

 

Box 18    In column 2 of Box 18 a substantial shareholder is directed to state the total number of shares in which it were interested, and those in which it had a short position, immediately before the relevant event. This figure includes all joint interests, interests through equity derivatives and deemed interests (see note 8).  In column 3 it should state the percentage figure of its interest, and short position (if any), immediately before the relevant event.  Note 7 explains how to calculate the percentage figure.

 

                Unless it is giving a notice under section 5(4) of the Securities and Futures (Disclosure of Interests – Securities Borrowing and Lending) Rules (L.N. 219 of 2002) a substantial shareholder will ignore row 3 of Box 18. 

 

Box 19    A substantial shareholder should complete Box 19 in the same manner as Box 18 specifying the number of shares in which it was interested, and those in which it had a short position immediately after the date of the relevant event. This figure includes all joint interests, interests through equity derivatives and deemed interests (see note 8).

 

                Unless it is giving a notice under section 5(4) of the Securities and Futures (Disclosure of Interests – Securities Borrowing and Lending) Rules (L.N. 219 of 2002) a substantial shareholder will ignore row 3 of Box 19. 

 

Box 20    A substantial shareholder should have selected from Table 2 the Code which best describes the capacity in which it held the shares listed in Box 19 and entered it in Box 20 column 1.  If it held some of its interests in one capacity (e.g. as beneficial owner), and other interests in another capacity (e.g. as trustee) then it should have used two Codes (on different rows) and stated the number of the interests in shares held in each capacity (on different rows) in column 2.     

 

If it also has a short position it should have stated the capacity or capacities in which it held that short position, using the appropriate Code(s), in column 3. 

 

 

Derivative interests

 

Box 21    If it derives all or part of its interest in shares (or its short position) which are listed in Box 19 from equity derivatives, it should have selected from Table 4 below the Code which best describes the derivatives that it holds and entered that Code in Box 21 column 1. It should have stated the number of shares in which it derives an interest (or a short position) from the derivatives in column 2 (or 3).  Note 13 explains how to work this out. If it has more than one derivative of the same category, it should have added them together and stated the total number (in one row) in column 2 (or 3).

 

If it has more than one derivative but they are in different categories it should have used 2 or more codes (on different rows) and stated the number of shares for each category of derivative (on different rows) in column 2 (or 3).

 

 

Table 4 - Category of derivatives

Code

Category of derivatives

 

Code

Derivatives listed or traded  on a Stock Exchange or traded on a Futures Exchange

 

Unlisted derivatives

 

Physically settled

401

Physically settled

403

Cash settled

402

Cash settled

404

 

 

If any party to a derivative can choose whether to settle in cash or by delivery then it should treat that derivative as physically settled.

 

 

Interests held by a corporation which it control

 

Box 22    If the substantial shareholder is entitled to exercise, or control the exercise of, one-third or more of the voting power at general meetings of a corporation, or the corporation or its directors are accustomed to act in accordance with its directions, and that corporation is interested in shares of the listed corporation concerned then give details of that corporation (referred to in these notes as a “controlled corporation”) in Box 22. If there is more than one corporation that it controls then details of each controlled corporation must be stated separately in Box 22.

The substantial shareholder must also add the controlled corporation’s interest to its interests in working out whether it is under a duty of disclosure and when completing Boxes 17 to 21. If the corporation which it controls also has a short position then the same principles apply. 

 

A substantial shareholder is directed to complete Box 22 as follows –

 

Column 1 :  State the name of the controlled corporation starting with the top controlled corporation in the group (if you control more than one corporation).

Column 2 :  State the address and place of incorporation (in brackets) of the controlled corporation.

Column 3 :  If it controls the controlled corporation state its name in column 3.  If another corporation named in column 1 of Box 22 controls the controlled corporation then state that corporation’s name in column 3. (The substantial shareholder’s name will normally appear in the first row of column 3. The controlled corporation named in the first row of column 1 normally appears in the second row of column 3 and so on). 

Column 4 : State the percentage of the shares in the controlled corporation that the person named in column 3 of the same row controls.

Column 5 : If the controlled corporation holds the interest in shares of the listed corporation directly (as opposed to the interest being a deemed interest) place a  “Y” in column 5, if the interest is a deemed interest  place a “N” in column 5. If the controlled corporation holds some shares of the listed corporation directly, and some shares indirectly, details of the interest held directly should be given in one row of Box 22 and the shares held indirectly (the deemed interest) should be given in the following row (see the example below where the direct and indirect interests of Wong Industries Ltd. are stated separately).

Column 6 and 7 :  State the number of shares of the listed corporation in which the controlled corporation is interested (has a short position). 

 

 

Example of how Box 22 should have been completed. 

 

Assume that Wong Holdings Limited owns 100% of the shares in a private corporation ABC (Hong Kong) Ltd. which owns 51% of the shares in DEF (Hong Kong) Ltd. which owns 35% of GHI (Hong Kong) Ltd. and 65% of Wong Industries Ltd. Wong Industries Ltd. in turn owns 100% of the shares in Wong Asset Management Ltd.

 

The group holdings in XYZ Ltd. (a listed corporation) are as follows : GHI (Hong Kong) Ltd. has a call option over 25,000,000 shares (physically settled) and has a short position in 10,000,000 shares under a cash settled equity derivative (details of these derivative interests will have been given in Box 21). Wong Industries Ltd. owns 10,000,000 shares and Wong Asset Management Ltd. owns 15,000,000 shares.

 

 

 

Group Structure and holdings

 

 

 

 

 

         Wong Holdings Ltd.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     ABC ( Hong Kong ) Ltd.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     DEF ( Hong Kong ) Ltd.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35%

 

 

 

 

 

 

65%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      GHI ( Hong Kong ) Ltd.

 

 

          Wong Industries Ltd.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 25,000,000 shares

 

 

 

 

 

 

100%

 

 

 

 

  (10,000,000 short position)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000,000 shares

 

Wong Asset Management Ltd.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,000,000 shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                             XYZ Ltd.

                ( A listed corporation )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In this example the entries in Box 22 would be as follows –

 

 

22. Further information in relation to interests of corporations controlled by substantial shareholder #

 

Name of controlled corporation

Address and place of incorporation

Name of controlling

Shareholder

 

   %

control

Direct

Interest

(Y/N)

Number of shares

Long positions

Short positions

ABC (Hong Kong) Ltd.

Unit 1, 26/F Wong Industrial Bldg

Chai Wan, HK (Hong Kong)

Wong Holdings Ltd

100%

 N

50,000,000

10,000,000

DEF (Hong Kong) Ltd.

Unit 1, 26/F Wong Industrial Bldg

Chai Wan, HK (Hong Kong)

ABC (Hong Kong) Ltd.

51%

N

50,000,000

10,000,000

GHI (Hong Kong) Ltd.

Unit 1, 26/F Wong Industrial Bldg

Chai Wan, HK (Hong Kong)

DEF (Hong Kong) Ltd.

35%

Y

25,000,000

10,000,000

Wong Industries Ltd.

Unit 1, 26/F Wong Industrial Bldg

Chai Wan, HK (Bermuda)

DEF (Hong Kong) Ltd.

65%

Y

10,000,000

 

Wong Industries Ltd.

Unit 1, 26/F Wong Industrial Bldg

Chai Wan, HK (Bermuda)

DEF (Hong Kong) Ltd.

65%

N

15,000,000

 

Wong Asset

Management Ltd.

Unit 1, 26/F Wong Industrial Bldg

Chai Wan, HK (British Virgin

Islands)

Wong Industries Ltd.

100%

Y

15,000,000

 

 

 

Joint interests

 

Box 23    If it is interested in shares of the listed corporation concerned jointly with another person then they are both taken to be interested in all of the shares held jointly in calculating whether they each have to file a notice, and in completing Boxes 17 to 21. It should have stated the name of the person who owns the interest in the shares jointly with the substantial shareholder, his/her address and the number of shares in which he/she is interested in Box 23.

 

The same principles apply to short positions held jointly.

 

 

Interests of trustee or beneficiary of a trust or founder of a discretionary trust

 

Box 24    If it is a trustee of a trust, a beneficiary of a trust, or if it is the “founder” of a discretionary trust ( e.g. it had a discretionary trust set up or put assets into it (and can influence how the trustee exercises his discretion), then it should have added all of the shares in which the trust has an interest (or a short position) to its  interests in working out whether it must file a notice. It should have disclosed details of that interest (or short position) when completing Boxes 17 to 21. It may have stated the name of the Trust which owns the interest in the shares and its address in Box 24, columns 1 and 2 but is not required to do so if he wishes these details to remain private. Box 22 columns 1 and 2. It should have selected from Table 5 below the Code which best describes its status in relation to the trust and enter the Code in Box 24 column 3.  It should have stated the number of shares in which the trust is interested (has a short position) in Box 24 column 4.(and 5).   It should have ignored an interest in reversion or remainder, an interest of a bare trustee, and any discretionary interest (of a beneficiary).

 

               

Table 5 - Status in relation to a trust

 

Code

Trustee of a trust

501

Beneficiary of a trust

502

Founder of a discretionary trust

503

 

 

Persons acting in concert

 

Box 25    If it is a party to an agreement with other parties to acquire interests in shares in the listed corporation in Box 1 in the circumstances set out in s. 317 (1)(a) or (b) then it will have added any shares in which any other party to the agreement is interested to its own interests in working out whether it must file a notice. Details of the interests of any other party must also have been taken into account in completing Boxes 17 to 21.  It must state the name of each of the other parties to the agreement, his/her address and the number of shares in which he/she is interested apart from the agreement in Box 25.  In the last row of Box 25 it must state the number of shares in which it is interested under sections 317 and 318. This will be the total of firstly all shares which have been purchased pursuant to the agreement by any of the parties to the agreement and secondly all shares in which the other parties to the agreement are interested apart from the agreement” (defined in s. 318(2)).

 

Example of how to complete Box 25

 

For example, assume that Wong Holdings Ltd and 2 other persons agree to buy shares in XYZ Ltd. (a listed corporation). They are each already interested in a number of shares of XYZ Ltd. which they purchased before they entered into the s.317 agreement. Under the s.317 agreement they each purchased a further 20,000,000 shares in XYZ Ltd. Their shareholdings are as follows –

 

Concert party

Number of shares apart from the s.317 agreement

Number of shares purchased pursuant to the s.317 agreement
Total

 

 

 

 

Wong Holdings Ltd.

50,000,000

20,000,000

70,000,000

Mr. A

4,000,000

20,000,000

24,000,000

Mr. B

2,000,000

20,000,000

22,000,000

 

 

 

 

Totals

56,000,000

60,000,000

116,000,000

 

 

                Assume also that Wong Holdings Ltd. is completing the notice. It will have already stated in Box 19 that it is interested in 116,000,000 shares. It has to state the number of shares in which the other parties are interested “apart from the agreement” and the total shares in which he is interested by the application of s.317 and 318 (the 60,000,000 shares bought pursuant to the agreement and the further shares that the other parties are interested in “apart from the agreement”). Accordingly, Mr. Wong  will then complete Box 25 as follows –

 

   25. Further information from a party to an agreement under section 317 (Please see Notes for further information required)

 

Names of other parties

Address

Number of shares

Mr. A

Unit 1, 25/F Wong Industrial Bldg, Chai Wan, HK

4,000,000

Mr. B

Unit 1, 24/F Wong Industrial Bldg, Chai Wan, HK

2,000,000

 

 

 

Total number of shares in which substantial shareholder is interested under section 317 and 318

66,000,000

 

 

 

                It must also  -

 

(i)                   attach a separate sheet to the notification stating that it is a party to an agreement to which s. 317 (1)(a) or (b) applies;

(ii)                 include a copy of any written agreement, contract or other document which records any terms or details of the agreement; and

(iii)                if there are no such papers as are mentioned in (ii), or if such papers do not record the material terms of the agreement, include a written memorandum setting out the material terms of the agreement. 

 

The memorandum required under (iii) should include details of any cash or consideration involved and the identity of all persons between whom such cash or other consideration is passed or is intended to pass. If the parties are interested in any derivatives, the exercise or conversion price, expiration date and exercise period should be disclosed. The memorandum must be signed by the substantial shareholder or his duly authorized agent.

 

                A notification that a person has ceased to be a party to an agreement to which s. 317 (1)(a) or (b) applies shall also state that he or the other party (as the case may be) has ceased to be a party to the agreement and, in the latter case, include the name and address of the other party.

 

Details of person(s) in accordance with whose directions it or its  directors are accustomed to act

 

Box 26    If you, or its directors, are accustomed or obliged to act in accordance with the directions or instructions of any person, or persons, (referred to in these notes as a “controller”) it should must state the name and address of each such person in Box 26.  It should have selected from Table 6 below the Code which best describes the relationship of the controller to it and enter that Code in Box 26 column 3. State the percentage of its shares that the controller owns.

 

Table 6 – Relationship with controller

Code

 

Controller is its immediate holding company

601

Controller is its intermediate holding company

602

Controller is its ultimate holding company

603

Controller is a director

604

Controller is a shadow director

605

Other

606

 

It need not complete Box 26 if it is a listed corporation or the wholly owned subsidiary of a listed corporation.

 

Box 27    Form 2 should have been dated the same day as it is filed with SEHK.

 

Box 28    This number relates to the number of continuation sheets the substantial shareholder has completed. These are already displayed automatically in the search results.

 

Box 29    The substantial shareholder is directed to state the number of attachments filed with the form. The only documents that should be submitted are those referred to in relation to Box 25. If it is filing electronically, or if there are no attachments, it need not complete Box 29.

 

 

Securities Borrowing and Lending

 

If the substantial shareholder is an approved lending agent (“ALA”) giving notification under section 5(4) of the Securities and Futures (Disclosure of Interests – Securities Borrowing and Lending) Rules (L.N. 219 of 2002) (“the SBL Rules”) then it need only complete Boxes 1 to 12, 15 and 16, columns 2 and 5 of Box 17, Boxes 18 and 19, and 27 and 28 of Form 2.

 

If it is the holding company of an ALA giving notification under section 5(4) of the Securities and Futures (Disclosure of Interests – Securities Borrowing and Lending) Rules (L.N. 219 of 2002) then it need only complete Boxes 1 to 12, 15 and 16, columns 2 and 5 of Box 17, Boxes 18 to 20, 22, 23 and 27 and 28 of Form 2. All boxes should be completed in accordance with the notes set out above.  All boxes should be completed in accordance with the notes set out above with the exception of Boxes 18 and 19. Boxes 18 and 19 should have been completed as follows.

 

Box 18    In column 2 of Box 18 the substantial shareholder is directed to state the total number of shares in which it were interested, and those in which it had a short position, immediately before the relevant event.  In column 3  the substantial shareholder should have stated the percentage figure of its interest, and short position (if any), immediately before the relevant event.  It should include shares that it is authorized to lend (or, if it is a holding company of an ALA, the shares that the ALA is authorized to lend) in the total of shares in which it is interested when completing row 1 of columns 2 and 3 of Box 18.

 

In column 2, row 3 of Box 18 ( labelled “Lending pool”) an ALA and a holding company of an ALA, should state only the number of shares that the ALA is authorized to lend immediately before the relevant event (referred to as “qualified shares” in the SBL Rules). In column 3, row 3 of Box 18, it should have stated the percentage figure of the interest of the ALA in qualified shares immediately before the relevant event. 

 

 

Box 19    Complete rows 2 and 3 of Box 19 in the same manner as Box 18 specifying the total number of shares in which it were interested, and those in which it had a short position immediately after the date of the relevant event.

 

In column 2, row 3 of Box 19 (labelled “Lending pool”) an ALA and a holding company of an ALA, should state only the number of shares that the ALA is authorized to lend (the “qualified shares”) immediately after the relevant event. In column 3, row 3 of Box 19, it should state the percentage figure of the interest of the ALA in qualified shares immediately after the relevant event.