• HK SFC issued circular to management companies of SFC-authorized real estate investment trusts (REIT), regarding treasury units of SFC-authorized REITs.
• Also amended the Outline of part XV of the Securities and futures ordinance (cap. 571)(SFO), disclosure of interests (DI), re mandatory electronic filing for DI notices.

Background

• SFC-authorized REITs are able to repurchase their own units on HKEX, subject to similar requirements applicable to listed companies under the listing rules of HKEX.
• HKEX has made various amendments to the listing rules re treasury shares.

Amendments for REITs

• SFC-authorized REITs may hold repurchased units in treasury and resell them, subject to similar requirements as applicable to treasury shares of listed companies.
• Requirements include conducting resale on a pre-emptive basis or with a shareholders’ mandate, disclosure and reporting requirements, imposition of a moratorium period after resale or repurchase, voting and dealing restrictions, and lock-up requirements.
• Number of units repurchased by a REIT under a repurchase mandate and held in treasury may be added to the issue mandate limit of no more than 20% increase of new units; no need separate unitholders’ approval for resale of the treasury units.
• Treasury units are not outstanding and are excluded from a REIT’s issued/voting units.
• They shall not be entitled to unitholders’ rights including distribution and voting rights.
• Any changes in the number of treasury units of REITs should be reported in the next-day disclosure returns and monthly returns, as per appendix E3 to the listing rules.
• Provided revised FAQs, and a revised compliance checklist for unit buy-back circular.

Disclose of Interest

• Amended section 5.9.1-3 of outline of part XV of SFO regarding treasury shares.
• Follows SFC, HKMA May 2017 issued forms for disclosure of substantial shareholdings.

Effectiveness

• The listing rules amendments will come into effect on Jun. 11, 2024.