Exchange to tighten its grip on highly dilutive capital raising

Hong Kong Exchanges and Clearing Limited has published the Consultation Paper on Capital Raisings by Listed Issuers, revealing the long-anticipated tightening of regulations on highly dilutive capital raising structures which corporate governance advocates have been flagging concerns. It is interesting to note that the Hong Kong regulators do not consider putting such structures to the vote of independent minority shareholders, or withholding the granting of whitewash waivers in cases where share issuances would result in a change of control, as effective methods to address their concerns. Rather, they propose to impose a ban on highly dilutive capital raisings, subject to limited exceptions.

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