27 juli 2022

Linklaters advises SIX Swiss Exchange on the amendments to the GDR rules relating to the “China-Swiss Stock Connect” programme

The SIX Swiss Exchange AG issued the long-awaited amendments to the Listing Rules on 22 July 2022, following approval from the Swiss Financial Market Supervisory Authority. This paves the way for the listing of A-share listed companies on the SIX Swiss Exchange AG in the form of global depository receipts (GDRs) via the “China-Switzerland Stock Connect” programme. The revised Listing Rules came into effect on 25 July 2022.

Linklaters provided legal support to the SIX Swiss Exchange AG and provided constructive proposals and suggestions by leveraging the firm’s expertise of the GDR depository and settlement arrangement as well as the co-ordination mechanism for information disclosure of listed companies under the “Shanghai-London Stock Connect” programme.

This matter was led by Linklaters’ Shanghai-based corporate partner John Xu, London-based capital markets partners Michael Fanner and Tom Thorne, alongside financial regulation partner Colette Pan from Zhao Sheng Law Firm, Linklaters’ joint operation partner in China.

The key amendments to the Listing Rules included the GDR listing requirements, obligations with respect to listing and conditions for maintaining the listing. In terms of the listing requirements, the revised Listing Rules set out clear requirements for the depository arrangement:

  1.  the GDR depositary must fulfil relevant regulatory criteria;
  2. the deposit agreement must provide for the underlying shares to be held by the depositary on a fiduciary basis (or on the basis of similar arrangements under applicable law) on behalf of the investors with rights to the GDRs in question, so that they can be separated and segregated for the benefit of the investors in the event of debt restructuring or insolvency of the depositary; and
  3. the depositary must provide all information and documentation in connection with the implementation of the deposit agreement upon request of the Regulatory Board or SIX Exchange Regulation AG.

In addition, the revised Listing Rules have further clarified the requirements that GDR issuers need to meet when applying for listing (including those related to the prospectus) and the information disclosure and reporting obligations required for maintaining the listing status.

Linklaters’ corporate partner John Xu, commented:

“Linklaters has supported on the design and launch of many trading and settlement programmes including the Shanghai-Hong Kong Stock Connect, the Shenzhen-Hong Kong Stock Connect, the Shanghai-London Stock Connect and the Bond Connect programmes, as well as advising the relevant exchanges on regulatory and legal issues. We are honoured to have had the opportunity to provide legal support to the SIX Swiss Exchange on the acceleration of the “China-Switzerland Stock Connect” programme. Our team looks forward to the successful offering and listing of the first batch of GDRs in Switzerland.”