HONG KONG, May 27 /CNW/ - New Hong Kong Stock Exchange listing rules for mineral and petroleum companies that come into force next week will provide an attractive option for Canadian companies wanting to tap into Asian capital and especially the Chinese unrelenting appetite for minerals.
According to the Hong Kong-based lawyer who advised on the new rules, Minter Ellison's Fred Kinmonth, the HKSE's strategic location at the cross-roads of investors from Mainland China, Europe, the UK and the US has always been a key selling point for listing in Hong Kong. What was missing were rules for listing mineral and petroleum companies that meet international standards.
"From next week, companies will have clear and comprehensive rules to guide their listing process," he said. "Importantly, mineral and petroleum companies, and their advisers in particular, will easily understand the new rules because they have been drafted with the listing rules of resource-rich countries like Canada and Australia in mind.
"And because eligible companies will be able to apply for either a primary or a secondary listing, we are likely to see increased interest from companies who are already listed on home stock exchange like the TMX or VSE but who want the added option of an Asian presence," Mr Kinmonth noted.
The new rules ensure that investors have access to material, relevant and reliable information that meets globally recognised standards - they set out disclosure obligations, standards for reporting resources and reserves and for valuing mineral and petroleum assets, and the qualifications and experience of technical experts.
In recent years, more overseas companies have shown interest in listing on the HKSE, attracted by Hong Kong's deep capital pool, financial expertise, strategic location, English common law regulatory infrastructure, and the HKSE's strong fund raising capability. The HKSE has also expanded its approved list of acceptable jurisdictions for listing applicants, and Canada (British Columbia and Ontario) as well as Australia are now included.
To establish eligibility for initial listing under the new Chapter 18 rules, a company's main activity must be the exploration for and/or extraction of natural resources (including minerals and petroleum) and this must represent 25% or more of the total assets, revenue or operating expenses of the company and its subsidiaries.
The company must also have a portfolio of resources identifiable under the applicable international reporting standard, the JORC Code, NI 43-101 or the SAMREC Code (Minerals) or PRMS (Petroleum). Companies that have only inferred or prospective resources will not qualify.
The HKSE currently ranks 7th in the world in terms of market capitalisation (US$2.3 trillion) - this compares to the LSE at US$2.8 trillion and the ASX at US$1.2 trillion. In 2009, the HKSE led the world in IPO funds raised (US$32 billion) and was ranked 4th in relation to total funds raised (behind NYSE Euronext, LSE and ASX). Its spread of international investors includes 36% US, 23% UK, 16% Asia, and 11% Europe.
"Given the capital intensive nature of mining, Australian mineral and petroleum companies seeking capital to grow are increasingly looking to the HKSE and the HKSE now has a solid set of rules to encourage that interest," Mr Kinmonth said.
An overview of the new rules can be found here: http://www.minterellison.com/public/connect/Internet/Home/About+Us/NA-Hong+Kong+Stock+Exchange+new+listing+rules
About Minter Ellison
Minter Ellison is a leading international law firm with more than 280 partners and 900 legal personnel in offices in Hong Kong, The People's Republic of China, Indonesia (through an associated firm), Australia, New Zealand and the UK. The firm's specialist resources & energy and corporate lawyers support local and multinational companies clients throughout Asia and have been independently recognized among the region's pre-eminent lawyers.
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For further information: For further information: Sarah Henwood, Director, Business Development, International Offices, Tel: +852 2841 6869; Fred Kinmonth, Chairman, Minter Ellison, Asia, Tel: +852 2841 6822