Background 


Hong Kong Exchanges and Clearing Limited announced that, from 23 September 2024 onwards, the Hong Kong's securities and derivatives markets will remain open and maintain normal operations in a digital and remote manner during severe weather conditions. 


Due to its geographical location, Hong Kong is affected by typhoons and rainstorms almost every year, especially in summer. During the more serious instances, most government services are suspended, and schools, offices and businesses are closed. Currently, when “Typhoon Signal No. 8” or above is hoisted or after a “Black Rainstorm Warning” or an “Extreme Conditions” announcement is made by the Hong Kong government (“Severe Weather Conditions”), the securities and derivatives markets are halted. 


Over time, the Hong Kong financial markets have developed digital and online facilities which proved to be robust during the COVID closure times. The city has the condition to keep the securities and derivatives markets open for trading during Severe Weather Conditions (“Severe Weather Trading”). 


Key Features of Severe Weather Trading


During a day with Severe Weather Conditions:

  • Under the Severe Weather Trading arrangements, trading, clearing and settlement services and operations in both the securities and derivatives markets (covering equity securities, debt securities, investment vehicles, exchange-traded products, structured products, futures, and options) will continue.
  • The Northbound and Southbound trading of securities under the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connects will also continue.
  • In terms of IPO, the new listing and the first day of trading of new securities can also proceed as usual.
  • Full market data dissemination will be maintained, ensuring that market participants have access to essential information without disruption.
  • Hong Kong banking services will be provided to facilitate Severe Weather Trading but only through electronic channels. But bank branches will close as is the case now, given the importance of protecting the safety of staff and customers of financial institutions.


Impacts on Corporate Actions of Hong Kong Listed Companies


The following table illustrates the differences in dealing with corporate actions of a Hong Kong listed company before and after the implementation of Severe Weather Trading. Please note that not all deadlines for the corporate actions will change.


Date for determining eligibility of entitlement

  • Before implementation of Severe Weather Trading : The last registration date announced by the listed company will be deferred, usually to the next business day without Severe Weather Conditions.
  • After implementation of Severe Weather Trading from 23 September 2024: The date for determining eligibility entitlement in the Central Clearing and Settlement System (“CCASS”) of corporate actions by the Hong Kong Securities Clearing Company Limited (“HKSCC”) will be the original last registration date, irrespective of whether that day is a day with Severe Weather Conditions. Nevertheless, shareholders who hold physical certificates must deliver the certificates to share registrars for registration on the day the physical outlets resume operations (i.e. the postponed last registration date) due to the closure of the physical outlets during the days with Severe Weather Conditions. As such, the last registration date should be postponed giving these holders sufficient time to complete registration.


Cash dividend payment date

  • Before implementation of Severe Weather Trading : The payment will be postponed. HKSCC will arrange payment when Severe Weather Conditions are cancelled.
  • After implementation of Severe Weather Trading from 23 September 2024: If the listed company pays the dividends via electronic means, the cash dividends will be paid upon receipt of the good funds on the same day. If the dividends are paid via paper cheques or other non-electronic means, HKSCC will arrange payments when Severe Weather Conditions are cancelled.


Stock dividend / bonus issue distribution date

  • Before implementation of Severe Weather Trading : The distribution will be postponed. HKSCC will arrange distribution when Severe Weather Conditions are cancelled.
  • After implementation of Severe Weather Trading from 23 September 2024: Same arrangement as prior to the implementation of the Severe Weather Trading.


Election of dividend with scrip / currency option – deadline for election form return

  • Before implementation of Severe Weather Trading : The deadline for returning the election form will be postponed. HKSCC will extend the CCASS deadline in accordance with the listed company’s arrangement.
  • After implementation of Severe Weather Trading from 23 September 2024: Same arrangement as prior to the implementation of the Severe Weather Trading.


Subscription (e.g. rights issue, open offer, preferential offer, takeover offer) – deadline for lodging the instructions

  • Before implementation of Severe Weather Trading : The deadline for lodging instructions will be postponed. HKSCC will extend the CCASS deadline in accordance with the listed company’s arrangement.
  • After implementation of Severe Weather Trading from 23 September 2024: Same arrangement as prior to the implementation of the Severe Weather Trading.


Stock consolidation and splitting – effective date

  • Before implementation of Severe Weather Trading : The effective date may or may not be postponed, as it is subject to the listed company’s arrangement. HKSCC may adjust the conversion date in CCASS based on the situations.
  • After implementation of Severe Weather Trading from 23 September 2024: The stock consolidation or splitting will be carried out as scheduled. HKSCC will arrange the conversion in CCASS as scheduled.


Change of board lot – effective date

  • Before implementation of Severe Weather Trading : The effective date may or may not be postponed, as it is subject to the listed company’s arrangement. HKSCC will arrange the change in CCASS on the next day when trading resumes.
  • After implementation of Severe Weather Trading from 23 September 2024: The change will be carried out as scheduled. HKSCC will arrange the change in CCASS as scheduled. 


Voting – proxy deadline

  • Before implementation of Severe Weather Trading : Proxy forms will be submitted to the listed company by HKSCC before the company’s proxy deadline.
  • After implementation of Severe Weather Trading from 23 September 2024: Same arrangement as prior to the implementation of the Severe Weather Trading.


Scheduled meeting or shareholder events

  • Before implementation of Severe Weather Trading : Physical general meeting can be postponed, in line with current practice. An announcement should be issued to inform shareholders of the postponement.
  • After implementation of Severe Weather Trading from 23 September 2024: Same arrangement as prior to the implementation of the Severe Weather Trading


Continuing Obligation of Listed Companies


After the implementation of Severe Weather Trading arrangements, a day with Severe Weather Conditions will still be regarded as a “business day”. Thus, listed companies must comply with obligations imposed by the Listing Rules that refer to “business day” even on days with Severe Weather Conditions. There will no longer be an automatic extension of time for compliance, as in the current practice.


In particular, the deadlines for corporate communications will not be extended due to Severe Weather Conditions, including those for:

  • disclosure of information by way of announcements (including annual and interim results announcements), circulars, notices and returns.
  • submission of documents, notifications or returns to the Stock Exchange of Hong Kong Limited (“SEHK”).


The Listing Division of the SEHK will continue its operations and receive electronic submissions from the listed companies on days with Severe Weather Conditions.


Next Steps


Hong Kong Exchanges and Clearing Limited will in due course publish relevant rule changes and guidance materials on other details of the Severe Weather Trading arrangements.


Listed companies should get themselves prepared to comply with their Listing Rules obligations during days with Severe Weather Conditions, including:

  • Discuss with the relevant employees who are expected to continue their work.
  • Formulate and execute infrastructure upgrades to enable remote work arrangements for the relevant employees.
  • Alert the directors that they should stand by to sign off corporate communications.
  • Assess the essential external services required from, e.g. printer, legal advisers, auditors and financial advisers.


YYC Legal LLP is in Association with East & Concord Partners (Hong Kong) Law Firm.


This material has been prepared for general informational purposes only and is not intended to be relied upon as professional advice. Please contact us for specific advice.