In 2005, the Hong Kong Exchanges and Clearing Limited (the “HKEx”) issued a listing decision (cited as HKEx-LD43-3, the “Listing Decision”) regarding a listing applicant incorporated outside Hong Kong (the “Applicant”), which controls an entity that is incorporated inside China (the “OPCO”) to run business via contractual arrangements. HKEx should determine whether the Applicant has demonstrated the legality of contractual arrangements and whether it has the ability to ensure the sound and proper operation of the contractual arrangements based on the material facts and the PRC legal opinion. If the decision were positive, HKEx should adopt a disclosure-based approach to deal with the application, and so long as appropriate disclosures in terms of contractual arrangements and the risks associated therewith were included, the Applicant as well as its business should be suitable for listing.
