23rd Feb 2006 17:15
HSBC Holdings PLC23 February 2006 The following is the text of a paid advertisement to appear in the Hong Kong press on Friday 24 February 2006. The Stock Exchange of Hong Kong Limited takes no responsibility for the contentsof this announcement, makes no representation as to its accuracy or completenessand expressly disclaims any liability whatsoever for any loss howsoever arisingfrom or in reliance upon the whole or any part of the contents of thisannouncement. HSBC HOLDINGS PLC (incorporated in England with limited liability) Waiver of Listing Rules to enable HSBC Holdings plc to hold Treasury Shares On 19 December 2005, the Stock Exchange granted a conditional waiver to theCompany in respect of Rule 10.06(5) of the Listing Rules to allow it,following any repurchase of shares, to elect to hold its own shares intreasury as opposed to automatically having to cancel those shares. As aconsequence of the waiver the Stock Exchange has agreed certainmodifications to other Listing Rules applicable to the Company.Shares held in treasury may subsequently be sold for cash, transferredpursuant to an employees' share scheme or cancelled. This option isavailable to the Company under changes introduced in UK law.The waiver is subject to certain conditions, including compliance by theCompany with applicable law and regulation in the United Kingdom in relationto the holding of shares in treasury. As part of the waiver, the Company hasagreed with the Stock Exchange a set of Modifications to the Listing Rulesnecessary to enable the Company to hold treasury shares. The Modificationsalso reflect various consequential matters to deal with the fact that theCompany may hold treasury shares in the future. A full version of theModifications is posted on the Company's website at www.hsbc.com and on theStock Exchange's website at www.hkex.com.hk and copies of the Modificationsare available on request from the Group Company Secretary, 8 Canada Square,London E14 5HQ and the Corporation Secretary, The Hongkong and ShanghaiBanking Corporation Limited, 1 Queen's Road Central, Hong Kong.The waiver was granted and the consequential Modifications agreed with theStock Exchange on the basis of, amongst other things, the specificcircumstances of the Company as a company incorporated in England with alisting on the London Stock Exchange which, as a result, has the abilityunder UK law to hold any shares it repurchases in treasury.Background On 19 December 2005, the Stock Exchange granted a conditional waiver to theCompany in respect of Rule 10.06(5) of the Listing Rules to allow it to hold itsown shares in treasury. As a consequence of the waiver the Stock Exchange hasagreed certain modifications to other Listing Rules applicable to the Company.As the Company is incorporated in England it is governed by applicable companylaw in the United Kingdom. Such law enables companies with a listing on theLondon Stock Exchange to hold their own shares in treasury following a sharerepurchase subject to certain conditions. The Company has a dual primary listingin Hong Kong and London. Following the changes to the law in the United Kingdom,the UKLA introduced changes to the UK Listing Rules to permit the holding ofshares in treasury. In view of its primary listing in Hong Kong, the Companyrequested the Stock Exchange to grant a waiver in respect of Rule 10.06(5) ofthe Listing Rules, in addition to making certain consequential modifications tothe other Listing Rules applicable to the Company, in order to enable it to makeuse of the flexibility, as a company incorporated in England, to repurchase itsown shares and to hold them in treasury. The waiver is intended to put theCompany in the same position in relation to treasury shares as other publiccompanies in the United Kingdom whose shares are admitted to the official listof the Financial Services Authority. The Stock Exchange has agreed to grant thewaiver and has agreed to the consequential Modifications, on the basis of,amongst other things, the specific circumstances of the Company. Authority to hold Treasury Shares Treasury shares are a company's own issued shares which it has repurchased butnot cancelled. Pursuant to the Companies Act 1985 (as amended), the Company ispermitted (with the approval of shareholders) to retain and hold in treasury anyshares it repurchases up to a maximum of 10 per cent of its issued share capitalfrom time to time. The Company obtained the authority of its shareholders at itsAnnual General Meeting held on 27 May 2005 to hold treasury shares subject tothe approval of the Stock Exchange and other regulatory authorities in HongKong, which has now been obtained. Accordingly, the Company may now utilise thisauthority to acquire its own shares and hold them in treasury, and subsequentlyto sell or transfer such shares in satisfaction of the exercise of optionsunder, or otherwise pursuant to, any of the Company's existing employees' shareschemes. The existing repurchase authority granted by shareholders will expireat the Annual General Meeting on 26 May 2006 (at which meeting approval will besought from shareholders to renew this authority). Regulatory Controls Pursuant to the Companies Act 1985 (as amended) a company incorporated inEngland that holds treasury shares is only entitled to (i) sell such treasuryshares for cash, (ii) transfer such treasury shares for the purposes of, orpursuant to, an employees' share scheme, or (iii) cancel such treasury shares.Any sale of treasury shares for cash will be subject to the pre-emption rightsof the existing holders of that class of shares (other than the company byvirtue of it holding treasury shares) except to the extent that, inter alia, (i)the sale of such treasury shares falls within the limit of the general authorityto disapply pre-emption rights (such authority was granted by the shareholdersof the Company at its Annual General Meeting on 27 May 2005 and the Company willseek to renew this authority at its Annual General Meeting to be held on 26 May2006), or (ii) the company is selling treasury shares for cash to an employees'share scheme. The UK Listing Rules require that if a company sells its treasuryshares where such shares are listed, the price at which the company sells suchshares must not be at a discount of more than 10 per cent to the middle marketquotation of those listed shares (as derived from the daily official list of theLondon Stock Exchange) at the time of announcing the relevant offer or agreeingthe placing of such shares unless the sale of such treasury shares is pursuantto a pre-existing general authority to disapply pre-emption rights or the saleat a discount is specifically approved by the company's shareholders. If acompany cancels any of its treasury shares it must also diminish the amount ofits issued share capital by the nominal amount of the shares cancelled. Chapter 12 of the UK Listing Rules contains certain additional regulatorycontrols in respect of treasury shares which include, inter alia, therequirement (i) not to sell for cash or transfer for the purposes of or pursuantto an employees' share scheme any treasury shares during a prohibited period(within the meaning of the UK Listing Rules) other than in certain limitedcircumstances provided for in the UK Listing Rules, and (ii) to make anotification to a regulatory information service for dissemination to the UKmarket if (a) by virtue of it holding treasury shares, a company is allottedbonus shares (as described below) and (b) a company sells for cash, transfersfor the purposes of, or pursuant to, an employees' share scheme or cancels anytreasury shares it holds. When a company makes any repurchases of its shares itmust also state in its notification relating to the repurchase the number ofshares which will be or have been cancelled and the number of shares which willbe or are held in treasury following any such repurchase. In accordance with itsobligations under the Listing Rules the Company will make equivalentnotifications to the Stock Exchange. In addition, the Company must disclose inits annual report and accounts sales of treasury shares for cash made otherwisethan through the market, or in connection with an employees' share scheme, orotherwise than pursuant to an opportunity which was made available to allholders of the Company's listed shares on the same terms. Rights Attaching to Treasury Shares Shares held in treasury by a company incorporated in England remain part of suchcompany's existing issued share capital. However, a company cannot exercise anyright in respect of the treasury shares it holds; in particular, it does nothave any right to attend and vote at meetings of the company, nor does it have aright to any dividend or other distribution of the company's assets in respectof the treasury shares it holds. However, in the event of a capitalisation issueby the company, it is entitled to receive fully paid bonus shares in respect ofthe treasury shares it holds which it can elect either to cancel or to hold intreasury after their allotment provided that the aggregate nominal value of theshares held in treasury, from time to time, does not exceed 10 per cent of thenominal value of the company's total issued share capital (including itstreasury shares). Description of Modifications As part of the waiver, the Company has agreed with the Stock Exchange a set ofModifications to the Listing Rules necessary to enable the Company to holdtreasury shares. The Modifications also reflect various consequential matters todeal with the fact that the Company may hold treasury shares in the future. Inparticular, Rule 10.06(5) of the Listing Rules is modified so that therequirement for the automatic cancellation of the listing of all shares whichare purchased by an issuer will not apply to listed shares purchased by theCompany and held as treasury shares. Shares purchased by the Company and held astreasury shares will remain listed and the listing will not be suspended orcancelled. Any subsequent sale of such treasury shares or transfer of suchtreasury shares pursuant to an employees' share scheme will not, for thepurposes of the Listing Rules, constitute a new issue of shares and will notrequire a new listing application to be made. The general mandate granted to the Directors on 27 May 2005 (which the Companywill seek to renew at the Annual General Meeting to be held on 26 May 2006) toallot shares also applies to the sale of shares out of treasury for cash. TheCompany will make an announcement pursuant to Rule 13.28 if it agrees to selltreasury shares for cash (other than in connection with an employees' sharescheme) in the same manner as the announcement that would be required for a newissue of shares for cash. As stated above, the Company will make the same notifications to the StockExchange that it makes to the UK market in relation to any repurchase of sharesto be held in treasury, and in relation to a sale and/or transfer of treasuryshares, including notifications required to be made pursuant to Chapter 12 ofthe UK Listing Rules (as described in the paragraph headed "Regulatory Controls"above). The Company will make certain additional disclosures in relation to anyshares repurchased and held in treasury in the explanatory statement seekingshareholder approval of the repurchase mandate and in the Company's annualreport and accounts. For the purposes of the connected transaction rules contained in Chapter 14A ofthe Listing Rules, any sale of treasury shares will generally be treated in thesame manner as the issue of new securities. In relation to employees' shareschemes, the provisions of Chapter 17 of the Listing Rules are modified toenable treasury shares to be used to satisfy the exercise of options under, orotherwise in connection with, the Company's employees' share schemes. Generally, Listing Rules which contain a calculation by reference to theCompany's issued share capital have been modified in so far as they apply to theCompany so that any shares which the Company holds in treasury from time to timeare excluded for the purposes of such calculation. In addition, the definitionof market capitalisation in the Listing Rules has been modified so that for thepurposes of calculating the market capitalisation of the Company pursuant to therelevant Listing Rule any treasury shares held by the Company are excluded fromsuch calculation. As a consequence of these modifications, the relevant sizetests used for the purposes of Chapters 14 and 14A have been modified so that(i) the consideration ratio calculated in accordance with Rule 14.07(4), whichrefers to a listed issuer's total market capitalisation, will exclude anytreasury shares the Company holds for the purposes of calculating its totalmarket capitalisation, and (ii) the equity capital ratio calculated inaccordance with Rule 14.07(5), which refers to a listed issuer's issued equitycapital before the relevant transaction, will exclude any treasury shares theCompany holds from its issued equity capital. In addition, for the purposes of calculating the number of shares in the handsof the public pursuant to Rule 8.08, any treasury shares held by the Companywill not be taken into consideration, with the effect that at least 25 per centof the Company's issued share capital (excluding any treasury shares held by theCompany) must be in public hands. The modifications described above are a summary of only the key modificationsmade under the waiver. In addition, there are various consequentialmodifications to the Listing Rules which have been agreed between the Companyand the Stock Exchange as sensible modifications in order to accommodate theholding by the Company of treasury shares. The full Modifications are posted onthe Company's website at www.hsbc.com and on the Stock Exchange's website atwww.hkex.com.hk and copies of the Modifications are available on request fromthe Group Company Secretary, 8 Canada Square, London E14 5HQ and the CorporationSecretary, The Hongkong and Shanghai Banking Corporation Limited, 1 Queen's RoadCentral, Hong Kong. Impact of Treasury Shares on Shareholders The obligation on a shareholder to disclose an interest held in a company'sshares in accordance with the provisions of Part XV the Securities and FuturesOrdinance of Hong Kong (Cap 571) ("SFO") will not be affected by virtue of theCompany holding shares in treasury. Shares held by the Company in treasuryremain part of its issued share capital, therefore, if the Company repurchasesshares and holds such shares in treasury rather than cancelling them it will notreduce the Company's issued share capital for the purposes of section 314 of theSFO. On this basis, a shareholder's interest in the issued share capital of theCompany will not change (except to the extent that such shareholder's own shareshave been repurchased by the Company). Terms of the Waiver The waiver is subject to certain conditions under which the Company will: (a) comply with the Companies Act 1985 (as amended) and the UK Listing Rules inrelation to treasury shares and inform the Stock Exchange as soon as practicablein the event of any failure to comply or any waiver from these requirementsbeing granted; (b) inform the Stock Exchange promptly in the event of any material change beingmade to the UK regime in relation to treasury shares; (c) make an announcement on the grant of the waiver; (d) confirm compliance with the conditions in the Company's annual report,annual review and with the Notice to Shareholders of any meeting at which aresolution to authorise the holding of treasury shares is to be considered; and (e) in the event of changes to the Hong Kong regulatory regime and the ListingRules, comply with the relevant changes in relation to treasury shares. In accordance with the terms of the waiver, the Company will make an annualsubmission to the Stock Exchange in respect of any changes to the Listing Ruleswhich may take place from time to time to assess whether they have anyimplications for its ability to hold treasury shares. In addition, should anyfurther consequential modifications be required as a result of such changes tothe Listing Rules, the Modifications shall be amended accordingly and a fullversion of the amended Modifications will be posted on the Company's website atwww.hsbc.com and on the Stock Exchange's website at www.hkex.com.hk and copiesof the amended Modifications will be available on request. Definitions "Company" HSBC Holdings plc"Listing Rules" the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited"London Stock London Stock Exchange plcExchange""Modifications" the modifications to the Listing Rules applicable to the Company in relation to treasury shares agreed between the Company and the Stock Exchange and as set out in the memorandum dated October 2005 (as amended) "Stock Exchange" The Stock Exchange of Hong Kong Limited"UK or United the United Kingdom of Great Britain and NorthernKingdom" Ireland"UKLA" or "United the UK Financial Services Authority, in its capacityKingdom Listing as the competent authority for Part VI of the UKAuthority" Financial Services and Markets Act 2000"UK Listing Rules" the United Kingdom Listing Authority Listing Rules For and on behalf ofHSBC Holdings plcR G BarberGroup Company Secretary 23 February 2006 As at the date of this announcement, the Directors of HSBC Holdings plc are SirJohn Bond, Baroness Dunn*, Sir Brian Moffat+, S K Green, A W Jebson, LordButler+, R K F Ch'ien+, J D Coombe+, R A Fairhead+, D J Flint, W K L Fung+, M FGeoghegan, S. Hintze+, J W J Hughes-Hallett+, Sir John Kemp-Welch+, Sir MarkMoody-Stuart+, S W Newton+, S M Robertson+, H Sohmen* and Sir Brian Williamson+. * Non-executive Director+ Independent non-executive Director HSBC Holdings plc Incorporated in England with limited liability. Registered in England: number617987Registered Office and Group Head Office: 8 Canada Square, London E14 5HQ, UnitedKingdomStock Code: 5 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
HSBC Holdings