The Role of the Depositary Bank

11 The Role of the Depositary Bank  | Types of DR Programs Table 6: Market Requirements Hong Kong Stock Exchange (HDRs) (1) London Stock Exchange (GDRs) NYSE (ADRs) Minimum Public Float At least 25% of total issued share capital (inclusive of shares underlying in the HDRs and all fungible shares) subject to a minimum of US$6.4 million (equivalent to HK$50 million) A minimum of 25% of shares in public hands (2) UKLA will consider lower FF if it is satisfied that there is sufficient liquidity in market US$ 100 million worldwide or US$ 60 million for an affiliated company Operating History At least 3 years, and ownership continuity for the most recent audited financial year 3 years from the date of the prospectus; exceptions may apply 3 years or 12 months for an affiliated company Financial Requirements Company must meet one of the following financial standards: 1. Profit Test 2. Market Cap/Rev Test 3. Market Cap/Rev/Cash Flow Test A minimum of GBP £700,000 Company must meet one of the following financial standards: 1. Earnings Test 2. Valuation/Revenue Test • Valuation/Revenue with Cash FlowTest; • Pure Valuation/Revenue Test 3. Affiliated Company Test Accounting Requirements Hong Kong Financial Reporting Standards or IFRS; U.S. GAAP Main Market: IFRS or equivalent PSM: National GAAP Prepared to U.S. GAAP; reconciled to U.S. GAAP; or prepared to IFRS for permitted companies Initial/Annual Listing Fees (3) Based on Market Capitalization of USD, 1) $26 million; 2) $260 million; 3) $650 million Initial: Annual: 1. US $22,750 1. US $18,850 2. US $58,500 2. US $70,330 3. US $78,000 3. US $138,970 Initial Fee (GBP): See table 7 for full list of admission fees by issuer market capitalization Annual Fee (GBP)*: • Issuers whose securities qualify as most actively traded instrument: (4) £60,000; or • Issuers whose securities are subject to Central Counterparty (CCP) clearing services: £31,500; or • Issuers whose securities are not subject to CCP clearing services: £12,000 *VAT, currently at 20 per cent, must be added to the fee derived for issuers where applicable. Fees are based on the number of shares issued Initial Fee (USD$): • $0.004 per share; plus • A one-time fee of $50,000; • Up to a maximum total fee of $295,000 including one-time fee of $50,000 Annual Fee (USD$): $0.000105/share; with a minimum fee of $59,500 Ongoing Obligations/ Deadline for the Disclosure of Financial Results 1. Annual reports published within 4 months of fiscal year-end 2. Semi-annual reports published within 3 months after the date upon which the financial period ended Main Market: Annual financial reports published within 4 months of fiscal year-end. Semi-annual financial reports published within 2 months of the period end PSM: Annual reports and accounts published within 6 months of fiscal year-end Must file an annual report on Form 20-F within 4 months of fiscal year-end NYSE requires a Company to disclose material information that may affect the market in the Company’s securities by notifying the NYSE The Company is not required to file a document with the NYSE if it has filed such document with the SEC through EDGAR 1. Based on HK Main Board listing requirements. 2. A minimum of 25% of shares in public hands assuming the issuer is not a sovereign controlled company. 3. Amounts are calculated in USD for illustration purposes using an exchange rate of 1 HK$ = US$0.13 as of January 2017. 4. Issuers with a depositary program size above £8 million (calculated as the average number of DRs outstanding during the last quarter of the previous trading year) qualify for status as most actively traded instrument. Sources: The Hong Kong Stock Exchange, London Stock Exchange and NYSE. and the result of access is the same compared to a sponsored Level I program as both trade on the OTC market. In an unsponsored program, the issuer must still qualify for 12g3- 2(b) exemption and the depositary bank will file the F-6 and perform most corporate action services. Ultimately the choice between listed and OTC-traded DRs depends on the issuer’s strategic objectives and how it wants to leverage the DR vehicle.