HKCGI Securities Law and Regulation Guidance Note (Tenth & Eleventh Issue) – Governance and Best Practices for Listed Issuers in Handling Loans and Lending Arrangements - Part 1 & 2

Partner Stephanie Chan and other Sidley lawyers authored the Hong Kong Chartered Governance Institute’s (HKCGI) latest Securities Law and Regulation Guidance Note on the very topical issue of “Governance and Best Practices for Listed Issuers in Handling Loans and Lending Arrangements”. The release of the Guidance Note marks the inaugural contribution to the thought leadership in the regulatory space by Hong Kong Sidley Partner, Stephanie Chan, in her newly appointed capacity as the Chairman of HKCGI’s Securities Law and Regulation Interest Group. The co-authors include Adrian Tang, Celia Chong and Samantha Chan of Sidley’s Hong Kong office.

Loans and lending practices of Hong Kong listed issuers have increasingly become an area of focus for Hong Kong regulators after discovering a string of misconduct cases where dubious fund transfers made under the pretext of loans and lending arrangements resulted in significant losses to the listed issuers and investors. The Securities and Futures Commission (SFC), the Accounting and Financial Reporting Council (AFRC) and the Hong Kong Stock Exchange (HKEX) have all published guidance to remind issuers and directors of their regulatory obligations and to be mindful of the proper conduct in handling such transactions. The Guidance Note is therefore intended to provide listed issuers, their directors and governance professionals with practical guidance on governance and related best practices in handling loans and lending arrangements, as well as a roadmap for how to avoid common pitfalls in relation to the same.

The Guidance Note is structured in two sections, with Part 1 addressing regulatory expectations and practical tips on maintaining good corporate governance in respect of loans and lending arrangements by listed issuers, while Part 2 focuses on common pitfalls relating to such loans and lending practices and the Hong Kong regulators’ latest enforcement actions.

The two parts of the Guidance Note can be found at:
Part 1
Part 2

The Hong Kong Division of The Chartered Governance Institute (CGI) has over 75 years of history and the Institute’s reach and professional recognition extends to all of Institute’s nine divisions, with about 40,000 members and students worldwide. HKCGI is one of the fastest growing divisions of CGI, with over 10,000 members, graduates and students with significant representations within listed companies and other cross-industry governance functions. HKCGI is also a founder member of the Corporate Secretaries International Association (CSIA), which was established in March 2010 in Geneva, Switzerland.