New regulation announced on REITs in HK

Hong Kong Securities and Futures Commission (SFC) announced on Friday the application of the Codes on Takeovers and Mergers and Share Repurchases (Codes) to SFC-authorized real estate investment trusts (REITs) with immediate effect.

Released Friday are consultation conclusions on the proposals to extend the Codes to REITs and to apply the market misconduct and disclosure of interests provisions in the Securities and Futures Ordinance (SFO) to listed collective investment schemes ( CISs) (Note 1).

"We believe that the implementation of the proposals represent a significant step forward in establishing a regulatory framework that better protects the investors' interests and assists the further development of the REIT market in Hong Kong," said Martin Wheatley, the SFC's Chief Executive Officer.

According to the SFC, unitholders who increase their holding to 30 percent or more will be subject to the trigger provisions under the Codes.

Likewise, unitholders holding between 30 percent and 50 percent who increase their holding by more than 2 percent from the relevant lowest percentage in the 12-month period preceding the relevant increase in holding will also be subject to the creeper provisions of the Codes.

Source:Xinhua