Core Viewpoint - The article discusses the handling of special shareholder rights in the context of companies applying for listing on the Hong Kong Stock Exchange, emphasizing the need for compliance with the Hong Kong Stock Exchange's regulations and the negotiation dynamics between the listing companies and their investors [4][20]. Summary by Sections Special Shareholder Rights Scope and Principles - The number of domestic companies applying for Hong Kong listings has significantly increased since 2024, leading to the necessity of addressing how special shareholder rights are managed [4]. - Companies must terminate or arrange special rights according to the Hong Kong Stock Exchange's Listing Rules and the new listing applicant guidelines [4][5]. - The handling of these rights is primarily guided by the opinions of overseas lawyers involved in the listing process, although domestic lawyers play a crucial role in drafting related agreements [4][19]. Handling of Special Shareholder Rights - According to the Listing Guidelines, special rights not applicable to all shareholders must be revised or terminated before listing [5]. - Special rights include preemptive rights, buyback rights, and liquidation preferences, which generally need to be terminated before the company submits its listing application [8][9]. - The treatment of these rights is stricter in Hong Kong compared to A-share listings, where certain arrangements can be retained under specific conditions [6][7]. Specific Handling Methods for Common Special Rights - Common special rights and their handling methods include: - Preemptive rights must terminate upon listing [9]. - Buyback rights need to be terminated before the listing application is submitted [9]. - Rights related to board nominations can continue if already appointed before listing [10]. - Financial compensation arrangements must be structured to avoid being linked to the listing price or market value [17][18]. Common Issues Regarding Buyback Rights - Buyback rights are a core special right for investors and must be terminated before the listing application is submitted [11]. - The article discusses the potential for a restoration mechanism for these rights if the listing application is rejected or withdrawn [12][13]. - The duration for re-filing a listing application is typically six months, and investors may negotiate terms to ensure their rights are not indefinitely terminated [13][14]. Impact on Corporate Restructuring - Companies must transition from limited liability to joint-stock companies before applying for a Hong Kong listing, which may involve terminating buyback rights to avoid accounting issues [16]. - The handling of special rights during this restructuring phase is critical to ensure compliance with accounting standards and regulatory requirements [16]. Work Mechanism in Projects - The termination of special shareholder rights is a collaborative effort between domestic and overseas lawyers, with input from accountants and sponsors [19]. - The process involves drafting agreements and negotiating terms to ensure compliance with the Hong Kong Stock Exchange's requirements [19]. Conclusion - Proper management of special shareholder rights is essential for companies seeking to list on the Hong Kong Stock Exchange, balancing compliance with shareholder interests is crucial for successful market entry [20].