The Securities and Futures Commission (SFC) today released consultation conclusions on proposals to introduce a statutory scheme of arrangement and compulsory acquisition mechanism for real estate investment trusts (REITs) (REIT Scheme Proposal) and an enhanced market conduct regime for listed collective investment schemes (CIS) under the Securities and Futures Ordinance (SFO) (Listed CIS Proposal) (Note 1).

The REIT Scheme Proposal would enable REITs to conduct privatisation and corporate restructuring in a clear and orderly manner, with similar safeguards and protection for investors as embodied in the statutory framework under the Companies Ordinance.

Moreover, the Listed CIS Proposal would further fortify market integrity by facilitating the extension of the SFO regime against market misconduct of listed companies, such as insider dealing and market manipulation, to listed CIS including REITs. 

The proposals received general support during consultation.  

“The REIT Scheme Proposal would provide a structured and transparent mechanism for REITs to conduct privatisation and corporate restructuring. It would also ensure unitholders enjoy consistent treatments and safeguards with those for the shareholders of a listed company,” said Ms Christina Choi, the SFC's Executive Director of Investment Products. “The Listed CIS Proposal, on the other hand, will bring greater clarity to the market, strengthen investor protection and enhance market integrity.”  

The bill on legislative amendments to implement the proposals is now being prepared. The SFC continues to work with the Government regarding the legislative process to implement the proposals. 

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Note:

1.On 28 March 2024, the SFC launched a two-month consultation on the Proposals. The REIT Scheme Proposal consists of introducing a statutory scheme of arrangement and compulsory acquisition mechanism for REITs which will be fundamentally based on Part 13 of the Companies Ordinance, with appropriate modifications. Under the Listed CIS Proposal, the market conduct regimes under the SFO including market misconduct regime (comprising offences of insider dealing, market manipulation and other market misconduct), disclosure of inside information regime and disclosure of interests regime (under Parts XIII, XIV, XIVA and XV of the SFO) are proposed to be extended to explicitly cover listed CIS including REITs, with refinements.