In the News: Hong Kong Secondary Listings; SAMR Antitrust Fines; and Allianz Life Insurance

Under the existing secondary listing regime introduced in 2018, Greater China Issuers without a WVR structure applying for secondary listing in Hong Kong must have a minimum market capitalization at the time of listing of at least either $40 billion or $10 billion and revenue of at least $1 billion in their most recent audited financial year. Under the revised regime, these requirements will be lowered to $3 billion for those that can demonstrate a track record of good regulatory compliance of at least five full financial years or $10 billion for two full financial years. The HKEX says it will publish guidance in the future regarding the migration of the majority of trading in an issuer's securities from an overseas exchange to Hong Kong, voluntary conversion to a dual-primary listing, and delisting entirely from overseas exchanges.

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SAMR fines tech giants for anti-monopoly violations

China's market regulator is continuing its anti-monopoly crackdown with fresh fines for several major Chinese companies. On November 20, the State Administration of Market Regulation (SAMR) announced that it had investigated 43 cases of anti-monopoly violations involving several technology giants such as Alibaba and Baidu dating back to 2012.

The SAMR said that all the cases violated Article 21 of the PRC Anti-Monopoly Law (中华人民共和国反垄断法), which requires notification to the authorities when the "concentration of business operators" reaches above a certain threshold. Eight cases involve Alibaba, including its 2018 investment in major delivery service provider Ele.me. The SAMR said it has fined the companies involved RMB500,000 ($78,000) each, the maximum permitted under the PRC Anti-Monopoly Law (Articles 48 and 49).

In recent months, the Chinese government has imposed fines on some of the country's biggest technology companies for anti-monopoly violations. This time, however, the SAMR clarified that, although the cases all violated the law, the market regulator does not believe they have had the effect of eliminating or restricting competition. Nonetheless, they are all transactions "that should have been declared but not declared in the past" according to the regulator. Enacted in 2008, the PRC Anti-Monopoly Law, Article 21 in particular, requires notification to and approval from the authorities before closing certain transactions. In late October, the Standing Committee of the National People's Congress released a draft amendment to the PRC Anti-Monopoly Law with stricter provisions across the board, including a proposed increase in the maximum fine permitted from RMB500,000 to RMB5 million and up to RMB25 million for serious violations. 

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Allianz approved to take full control of life insurance business

China's insurance regulator has approved German insurance giant Allianz Group's application to operate the country's first wholly foreign-owned life insurance company. On November 17, Allianz announced that the Shanghai bureau of the China Banking and Insurance Regulatory Commission (CBIRC) has approved Allianz's acquisition of the 49% stake in its China joint-venture (JV) owned by local firm CITIC Trust Co., Ltd.