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An issuer should resolve or mitigate conflict situations prior to listing. The Exchange may accept a proposal to resolve or mitigate conflicts of interest within a reasonable period after listing. Conflicts of interest include situations in which interested persons:—
(1) Carry on business transactions with the issuer or provide services to or receive services from the issuer or its group;
(2) Lend to or borrow from the issuer or its group;
(3) Lease property to or from the issuer or its group; or
(4) Have an interest in businesses that are competitors, suppliers or customers of the issuer or its group.
Amended on 7 February 20207 February 2020.
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In reviewing compliance with the Exchange's policy on conflicts of interest, the Exchange takes into account:—
(1) The parties involved in the conflict situation and their relationship to the issuer;
(2) The significance of the conflict in relation to the size and operations of the issuer and in relation to its potential influence on the interested person;
(3) Whether the parties who are involved in the conflict derive any special advantage from it; and
(4) Whether the conflict can be terminated, and if so, how soon and on what basis; or, if the conflict cannot be promptly terminated, whether:—
(a) the arrangement is necessary and beneficial to the operations of the issuer;
(b) the terms of the arrangement are the same or better than those that can be obtained from third parties;
(c) the arrangement will be reviewed at regular intervals and approved by independent directors or shareholders;
(d) the issuer has or will have adequate internal procedures to ensure that the terms of the arrangement are fair and reasonable; and
(e) there is, or has been, adequate disclosure of the conflict, the parties to it, and the measures taken in respect of it. This may be through the prospectus, offering memorandum, introductory document, circular or other reports.
(5) Whether the issuer has entered into any right of first refusal agreements and whether such agreements are valid for as long as the conflicts of interest exist. Where a business trust or REIT enters into right of first refusal agreements, Paragraph 3 of Practice Note 4.1 shall apply.
Amended on 29 September 201129 September 2011.