A listed issuer’s annual report provides key information and assists investors with their decision-making. Due to factors such as the COVID-19 pandemic and the resulting global economic downturn, investors have become more prudent. Therefore, the information contained within an annual report has increased in importance, as it helps investors understand the listed issuer’s business, financial position, as well as its management and prospects.

Writing an annual report, however, can be tricky. In essence, the information required to be disclosed is extensive, and given the fact that it contains a lot of different information about an issuer, it can take a considerable amount of time to create and issue a flawless report.

Pursuant to the rules governing the listing of securities (the Listing Rules) on The Stock Exchange of Hong Kong Limited, a listed issuer must, within four months after the end of the financial year and not less than 21 days before the date of its annual general meeting, send its shareholders an English and Chinese annual report with its consolidated financial statements and a copy of the auditors’ report. Information required in an annual report is governed by the Listing Rules and the Companies Ordinance.

An annual report generally consists of sections such as “Corporate Information,” “Chairman’s Statement,” “Management Discussion and Analysis,” “Corporate Governance Report,” “Directors’ Report,” “Directors and Management,” and “Independent Auditor’s Report.” Generally, the preparation work of an annual report is divided among the listed issuer, its auditors and its legal advisors. The issuer’s auditors are mainly responsible for reviewing financial-related sections so as to ensure that the financial information to be disclosed in an annual report is in line with the financial statements, and the issuer and its legal advisors are responsible for other sections. Though legal and compliance related matters arising from the preparation of the annual report will be dealt with by the issuer’s legal advisors, accountants must also equip themselves with adequate knowledge of the requirements under the Listing Rules and the Companies Ordinance when preparing a listed issuer’s annual report. If there is any non-compliance such as an omission of certain required information, the listed issuer may be required to publish a supplemental or clarification announcement. Listed issuers face the possibility of criticism if the non-compliance is material.

From my experience, certain required information is usually omitted from an annual report, such as a change or update in a director’s name, other directorships held in public companies and major appointments and professional qualifications during the reporting period. Pursuant to Rule 13.51B(1) of the Listing Rules or Rule 17.50A(1) of the GEM Listing Rules (as the case may be), if there is a change in any of the information under paragraphs (a) to (e) and (g) of Rule 13.51(2) of the Listing Rules or Rule 17.50(2) of the GEM Listing Rules (as the case may be) in the reporting period, a listed issuer must ensure that such changes are set out in the next published annual report unless otherwise disclosed in the listed issuer’s previous interim report. As such, listed issuers must bear in mind that sufficient information must be given to their accountants and other professionals to avoid a breach of the Listing Rules.

The e-Learning Course

My e-learning course “Preparing annual report and directors’ report with ease” provides assistance to members on preparing annual reports for listed issuers. The course covers the following topics:

The course aims to help members first understand the sections of a listed issuer’s annual report that may be tricky and the manner in which they should be prepared. I hope that members, after taking part in this course, would enjoy the process of preparing annual reports for listed issuers and find it to be a simple and enjoyable task.

Richard Ho has been in the legal industry handling the listing of securities and compliance related matters for more than a decade. He mainly provides assistance on initial public offering projects (acting as legal advisor to sponsors and proposed issuers), mergers and acquisitions, the provision of directors’ training, compliance matters on the Listing Rules and Securities and Futures Ordinance and matters relating to the Securities and Futures Commission’s Hong Kong Code on Takeovers and Mergers.

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