HSBC Holdings plc $HSBA (+0,01 %) has received exemptive relief from the Hong Kong Stock Exchange allowing the bank to exceed the usual 20% limit for the issue of contingent convertible securities (CCSs) as part of its capital strategy. The approval announced today allows HSBC to apply for additional authority to issue CCSs beyond the general mandate, which is usually renewed at the company's annual general meeting (AGM).
CCSs are hybrid capital securities that convert into ordinary shares under certain conditions. They are recognized for their special regulatory capital treatment under European Union and UK law. HSBC's application complies with the Institutional Guidelines and complies with the Hong Kong Stock Exchange Rules, except for the restriction on the general mandate for non-pre-emptive issues.
The additional mandate, if approved by shareholders, will be separate from the general allotment authority. This is in accordance with the Investment Association's guidelines and the Pre-Emption Group's policy statements. The mandate will remain valid until the conclusion of the first AGM following its approval or until revoked or varied by a simple resolution of shareholders.
The waiver granted is conditional on HSBC giving notice prior to the application for the mandate. Any related announcements or circulars must clearly state that the mandate is ancillary to the general mandate under Rule 13.36(2) of the Hong Kong Stock Exchange Rules.
This strategic move by HSBC Holdings plc, which was detailed in a press release, allows the bank to potentially strengthen its capital base by issuing CCSs beyond the existing limit. This provides additional flexibility in capital management.