Counting HKEX's Puzzling Behaviors

On April 12, HKEX issued a notice announcing that the proposed new treasury share mechanism had been approved and would take effect on June 11. Under this new regulation, shares repurchased by Hong Kong-listed companies may be held as 'treasury shares' without mandatory cancellation—unlike before, when repurchased shares had to be canceled. I. HKEX’s Crisis of Confidence Interestingly, the treasury-share proposal received feedback from 56 stakeholders: 19 listed companies, 20 professional associations and law firms, and only 3 investment management firms. Among them, 52 supported removing the mandatory cancellation requirement for repurchased shares, while only four opposed it—including BlackRock and Fidelity. In fact, the treasury-share mechanism also exists in U.S. markets; why, then, did foreign institutions BlackRock and Fidelity oppose it? According to the announcement, objecting institutions worry that if Hong Kong-listed companies are allowed to retain repurchased shares as treasury stock instead of canceling them, investors will generally expect those treasury shares to eventually re-enter the market. Consequently, investment institutions calculating earnings per share (EPS) would include treasury shares in their denominator—diluting the positive impact of share buybacks on investor returns. Treasury shares may re-enter the market in two scenarios: first, when the company needs future financing, it could cheaply issue treasury shares via private placement; second, after repurchasing shares, the company could allocate treasury shares as equity incentives to employees. In U.S. markets, corporate law amendments in the 1970s made dividend taxation more costly than share repurchases, causing buybacks to become the primary form of shareholder return. As a result, most U.S. companies prioritize canceling repurchased shares—a key driver behind the U.S. market’s decades-long bull run. In contrast, in China’s A-share market, although many companies publicly announce buybacks, very few actually cancel the repurchased shares—rendering such buybacks largely meaningless. Although HKEX’s new rule now aligns with both A-share and U.S. practices, it would be unfair to assume all companies will retain rather than cancel repurchased shares. Yet increasingly absurd actions—where major shareholders openly act against minority shareholders’ interests—have eroded investor confidence in Hong Kong markets. Given this regulation, investors naturally anticipate worst-case outcomes, especially since precedents exist in the A-share market—for instance, last year’s Luda Master announced a buyback to boost its stock price, only to later cancel the proposal entirely; HKEX remained silent, which investors interpreted as tacit approval of minority shareholder rights violations. Similarly, last year IMAX China’s major shareholder attempted a privatization deal, explicitly stating in its announcement: “If the transaction fails, IMAX China cannot guarantee future dividend payments”—leaving minority shareholders in an extremely vulnerable position. Of course, among thousands of listed companies, some ‘bad apples’ inevitably appear—and HKEX cannot bear full blame. Regulators’ responsibility lies in strengthening oversight and preventing such negative examples from recurring. Yet last year, HKEX failed to penalize numerous such cases, choosing instead to turn a blind eye—an approach that has left many investors disheartened and further diminished trust in the exchange. Thus, the opposition from these two foreign institutions reflects not only distrust toward certain listed companies but also skepticism about HKEX’s regulatory effectiveness. The two foreign institutions proposed two recommendations: 1. If the non-cancellation option is approved, stricter rules must govern treasury shares—specifically, imposing time limits on when treasury shares may be reissued.

Nikola’s Stock Plunges Over 8% Amid Uncertainty Over GM Partnership

Gasgoo News: According to foreign media reports, on November 24, Nikola’s stock fell over 8% in after-hours trading after its CEO Mark Russell failed to reassure investors that General Motors would not withdraw from their $2 billion partnership—and that founder Trevor Milton would not suddenly dump his shares. (Image source: Nikola) In a CNBC interview, Russell stated that negotiations with GM regarding fuel-cell and battery technology supply, as well as collaboration on an electric pickup truck, were 'ongoing,' but he declined to provide further details. Either party may terminate the partnership if a final agreement is not reached by December 3. Russell also refused to speculate on Milton’s plans for his $91.6 million worth of shares following the expiration of his lock-up period on December 1—shares that include $6 million in 'founder equity' granted to early employees, leaving Milton personally holding $85.6 million in shares. With approximately 361 million shares outstanding, Milton remains Nikola’s largest single shareholder. By regulation, insiders at SPAC-merged companies cannot immediately sell their shares; typically, a 180-day lock-up period applies following the completion of the merger.

Top Rubis Shareholder Says Stock Offer Too Generous for Partners

19 hours ago

Rubis SCA faces opposition from major shareholder Patrick Molis regarding a plan to issue 12.7 million new shares to partners during its conversion to a joint-stock company. The proposal requires a two-thirds majority vote scheduled for December 9.

bloomberg

2026-10-19

Top Rubis Shareholder Says Stock Offer Too Generous for Partners

Top Rubis Shareholder Says Stock Offer Too Generous for Partners

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