HKSI Paper 7 The equity market question: Listed Harbour Logistics Ltd

HKSI Paper 7The equity market

Listed Harbour Logistics Ltd wants HK$80 million within a week from three institutions, through new shares equal to 8% of its issued shares. Its general mandate is unused. Which method is most suitable?

A An open offer to all shareholders under the general mandate
B A specific mandate placing to the institutions, approved at a general meeting
C A rights issue to all shareholders, underwritten by the institutions
D A placing to the institutions under the general mandate

Show the answer and explanation

Answer: D. A placing to the institutions under the general mandate

A placing obtains subscriptions primarily from persons selected or approved by the issuer or an intermediary (Main Board Rule 7.09), and a listed issuer may place new shares within a general mandate granted under Rule 13.36(2)(b) (Rule 7.12A(1)). The mandate covers up to 20% of issued shares, so 8% fits, no meeting is needed and the placing can complete in days. A specific mandate placing needs approval at a general meeting, which cannot be called and held within a week and is unnecessary while the mandate is unused. An open offer, even under the mandate, goes to all shareholders and must stay open for at least 10 business days (Rule 7.25). A rights issue also goes to all shareholders and takes weeks; underwriters only take up the shortfall. Source: HKEX Main Board Listing Rules r.7.09, r.7.12A, r.7.25, r.13.36(2)(b) (as amended 11 June 2024) (as at October 2026).

Common mistake

Picking a method because it names the right investors or the mandate. Only a mandate placing is both targeted and fast enough.

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Original study material mapped to the public HKSI Paper 7 syllabus. Unofficial, not endorsed by HKSI Institute or the SFC. Verify figures and rules against current guidance before relying on them.