HKSI Paper 7 The equity market question: shares for cash under the mandate

HKSI Paper 7The equity market

Lantern Tech Ltd's general mandate was granted when it had 500 million issued shares; it holds no treasury shares and has bought none back. May it place 120 million new shares for cash under the mandate at a 15% discount to the benchmarked price?

A No: any placing at a discount to the market price needs a specific mandate
B Yes: the 15% discount is within the limit, which is the only test for a mandate placing
C Yes: a general mandate allows up to 25% of the issued shares to be placed for cash
D No: the mandate is capped at 100 million shares, so a specific mandate is needed

Show the answer and explanation

Answer: D. No: the mandate is capped at 100 million shares, so a specific mandate is needed

Under Main Board Rule 13.36(2)(b), securities issued under a general mandate must not exceed 20% of the issued shares (excluding treasury shares) at the date of the resolution, plus any shares bought back since if shareholders have approved adding them. Here that is 20% x 500 million = 100 million shares, so 120 million is too many. Lantern Tech needs a specific mandate placing approved in general meeting (Rule 7.12A(2)). The discount test in Rule 13.36(5) is a second limit, not the only one: a mandate placing for cash may not be at a discount of 20% or more to the benchmarked price, so 15% passes it. The cap is 20%, not 25%, and a discount below 20% is permitted. Source: HKEX Main Board Listing Rules r.7.12A, r.13.36(2)(b), r.13.36(5) (as amended 11 June 2024) (as at October 2026).

Common mistake

Checking only the discount. A general-mandate placing must pass both the 20% size cap and the under-20% discount test.

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Related HKSI Paper 7 questions

Thames Retail plc, widely held and listed in London for 20 years, seeks a Hong Kong listing of its existing shares, with no new shares and no marketing. Which listing method fits?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?Mr Chan holds 3 million of Lok Fu Ltd's 30 million shares. Lok Fu places 10 million new shares with other investors. What is Mr Chan's percentage holding afterwards?

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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.

HKSI Paper 7 The equity market question: shares for cash under the mandate

HKSI Paper 7The equity market

A No: any placing at a discount to the market price needs a specific mandate
B Yes: the 15% discount is within the limit, which is the only test for a mandate placing
C Yes: a general mandate allows up to 25% of the issued shares to be placed for cash
D No: the mandate is capped at 100 million shares, so a specific mandate is needed

Show the answer and explanation

Answer: D. No: the mandate is capped at 100 million shares, so a specific mandate is needed

Common mistake

Checking only the discount. A general-mandate placing must pass both the 20% size cap and the under-20% discount test.

Practise more Paper 7 The equity market questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practising →

Build a daily practice habit — a few exam-style questions a day, with worked answers. Free to start.

Start practising →

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.