When a Hong Kong issuer must disclose inside information

Inside information can affect the price of a listed corporation's securities. Hong Kong law therefore requires public disclosure on a prompt timetable. The test is not simply “when the next board meeting happens” or “when the company finishes every internal investigation.” It is when the information has come to the corporation's knowledge and the company can disclose it accurately, subject to the statutory safe harbours.

The statutory timing standard

Section 307B(1) of the Securities and Futures Ordinance requires a listed corporation to disclose inside information to the public as soon as reasonably practicable after it has come to the corporation's knowledge. Under the statute, the knowledge question looks to an officer who has, or ought reasonably to have, the information in the course of performing that officer's functions. A company cannot defer its assessment solely because a particular senior executive has not personally read the information.

Take the necessary steps immediately

The SFC explains that “as soon as reasonably practicable” concerns when disclosure occurs, while “immediately” describes taking the steps needed to make that disclosure. Depending on the event, necessary steps can include collecting sufficient detail, assessing likely impact, verifying facts and obtaining professional advice. Those steps must proceed promptly and in parallel where practical; a company should not wait for perfect certainty if it can responsibly disclose what is known.

Use a holding announcement when a full one needs time

If the company needs time to clarify the event or its impact before issuing a complete announcement, the SFC guidance says it should consider a holding announcement. It should disclose as much of the subject matter as possible and explain why a fuller announcement cannot yet be made. A fuller announcement follows as soon as reasonably practicable. A holding announcement does not suspend the disclosure duty or create an unlimited investigation period.

Protect confidentiality before publication

Before full public disclosure, the corporation should keep the information strictly confidential. If it believes confidentiality cannot be maintained or may have been breached, it should immediately disclose the information to the public, subject to the Ordinance and applicable safe harbours. A leak or rumor can therefore change the practical urgency of the response.

Separate inside-information disclosure from market announcements

The SFO inside-information obligation is statutory and has its own tests and safe harbours. HKEX Listing Rules can also require announcements to avoid or correct a false market or in response to an Exchange inquiry. These duties may arise together, but do not collapse them into one rule. The relevant announcement must be accurate, complete in all material respects and not misleading.

Exam sequence

1. Identify whether the information is inside information and whether it has come to the corporation's knowledge under the statutory test.
2. Check whether a section 307D safe harbour applies to the circumstances.
3. If disclosure is required, act as soon as reasonably practicable and keep the information confidential until publication.
4. If facts need clarification, consider a holding announcement rather than waiting silently.
5. Make the full announcement promptly and ensure it is accurate and balanced.

Key takeaway

The duty is prompt disclosure after inside information comes to the corporation's knowledge. Verification and advice are part of the immediate response; they are not a reason to delay indefinitely.

The test is prompt disclosure

Under Part XIVA of the SFO, a listed corporation must disclose inside information to the public as soon as reasonably practicable after the information has come to its knowledge. The board should not wait for a scheduled meeting, an annual report or certainty about every detail if the statutory duty is already triggered. The company must take reasonable measures to ensure that the information is kept strictly confidential until disclosure. A leak, unusual trading or press inquiry can make confidentiality impossible and requires immediate reassessment.

Use the safe harbours narrowly

The SFO contains specified safe-harbour situations where disclosure may be delayed, subject to conditions. These include matters such as an incomplete proposal or negotiation, information whose disclosure would prejudice a commercial interest in specified circumstances, trade secrets, and certain government or regulatory information. The conditions and safeguards are fact-sensitive. A company should document which statutory category it relies on, why it applies, who has access, how confidentiality is protected and when the position will be reviewed. A generic “commercially sensitive” label is not sufficient.

Prepare a holding announcement

If the company cannot disclose all details immediately but information is no longer confidential, it may need to publish a holding announcement with the material facts known, explain what remains uncertain and commit to update the market. The announcement should be accurate and balanced. Coordinate the statutory disclosure duty with HKEX announcement requirements, but do not assume an Exchange filing alone cures every SFO obligation. Following publication, continue monitoring for material developments and correct misleading or incomplete information promptly. The goal is timely equal access to material information, not perfect certainty before speaking.

Practical control and exam application

A board protocol should define who assesses information, how quickly legal, company-secretarial and senior staff are notified, and who may approve an announcement. Keep an insider list and restrict access while disclosure is pending. The company should not selectively brief analysts or major investors before public release. After a leak or media report, reassess confidentiality immediately and coordinate with the Exchange and SFC as required. Record the time the information became known, the decision on disclosure or safe harbour, and subsequent review points; a defensible record supports timely judgment.

Records and exception handling

The disclosure should include sufficient detail for investors to understand the nature and likely effect of the information; a vague statement that “an announcement will follow” may not satisfy the duty once the material facts are known. Avoid speculation, but distinguish known facts from estimates and explain uncertainty. After the announcement, keep the public record current as the matter develops. If the issuer relies on a safe harbour, confidentiality remains essential; if confidentiality is lost, reassess disclosure immediately rather than waiting for the original review date.