Jun 2026
Hong Kong is implementing an uncertificated securities market (“USM”) regime, which is scheduled to go live on 16 November 2026. The USM regime removes the longstanding requirement for paper certificates to evidence legal title to listed securities, enabling legal title to be held, evidenced and transferred electronically through a UNSRT system operated by an Approved Securities Registrar (“ASR”). Cayman Islands and Bermuda are among the “specified jurisdictions” (together with Hong Kong and Mainland China) that will participate first in the regime when it goes live in November 2026. Issuers incorporated in these jurisdictions and already listed on the Stock Exchange of Hong Kong (“SEHK”) will transition to the USM regime over approximately five years from the implementation date. New listings from 16 November 2026 must be participating securities from the outset.
Key Obligations for Issuers
Conyers does not provide Hong Kong legal advice. Issuers requiring detailed advice on their obligations under Hong Kong law should consult their Hong Kong legal advisers. Based on our understanding of the published guidance, the key obligations for issuers include:
Appointment of an ASR: All issuers of prescribed securities must appoint an ASR to maintain the register of holders of those securities. This appointment must be in place from the time securities are first listed (or from the USM implementation date, whichever is later) and continue until the securities cease to be listed. Issuers whose prescribed securities are to become participating securities must ensure their ASR is approved to provide and operate a UNSRT system.
- Transition Timeline: For securities already listed on the SEHK at the USM implementation date, issuers will be assigned a specified date by which their securities must become participating securities. For new listings after the implementation date, securities must be participating securities from the listing date. Issuers will receive at least three months’ advance notice of their specified date.
- Dematerialisation: Once securities become participating securities, any new securities issued must be in uncertificated form. No new share certificates may be issued. Existing certificates remain valid until cancelled but will need to be dematerialised over time. Issuers may initiate dematerialisation even without a holder request and are encouraged to do so in certain circumstances to facilitate the transition to the USM regime.
- Electronic Transfers: Transfers of participating securities held in uncertificated form are to be effected by specified request through the UNSRT system, rather than by paper instrument of transfer. Paper instruments of transfer may only be used in exceptional circumstances.
Constitutional Document Amendments
The articles of association or bye-laws of a listed company must be amended to be consistent with the USM regime before that company’s securities can become participating securities. The SFC has confirmed that the requirements under the USM regime are not prohibited under the laws of Bermuda or the Cayman Islands, but issuers must still ensure their articles of association or bye-laws incorporate sufficient reference to and consistency with the USM regime. Issuers will have until the later of (i) 16 November 2027 (the first anniversary of the USM implementation date) and (ii) the date of their first annual general meeting after the USM implementation date to amend their articles of association or bye-laws. Key areas requiring amendment include:
- Form of Shares: Existing provisions requiring the issue of share certificates must be amended or qualified to clarify that no certificates will be issued whilst shares remain participating securities (save as otherwise permitted under the USM Rules).
- Transfer and Transmission: Existing provisions governing transfers must be amended to permit transfers by specified request as well as by instrument of transfer, and to clarify which method applies in which circumstances.
- Dematerialisation and Rematerialisation: New provisions should be added to permit shares to be issued in uncertificated form, to allow dematerialisation (at the issuer’s initiative or at the holder’s request) and to address rematerialisation on delisting.
- Register of Members: Existing provisions relating to the register of members should be amended to ensure consistency with the USM Rules, including requirements for recording whether securities are held in certificated or uncertificated form, and restrictions on book closure periods.
- Lost/Damaged Certificates: Existing provisions requiring replacement certificates should be amended to clarify that lost or damaged certificates will not be replaced with new certificates, but the shares may instead be dematerialised.
- Authenticated Messages: Issuers may wish to permit the use of authenticated messages for communications with shareholders, including for proxy appointments and revocations.
- Definitions: New definitions will need to be added to reflect terms used in the USM regime.
Key Timelines and Action Points
We would recommend that Issuers should take the following steps as soon as practicable:
- Engage with your ASR: Reach out to your share registrar/ASR to understand their readiness for the USM regime and to discuss timing for your securities to become participating securities.
- Review constitutional documents: Begin reviewing your articles of association or bye-laws to identify amendments required for USM compliance. The SFC has published sample provisions based on the Hong Kong Companies Ordinance model articles, which can be adapted for Cayman Islands and Bermuda companies.
- Plan for shareholder approval: Constitutional amendments will require shareholder approval. Consider the timing of your next general meeting and factor in sufficient lead time for documentation and notice periods.
- New listings: For companies planning to list after 16 November 2026, the securities must be participating securities from the listing date and be issued in uncertificated form. Constitutional documents and listing documents must be prepared with USM compliance from the outset.
How Conyers Can Assist
Conyers has significant experience advising Cayman Islands and Bermuda incorporated companies listed on the SEHK. We are well placed to assist issuers in preparing for the USM regime, including:
- reviewing existing articles of association or bye-laws and advising on amendments required for USM compliance;
- preparing amended constitutional documents and related resolutions for shareholder approval;
- providing Cayman Islands or Bermuda legal opinions as required; and
- coordinating with Hong Kong counsel on the overall transaction timeline and regulatory requirements.
If you would like to discuss how the USM regime may affect your company, please contact Richard Hall, Ryan McConvey or your usual contact at Conyers.