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Circular to Management Companies of SFC-authorised Real Estate Investment Trusts (REIT) - Treasury units of SFC-authorised REITs


  1. In accordance with our circular dated 31 January 20081 (Circular), SFC-authorised REITs may repurchase their own units on The Stock Exchange of Hong Kong Limited (Exchange) subject to similar requirements applicable to listed companies under the Rules Governing the Listing of Securities on the Exchange (Listing Rules).

  2. The SFC noted that the Exchange has recently announced various amendments to the Listing Rules relating to treasury shares (Listing Rules Amendments) following a public consultation. Details of the Listing Rules Amendments are set out in the consultation conclusions paper issued by the Exchange in April 20242. Listing Rules Amendments and application to REITs

  3. The Listing Rules Amendments are introduced mainly to remove the requirement to cancel repurchased shares and adopt a framework to govern the resale of treasury shares. The Listing Rules Amendments will come into effect on 11 June 2024.

  4. It has been the SFC’s long-established policy to regulate REITs in the same manner as listed issuers in view of their similarities in terms of economic nature and investors’ interests.

  5. Accordingly, in line with the Circular and the Listing Rules Amendments, SFC-authorised REITs may hold repurchased units in treasury and resell them, subject to similar requirements as applicable to treasury shares of listed companies under the Listing Rules Amendments. These include requirements on conducting resale on a pre-emptive basis or with a shareholders’ mandate, disclosure and reporting requirements, imposition of a moratorium period after resale or repurchase, voting and dealing restrictions as well as lock-up requirements.

  6. In particular, REIT managers should note the following in relation to an SFC-authorised REIT: (a)   Under 12.2 of the Code on REITs (REIT Code), a REIT may issue new units during the financial year which does not increase its total number of units outstanding at the end of the previous financial year by more than 20% (issue mandate). In line with the Listing Rules Amendments, the number of units repurchased by a REIT in the year under a repurchase mandate and held in treasury (Relevant Treasury Units) may be added to such issue mandate limit. As the issue mandate is not subject to unitholders’ approval, no separate unitholders’ approval would be required for the resale of the Relevant Treasury Units in the year. Both the issue mandate limit and the repurchase mandate limit should be calculated based on the number of issued units of a REIT excluding any treasury units held by the REIT at any given time3. (b)   Treasury units shall not be regarded as outstanding and shall be excluded from a REIT’s issued or voting units for the purposes of 9.9(c) and (h) of the REIT Code, as well as for various other purposes in line with the Listing Rules Amendments (e.g. public float, market capitalisation, mandate limits and size tests for transactions). Also, treasury units shall not be entitled to unitholders’ rights including distribution and voting rights. (c)   Any changes in the number of treasury units of REITs should be reported in the next-day disclosure returns and monthly returns in accordance with the requirements under Appendix E3 to the Listing Rules4.

  7. REIT managers intending to hold and/or resell treasury units under the new framework should review and update the constitutive documents, compliance manuals and/or other relevant documents of their REITs where appropriate. Where amendments to the constitutive documents are required, REIT managers should ascertain whether unitholders’ approval would be required in compliance with 9.6 of the REIT Code.

  8. REIT managers should satisfy themselves that a proposed purchase of units, holding, sale or transfer of treasury units complies with all applicable requirements set out or referred to in this circular.

  9. To provide more practical guidance on the application of the new requirements, the Frequently Asked Questions relating to Real Estate Investment Trusts5 have been updated. A revised Compliance Checklist for Unit Buy-back Circular is also available on the SFC’s website6.

  10. REIT managers are welcome to contact the relevant case officers should they wish to seek clarification of any aspect of this circular.

Investment Products DivisionSecurities and Futures Commission

3 Illustrative examples are set out in the new Question 65A of the Frequently Asked Questions relating to Real Estate Investment Trusts

4 All relevant confirmations required to be provided in such returns should also be provided.

5 Please refer to the updated Questions 55 and 65 and the new Question 65A of the Frequently Asked Questions relating to Real Estate Investment Trusts

6 Compliance Checklist for Unit Buy-back Circular. This revised checklist will supersede the checklist appended to the Circular.



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