BACK-DOOR listings in Hongkong may be forced to go through Hongkong Stock Exchange new listing-approval procedures under a package of directives issued yesterday. In a joint statement the Hongkong Stock Exchange and the Securities and Futures Commission (SFC) yesterday said they were tightening up the application of local securities rules when considering back-door listings. What will be subject to specific attention will be back-door listings involving the acquisition of a stake in the target company below 35 per cent. In such cases, should the acquisitor attempt to inject new assets into the listing the stock exchange is threatening to invoke the new listing rules when considering any such transaction. Hongkong Stock Exchange head of listing Herbert Hui stressed: ''What we are trying to do is to ensure that those involved in these types of transactions operate within the rules.'' A back-door listing occurs when an unlisted company purchases control of a listed company and then injects assets from the acquiring company into the listed vehicle. ''In this way, the acquiring company can in effect become listed, without going through the same vetting process prescribed for new listing on the exchange,'' said the regulatory statement. When back-door listings occur, the regulators will be demanding that the buyer offer all shareholders affected by the transaction a categorical explanation detailing what the buyer intends to do with the listing. Suitability for retention of a listing will depend on the experience of the new management. The statement said: ''Where injections or disposals are proposed as part of the acquisition the exchange may treat the issuer as a new applicant for listing. ''If the exchange forms the view that any injections constitute an attempt to achieve a back-door listing and thereby a circumvention of the exchange listing rules, the exchange may also decide to treat the issuer as a new applicant for listing.'' The statement also says: ''Disposals by the issuer to a former director or former controlling shareholder following any acquisition may be treated, on a case by case basis, as connected transactions.'' In addition the SFC takeovers executive said: ''Artificial arrangements to pass the controlling shareholder a hidden premium for the sale of the controlling interest are strictly prohibited.'' If the SFC determines such a circumstance has arisen it can, under its present powers, demand that minority shareholders be compensated for the difference while the financial advisers involved in the transaction could lose their licences. SFC deputy chairman Ermanno Pascutto said: ''Both the exchange and the SFC closely scrutinise all details of back-door listings to ensure that the interests of minority shareholders are fully protected.'' The statement issued by the regulators is a response to growing market concern at the proliferation of this activity.