THE signing of a co-operation agreement between the stock exchanges and regulatory bodies of Hongkong and China is expected to clear the final hurdle for the listing of nine mainland enterprises in the territory. The memorandum will be signed on Saturday by representatives of the Securities and Futures Commission, the Stock Exchange of Hongkong, the China Securities Regulatory Commission and the two exchanges in Shanghai and Shenzhen. According to a source, the memorandum will define the respective role and function of the signing parties. It sets out the basic principles of co-operation and the legal framework under which it is to be carried out. It also covers the provision and disclosure of information, the mechanism for regular consultation between the two sides, and the training and exchange of personnel. ''The memorandum can be regarded as expression of willingness by both sides to co-operate in listing of mainland enterprises in Hongkong, while the actual arrangement for Hongkong listing will be spelled out in supplementary documents,'' the source said. The supplementary documents include the addendum and explanation to the Standard Opinion on Joint Stock Companies and articles of association of mainland companies listing in Hongkong. Under the territory's listing rules, overseas issuers should be incorporated or established in a jurisdiction where the standards of shareholder protection are at least equivalent to those provided in Hongkong. If the jurisdiction in which the overseas issuer is incorporated is unable to provide such standards, listing in Hongkong is still possible by means of amending the issuer's constitutional documents or a listing agreement to provide equivalent standards of shareholder protection. The Standard Opinion governs the reform of enterprise structures in China. However, it was not drafted for Hongkong listing purposes and there are some areas which need to be revised in order to meet the requirements of the Hongkong exchange. It is understood the explanation will seek to clarify ambiguous clauses while the addendum will include all new clauses added to the Standard Opinion. New provisions include a definition of the shares listed in Hongkong, and is expected to clarify that dividend payments for H shares need not be subject to state foreign exchange control. The provision is to achieve the requirement of free transferability and to ensure that overseas investors will be able to realise their profits in foreign currency. Explanatory clauses are expected to clarify such concepts as state shares, legal person shares, individual shares and foreign capital shares because the legal status of the various types is not clearly distinguished. The articles of association for mainland companies listing in Hongkong is expected to further bring the enterprises closer to international standards. The source said that although China would adopt a new accounting system from next month, the old system would continue to be in use in some enterprises. ''Therefore, it is necessary to require the listing companies to conform with IAS and SSAP accounting standards. Otherwise, they will not be qualified to list in Hongkong,'' he said. The source said the signing of the memorandum and related documents would have far-reaching implications. The obvious benefit is that there will be a standardised framework and accepted procedure for mainland enterprises seeking Hongkong listing to follow. ''Even if the enterprises are listed in Hongkong, they are still China-incorporated. The mechanism for the relevant parties to jointly supervise these companies will be very important for maintaining investors' confidence,'' he said. In addition, the co-operation between the Chinese and Hongkong regulatory authorities would help the growth of the mainland securities market, he said.