News

2017年3月17日 金曜日

Listing on the Stock Exchange of HK

Date: 17/03/2017
Christy Li

The Stock Exchange of Hong Kong (the "Exchange") is one of the stock exchanges with the largest market capitalisation and active trading in the world. It is an ideal platform for enterprises to raise capital. It is expected that Hong Kong will continue to rank top globally for initial public offerings in 2017, with 130 companies raising funds up to HK$220 billion. This article will briefly introduce the listing methods and the basic listing requirements for listing on the Exchange.

(I) Listing Methods
A company wishing to go public in Hong Kong can apply to list either on the Main Board or the Growth Enterprise Market ("GEM") of the Exchange. There are four methods of listing, the details of which are set out as below:
(i) Offer for Subscription: this is an offer to the public by, or on behalf of, an issuer of its own securities for subscription.
(ii) Offer for Sale: this is an offer to the public by, or on behalf of, the holders or allottees of securities already in issue or agreed to be subscribed.
(iii) Placing: The obtaining of subscriptions for, or the sale of securities by, an issuer or intermediary primarily from or to persons selected or approved by the issuer or the intermediary.
(iv) Introduction: this is an application for listing of securities already in issue where no marketing arrangements are required.
In addition, a GEM issuer may transfer its listing to the Main Board under a streamlined procedure.

(II) Basic Listing Requirements
(i) Financial Requirements
A Main Board new applicant must have a trading record of not less than three financial years and meet one of the following three financial criteria:



  Profit Test Market Cap/Revenue Test Market Cap/Revenue/Cashflow Test
Profit Attributable to Shareholders At least HK$50 million in the last 3 financial years (with profits of at least HK$20 million recorded in the most recent year, and aggregate profits of at least HK$30 million recorded in the 2 years before that) - -
Market Cap At least HK$200 million at the time of listing At least HK$4 billion at the time of listing At least HK$2 billion at the time of listing
Revenue   At least HK$500 million for the most recent audited financial year At least HK$500 million for the most recent audited financial year
Cashflow     Positive cashflow from operating activities of at least HK$100 million in aggregate for the three preceding financial years

A GEM new applicant must have a trading record of at least two financial years comprising:
i. A positive cashflow generated from operating activities in the ordinary and usual course of business of at least HK$20 million in aggregate for the two financial years immediately preceding the issue of the listing document
ii. Market cap of at least HK$100 million at the time of listing

(ii) Acceptable Jurisdictions
Chapter 19 of the Main Board Listing Rules and Chapter 24 of the GEM Listing Rules provide the general framework applicable to all overseas companies seeking a listing on the Exchange.  Main Board Rule 19.05(1)(b) and GEM Rule 24.05(1)(b) and the explanatory notes thereto set out the shareholder protection standards that are expected of an overseas company when seeking a primary listing on the Exchange. Applicants incorporated outside Hong Kong and other recognised jurisdictions seeking a primary listing on Main Board and GEM are assessed on a case-by-case basis and have to demonstrate they are subject to appropriate standards of shareholder protection, which are at least equivalent to those required under Hong Kong law.

(iii) Accounting Standards
A new applicant's accounts must be prepared in accordance with Hong Kong Financial Reporting Standards, International Financial Reporting Standards or China Accounting Standards for Business Enterprises for PRC issuer only.

For Main Board new applicants, accounts of an overseas-incorporated issuer seeking a secondary listing on the Exchange prepared in accordance with generally accepted accounting principles in the United States of America or other accounting standards may be acceptable by the Exchange on a case by case basis.

(iv) Suitability for Listing
Both the issuer and its business must, in the opinion of the Exchange, be suitable for listing. An issuer or its group (other than an investment company) whose assets consist wholly or substantially of cash or short-dated securities will not normally be regarded as suitable for listing, except where the issuer or group is solely or mainly engaged in the securities brokerage business.

(v) Operating History and Management
A Main Board new applicant must have a trading record period of at least 3 financial years with management continuity for at least the 3 preceding financial years; and ownership continuity and control for at least the most recent audited financial year. Under the Market Cap/Revenue test, the Exchange may accept a shorter trading record period under substantially the same management if the new applicant can demonstrate that its directors and management have sufficient and satisfactory experience of at least three years in the line of business and industry of the new applicant; and there is management continuity for the most recent audited financial year.

A GEM new applicant must have a trading record of at least 2 full financial years with substantially the same management throughout the 2 full financial years; and a continuity of ownership and control throughout the full financial year immediately preceding the issue of the listing document. The Exchange may accept a shorter trading record period and waive or vary the ownership and management requirements for newly-formed "project" companies and mineral companies.

(vi) Minimum Market Capitalisation
The expected market capitalisation of a new applicant at the time of listing must be at least HK$200 million for Main Board and HK$100 million for GEM.

(vii) Market Capitalisation of Public Float
The expected market capitalisation at the time of listing of the securities of a new applicant which are held by the public must be at least HK$50 million for Main Board and HK$30 million for GEM.

(viii) Public Float
At least 25% of the issuer's total number of issued shares must at all times be held by the public. Where the issuer has one class of securities or more apart from the class of securities for which listing is sought, the total securities of the issuer held by the public on all regulated markets at the time of listing must be at least 25% of the issuer's total number of issued shares. However, the class of securities for which listing is sought must not be less than 15% of the issuer's total number of issued shares.

(ix) Spread of Shareholders
The equity securities seeking for listing must be held among at least 300 holders for Main Board, and at least 100 persons for GEM.

(x) Offering Mechanism
A new applicant may not list by way of placing only if there is likely to be significant public demand for its securities. For GEM, A new applicant is free to decide on its offering mechanism and may list on our Exchange by way of placing only.

(xi) New Issue Price
Both the Main Board and the GEM Listing Rules do not impose conditions on the new issue price. However, new shares cannot be issued at a price below their nominal value.

投稿者 Kuribayashi Sogo Law Office

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