The Hong Kong Stock Exchange is currently the world’s 7th largest stock exchange, and the third largest in Asia after Japan and Shanghai. In terms of IPO fund raising, however, Hong Kong ranks third (after the New York Stock Exchange (NYSE) and the London Stock Exchange Group). Hong Kong has ranked in the world’s top five IPO exchanges and as the top Asian exchange for IPOs for the past 15 years.

In Hong Kong, there are two boards that companies may be listed – Main Board or the Growth Enterprise Market (GEM) of the Stock Exchange. The Main Board is suitable for established companies with at least 3 years’ profit track record and the equity securities can be listed in the form of shares or depository receipts. Companies who do not meet the Main Board’s criteria can list on GEM. GEM is a second board and a stepping-stone towards the Main Board. Equity securities can only be listed in the form of shares in GEM.

Depending on the complexity of the listing company, the IPO process may vary between 4 months to 2 years. The financial printer is critical in the IPO listing process:

  • It is the conduit for bankers, companies, accountants and valued stakeholders.

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  • Experience is needed to handle the sophisticated process as it plays an important role in managing all parties’ expectations

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  • Dedicated and experienced project management team providing in-depth knowledge for large, complex IPOs.

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  • During the last stages of the IPO process, skilled teams provide fast and responsive contingent plans for mission-critical and unexpected situations.

Main Board Listing Summary:

  • Market Suitability: Established and larger companies that meet the Main Board’s financial requirements.

  • Trading Record: 3 financial years.

  • Types of Securities: Equities (shares and depositary receipts), debts, third party derivatives, unit trusts and investment vehicles.

  • Listing Debt Securities: Allowed.

  • Management Continuity Requirement: 3 preceding financial years.

  • Ownership Continuity Requirement: At least for the most recent audited financial year.

  • Financial Requirement: 

    • Must meet one of the three financial criteria:​

      • ​Profit Test

      • Market Capitalization/Revenue / Cashflow Test

      • Market Capitalization / Revenue Test

  • Minimum Market Capitalization:​​

    • ​For shares and Depository Receipts: At least HK$200 million (approx. $26 million USD) at the time of listing.

    • For options, warrants or similar rights: HK$10 million (approx. $1.3 million USD) at the time of listing.

  • Statement of Future Business Plans & Prospects:​

    • ​No specific requirement. New applicants are expected to provide a general statement of future plans and prospects.

  • Underwriting Requirement:​

    • ​New issue must be fully underwritten.

  • Minimum Public Float:​

    • ​At least 25% of the issuer’s total issued share capital subject to a minimum of HK$50 million (approx. $6.4 million USD) must at all times be held by the public.

  • ​Competing Businesses of Directors or Controlling Shareholders

    • ​Allowed, but full disclosure is required.

  • ​Shareholders Spread

    • ​The equity securities in the hands of the public should be held among at least 300 holders (if qualifying under the Profit test or Market Cap / Revenue / Cashflow test) and 1,000 holders (if qualifying under the Market Cap / Revenue test).

  • ​Offering Mechanism Restrictions

    • ​May not list by way of placing only.

  • ​Accountants’ Report

    • ​Must be prepared in accordance with either HKFRS1 or IFRS2. US GAAP3 is acceptable under certain circumstances.

    • Must be prepared for at least 3 financial years, preceding the issue of the prospectus.

  • ​Acceptable Jurisdictions

    • ​Hong Kong, Mainland China, Bermuda, Cayman Islands, Australia and Canada. Other jurisdictions that prove that their standards of shareholder protection is equivalent to that of Hong Kong’s.

GEM Board Listing Summary:

  • Market Suitability: Companies who do not meet the Main Board’s criteria.

  • Trading Record: 2 financial years.

  • Types of Securities: Equities (shares only) and debt securities (options, warrants and convertible securities).

  • Listing Debt Securities: Allowed (subject to certain conditions).

  • Management Continuity Requirement: 2 preceding financial years.

  • Ownership Continuity Requirement: For the preceding full financial year.

  • Financial Requirement: 

    • Must meet one of the three financial criteria:​

      • ​No Profit Requirement

      • Market Capitalization of at least HK$100 million (approx. $13 million USD) at the time of listing.

      • Positive cashflow from operating activities of at least HK$20 million (approx. $2.6 million USD) in aggregate for the two preceding financial years.

  • Minimum Market Capitalization:​​

    • ​For shares and Depository Receipts: At least HK$100 million (approx. $13 million USD) at the time of listing.

    • For options, warrants or similar rights: HK$6 million (approx. $0.8 million USD) at the time of listing.

  • Statement of Future Business Plans & Prospects:​

    • ​Must state business objectives for the remaining financial year during which listing occurs and for 2 financial years thereafter.

  • Underwriting Requirement:​

    • ​Not Required.

  • Minimum Public Float:​

    • ​At least 25% of the issuer’s total issued share capital subject to a minimum of HK$30 million (approx. $3.8 million USD) must at all times be held by the public.

  • ​Competing Businesses of Directors or Controlling Shareholders

    • ​Allowed, but full disclosure is required.

  • ​Shareholders Spread

    • ​The equity securities in the hands of the public should be held among at least 100 holders.

  • ​Offering Mechanism Restrictions

    • ​May list by way of placing only.

  • ​Accountants’ Report

    • ​Must be prepared in accordance with either HKFRS1 or IFRS2. US GAAP3 is acceptable if the company is listed, or will be simultaneously listed, on either the NYSE or the NASDAQ National Market.

    • Must be prepared for at least 2 financial years, preceding the issue of the prospectus.

  • ​Acceptable Jurisdictions

    • ​Same as that of Main Board.

Notes:

1HKFRS: Hong Kong Financial Reporting Standards

2IFRS: International Financial Reporting Standards
3US GAAP: Generally Accepted Accounting Principles in the United States of America

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