HKEx Consults on Suggestions to Enhance Competitiveness of Listing Mechanism, Including Expanding Scope of IPO Confidential Filing Applications

Hong Kong Exchanges and Clearing (00388) has published a “Consultation Document” seeking market feedback on a series of proposals to enhance the competitiveness of Hong Kong’s listing mechanism. Key measures include optimizing regulations for different voting rights listings and facilitating overseas issuers to list in Hong Kong. The consultation period lasts 8 weeks, ending on May 8.

Among the proposals, for dual-class share structures, it is suggested to lower the listing market capitalization threshold to not less than HKD 20 billion, or not less than HKD 6 billion with revenue in the most recent audited fiscal year of at least HKD 600 million; the current requirements are a market cap of at least HKD 40 billion, or HKD 10 billion with revenue of at least HKD 1 billion in the most recent audited fiscal year.

Additionally, if an applicant’s market value at listing is at least HKD 40 billion, the upper limit for different voting rights per share could be increased to no more than 20 votes per share (a 20:1 voting ratio limit); the current regulation limits the ratio to no more than 10:1.

Regarding confidential submission of listing applications, the option has been limited to qualified secondary applicants, biotech companies, special tech companies, or companies granted exemptions in specific cases. It is proposed to relax this restriction so that all new applicants can choose to submit their applications confidentially.

HKEX stated that these proposals aim to create a more diverse and vibrant market environment, offering richer investment opportunities to better meet the needs of investors and issuers.

Aiming to Strengthen the IPO Market Position

HKEX Listing Division Head Wui Kit-suen said that HKEX is committed to ensuring a robust and competitive listing mechanism to reinforce Hong Kong’s status as a leading international financial center. Through in-depth communication with stakeholders, it was found that they generally wish to seize more high-quality innovative investment opportunities and hope that the listing process can be more efficient and adaptive while maintaining investor trust and confidence. Therefore, HKEX has put forward these proposals.

She added that HKEX successfully implemented a series of listing reforms in 2018, fundamentally reshaping Hong Kong’s stock market structure and attracting many innovative companies to list in Hong Kong. These proposals are based on the成果 of those reforms. HKEX welcomes feedback on these proposals and looks forward to continued communication with stakeholders to jointly strengthen Hong Kong’s position as the preferred fundraising hub for growth companies and the top global market for Asian capital deployment.