LISTING REQUIREMENTS
Requirement for Mainboard IPO
Companies intending to list in Hong Kong must submit listing application to HKEx. The process and rules for listing on the Hong Kong Main Board are set out in the “Main Board Listing Rules”.
Financial Requirements
Companies must satisfy one of the below tests
| Market Cap / Profits Test | Market Cap / Revenue Test | Market Cap / Revenue / Cashflow Test |
|---|---|---|
|
3-Year aggregate profit ≥ HK$50m Market cap ≥ HK$500m |
Latest year revenue ≥ HK$500m Market cap ≥ HK$4bn |
Latest year revenue ≥ HK$500m Market cap ≥ HK$2bn Positive 3-year aggregate operating cash flow (OCF) ≥ HK$100m |
Other Requirements
- Management has remained unchanged for the recent 3 years
- At least 3 independent non-executive directors who must account for at least one third of the board members
- A business record of not less than 3 fiscal years
- A controlling shareholder or director may conduct business in competition with the company but the business must be fully disclosed
- At least 300 shareholders
- The company cannot choose to be listed purely as a placing
- Open subscriptions must be fully underwritten
- No new shares can be issued within six months after the company’s listing
- It is requested to submit financial reports every six months
- Public float at the time of listing is not less than HK$125 million
- The minimum public float is not less than 25%
- If the market cap at the time of listing exceeds HK$10 billion, the minimum public float can be reduced to 15%
- The shares will not be sold within the 6 months after the listed file is disclosed
- Shares can be sold in the next 6 months but control must be retained
- Ownership and control remain unchanged for the recent year
Requirement for GEM IPO
Companies intending to list on GEM Hong Kong must submit listing application to HKEx. The listing process and rules are set out in the “GEM Listing Rules”.
Financial Requirements
- No requirements for profitability
- Positive 2-year aggregate operating cash flow (OCF) ≥ HK$30m
- Market cap ≥ HK$150m
Other Requirements
- Management has remained unchanged for the recent 2 years
- At least 3 independent non-executive directors who must account for at least one third of the board members
- The company must have a business record of not less than 2 fiscal years
- A controlling shareholder or director may conduct business in competition with the company but the business must be fully disclosed
- At least 100 shareholders
- The percentage of three public shareholders who hold the highest shareholdings shall not be more than 50% of the securities held by the public at the time of listing
- The company cannot choose to be listed purely as a placing
- No mandatory underwriting rules
- No new shares can be issued within six months after the company’s listing
- It is requested to submit financial reports every season
- The minimum public float is not less than 25%
- If the market cap at the time of listing exceeds HK$10 billion, the minimum public float can be reduced to 15%
- The shares will not be sold within the first year after the listed file is disclosed
- Shares can be sold in the next year but control must be retained
Companies with WVR Structures Listing Requirements
- The market capitalisation of a company at the time of listing must satisfy one of the following:
– at least HK$40 billion; or
– at least HK$10 billion and revenue of at least HK$1 billion for the most recent audited financial year. - Non-WVR shareholders must be entitled to cast at least 10% of the eligible votes.
- The voting power of any beneficiaries of weighted voting rights must not exceed ten times the voting power of ordinary shares, on any resolution tabled at the issuer’s general meetings.
- At listing, any beneficiaries of weighted voting rights must be members of the applicant’s board of directors.
- The beneficiaries of weighted voting rights must beneficially own collectively at least 10% of the substantial equity. The Exchange may be prepared to accept a lower minimum shareholding percentage if the lower substantial equity still represents a very large amount in absolute dollar terms (for example if the applicant has an expected market capitalisation of over HK$80 billion).
- The company must include the warning “A company controlled through weighted voting rights” on the front page of all listing documents, periodic financial reports, circulars, notifications and announcements and describe the WVR structure, the issuer’s rationale for having it and the associated risks prominently in its listing documents and periodic financial reports.
- The listed equity securities must have a stock name that ends with the marker “W”.
Biotech Companies
- A Biotech Company must:
– demonstrate to the Exchange’s satisfaction that it is both eligible and suitable for listing as a Biotech Company;
– have an initial market capitalisation at the time of listing of at least HK$1.5 billion;
– have been in operation in its current line of business for at least two financial years prior to listing under substantially the same management; and
– ensure that it has available sufficient working capital to cover at least 125% of the company’s costs for at least 12 months from the date of publication of its listing document (after taking into account the proceeds of the applicant’s initial listing). - The company must disclose in its listing documents its strategic objectives, the details of each Core Product, details of its research and development experience, estimate of cash operating costs related to Core Products, specific risks, general risks and dependencies.
- The company must, in respect of each Core Product, prominently disclose to investors a warning that the relevant Core Product may not ultimately be successfully developed and marketed.
- The company must ensure that a portion of the total number of its issued shares with a market capitalisation of at least HK$375 million is held by the public. Any shares allocated to a Cornerstone Investor and any shares subscribed by existing shareholders of the company shall not be considered as held by the public.
- The company must have previously received meaningful third party investment from at least one Sophisticated Investor at least six months before the date of the proposed listing (which must remain at IPO).
- The company must provide ongoing disclosures regarding its R&D activities in its interim and annual reports.
- The listed equity securities must have a stock name that ends with the marker “B”.
Companies from Innovative Sectors Seeking A Secondary Listing in Hong Kong Listing Requirements
- The company must demonstrate to the Exchange that it is both eligible and suitable for listing.
- The company must have a track record of good regulatory compliance of at least two full financial years on a Qualifying Exchange (NYSE, NASDAQ or the “premium listing” segment of the LSE’s Main Market).
- A Non-Greater China Issuer without a WVR structure must have an expected market capitalisation at the time of its secondary listing of at least HK$10 billion.
- A secondary listing applicant with a WVR structure and/or which is a Greater China Issuer must satisfy one of the following:
– a market capitalisation of at least HK$40 billion at the time of listing; or
– a market capitalisation of at least HK$10 billion at the time of listing and revenue of at least HK$1 billion for the most recent audited financial year. - The company may make a listing application on a confidential basis.
- The company must prominently disclose in its listing documents any provisions in its constitutional documents concerning its governance that are unusual compared with normal practices in Hong Kong and are specific to the company.
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