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Hong
Kong Listing refers to the initial public offering (Initial Public Offerings)
in Hong Kong.The enterprise offers the shares to investors through the stock
exchange publicly for the first time , in order to raise capital for the
development of enterprises. Hong Kong offers many outstanding benefits for
companies to list in it.
Advantages
of listing in Hong Kong
1.
Gateway to Mainland China and the Rest of Asia
With
close trading and business links to Mainland China and other Asian economies,
Hong Kong is strategically located in a high growth region. As an
internationally recognized financial centre with an abundance of professional
expertise, its stock exchange has provided many Asian and multinational
companies with fund raising opportunities.
2. Mainland
China’s Growth
Hong
Kong is an ideal place for companies seeking exposure in the rapidly growing
Mainland Chinese market. Companies can take advantage of the multitude of
opportunities offered by China’s arrival as a global economic power.
3. Respected
and Well Established Legal System
Hong
Kong has a well-established legal system based on English common law, which
provides a strong and attractive foundation for companies’ fund raising and
helps instill confidence in investors.
4.
International Accounting Standards
Hong
Kong Financial Reporting Standards and International Financial Reporting
Standards. HK also accept the use of generally accepted accounting principles
in the United States of America (US GAAP) or other accounting standards, in specific
circumstances, particularly for secondary listings.
5. Sound
Regulatory Framework
HK
Listing Rules are on a par with international standards and demand a high level
of disclosure from listed companies. International corporate governance
requirements ensure that investors have access to timely information which
allows them to appraise the position and prospects of listed companies at all
times.
6. Free
Flow of Capital
Hong
Kong is one of the most open markets in the world. With zero capital flow restrictions,
numerous tax advantages, currency convertibility and the free transferability
of securities, Hong Kong offers an attractive market for both companies and
investors alike.
7.
Advanced Clearing and Settlement Infrastructure and Financial Services
Hong
Kong boasts sound and solid securities and banking sectors supported by a
strong trading, clearing and settlement infrastructure.
8. Home
International Market for Mainland Chinese Companies
As Hong
Kong is part of China, its market is the first choice for Mainland Chinese
companies seeking a listing on an international market. Statistics show its
stock exchange has a significant portion of the trading in shares of Mainland
Chinese enterprises listed in Hong Kong and other markets outside the Mainland.
Listing
Requirements on Hong Kong Stock Exchange Main Board
1.
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:
1.1Profit
Test
Profit
Attributable to Shareholders is 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 is at least HK$200 million at the time of listing.
1.2
Market Cap/Revenue Test
Market
Cap is at least HK$4 billion at the time of listing.
Revenue
is at least HK$500 million for the most recent audited financial year.
1.3Market
Cap/ Revenue/ Cash flow Test
Market
Cap is at least HK$2 billion at the time of listing.
Revenue
is at least HK$500 million for the most recent audited financial year.
Positive
cash flow from operating activities of at least HK$100 million in aggregate for
the three preceding financial years.
Note:
The Exchange may accept a shorter trading record period and/or may vary or
waive the above profit or other financial standards requirement.
2.
Acceptable Jurisdictions:
Applicants
incorporated outside Hong Kong and other recognized jurisdictions seeking a
primary listing on Main Board 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. A roadmap that compromises a schedule of shareholder protection matters is
set out in the attachment to the Joint Policy Statement dated 7 March 2007 to
distil the key requirements for ensuring appropriate standards of shareholder
protection from Exchange’s current approach.
3.
Accounting Standards:
-A new
applicant’s accounts must be prepared in accordance with either Hong Kong
Financial Reporting Standards or International Financial Reporting Standards.
-Banking
companies must also comply with the Financial Disclosure by Locally
Incorporated Authorized Institutions issued by the Hong Kong Monetary
Authority.
-For Main
Board new applicants, accounts of an oversea-incorporated issuer prepared in
accordance with generally accepted accounting principles in the United States
of America (US GAAP) or other accounting standards may be acceptable by the
Exchange under certain circumstances.
4.
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.
5.
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;
-Ownership
continuity and control for at least the most recent audited financial year.
Exception:
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;
-Management
continuity for the most recent audited financial year.
6.
Minimum Market Capitalization:
The
expected market capitalization of a new applicant at the time of listing must
be at least HK$200 million.
7.
Market Capitalization of Public Float:
The
expected market capitalization 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.
8.
Public Float:
At least
25% of the issuer’s total issued share capital must at all times be held by the
public. Where the issuer has one class of securities or more, the total
securities of the issuer held by the public at the time of listing must be at
least 25% of the issuer’s total issued share capital. However, the class of
securities for which listing is sought must not be less that 15% of the
issuer’s total issued share capital, having an expected market capitalization
at the time of listing of not less than HK$50 million. The
Exchange may, at its discretion, accept a lower percentage of between 15% and
25% in the case of issuers with an expected market capitalization at the time
of listing of over HK$10 billion.
9.
Spread of Shareholders:
For
issuers qualified for listing :
-The
profit test or the market capitalisation/revenue/cash flow test: 300
shareholders
-The
market capitalization/revenue test: 1,000 shareholders
-Not more
than 50% of the securities in public hands at the time of listing can be
beneficially owned by the three largest public shareholders.
10.
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. The Main
Board Listing Rules set out certain procedures to be adopted in the allocation
of shares in initial public offerings. For further details, please see Practice
Note 18 of the Main Board Listing Rules on Initial Public Offer of Securities.
11. New
Issue Price:
Listing
Rules do not impose conditions on the new issue price. However, new shares
cannot be issued at a price below their nominal value.
Contact
us
If
you have further queries, please contact Tannet
24
hours Malaysia hotline：603-21418908;
24
hours Hong Kong hotline：852-27837818;
24
hours Hong Kong hotline：86-755-
36990589;
Email:
mytannet@gmail.com
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