The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Friday) published an updated Guidance Letter on IPO* Vetting and Suitability for Listing - HKEX-GL68-13A (GL68-13A).

The Exchange has vetted 509 listing applications since GL68-13A came into effect in June 2016. Based on the Exchange's experience and developments in the market, it has become aware that the market has begun to use the list of characteristics set out in paragraph 1.4 of GL68-13A as a 'checklist' against which to determine an applicant's suitability for listing, which was not the Exchange's intention.

In order to emphasise the message that the focus of the Exchange's suitability review is qualitative and not based on a 'checklist', it has updated GL68-13A to reiterate that the characteristics set out in GL68-13A are not a 'checklist' for potential shell companies and that exhibiting none of those characteristics does not necessarily mean that a listing applicant is suitable. The Exchange assesses a listing applicant's suitability holistically and, in particular, examines whether the use of proceeds and funding needs are consistent with its future objectives and strategies; whether the listing applicant has a commercial rationale for listing as well as all other relevant information. Listing applicants that are unable to demonstrate their commercial rationale for listing may not be suitable for listing.

'To maintain the quality and reputation of the Hong Kong market, the Exchange has continuously reviewed and tightened our approach to address regulatory concerns on shell creation activities. The objective of updating this Guidance Letter is to reiterate that it is the responsibility of the listing applicant and its sponsor(s) to demonstrate that the listing applicant is not solely seeking to monetise the premium attached to a listing status. It is not our objective to discourage businesses which have genuine needs to access the capital market in Hong Kong,' said David Graham, HKEX's Chief Regulatory Officer and Head of Listing.

The updated Guidance Letter is available on the HKEX website.

* Initial Public Offering

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HKEx - Hong Kong Exchanges and Clearing Ltd. published this content on 13 April 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 13 April 2018 09:46:06 UTC