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Requirements for an offering and listing in the U.K., U.S. or Hong Kong

Requirements for an offering and listing in the U.K., U.S. or Hong Kong

United Kingdom United States Hong Kong
Premium Listing Standard Listing
Historical Financial Information Disclosure: Audited accountants’ report covering financial information for three years and ending not more than six months from the date of the prospectus. If more than six months since year end, audited interim financial information must be included. Needs to be IFRS or equivalent. Audited financial information for three years and interim financial information covering the first six months of year if prospectus is dated more than 9 months after end of last fiscal year, together with comparative information from the prior year. Needs to be IFRS or equivalent.

Audited financial information for three years, and unaudited information covering first six months of year if prospectus is dated more than 9 months after end of last fiscal year, together with comparative information from the prior year. Needs to be U.S. GAAP or IFRS as issued by IASB (otherwise reconciliation to U.S. GAAP required).

For “emerging growth companies” (companies having less than $1 billion in revenues), the U.S. JOBS Act allows companies to elect to include only two years’ of historical financial information, not three.

Audited accountants’ report covering three financial years and, if Prospectus is dated more than six months after the financial year-end, interim periods, prepared in accordance with HK GAAP4.
General Prospectus Disclosure Obligation: In addition to specific requirements under the Prospectus Rules:

  • A Prospectus must contain all such information as is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses, and prospects of the issuer the rights attaching to the securities to be issued.(87A U.K. Financial Services and Markets Act 2000 (“FSMA”))
In addition to specific requirements under Form F-1:

  • S. Rule 10b-5 and other similar anti-fraud rules – Prospectus must not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading
  • Generally, information is deemed to be material if there is a substantial likelihood that a “reasonable” investor would consider it important in making an investment decision
The Prospectus must contain such particulars and information which are necessary to enable an investor to make an informed assessment of the activities, assets and liabilities, financial position, management and prospects of the Company and of its profits and losses and of the rights attaching to such securities (rule 11.07 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “HK Listing Rules”)).
Shareholder / Director Lock-up: The underwriters typically require that for a particular period following listing the Company and certain key shareholders (and, in a premium listing/offering, the Directors) be prevented from selling shares (180 days is the customary period). The underwriters typically require that for a particular period following listing the Company and certain key shareholders be prevented from selling shares (180 days is the customary period).
  • The underwriters typically require that for a particular period following listing the Company and certain key shareholders be prevented from selling shares (180 days is the customary period)
  • In addition, under the HK Listing Rules, controlling shareholder must undertake not to dispose of or otherwise create any options, rights, interests or encumbrances in respect of its interest in the Company, from the date of the Prospectus until six months after the listing date
  • A controlling shareholder must undertake not to dispose of or otherwise create any options, rights, interests or encumbrances in respect of its interest in the Company if such disposal would result in its ceasing to be a controlling shareholder during the six-month period after the expiry of the period referred to in the point above
  • A controlling shareholder must undertake to the Company and the HKSE to disclose any pledge or charge of any securities beneficially owned by it, from the date of disclosure of its shareholding in the Prospectus until 12 months after the listing date
Comfort Letters:
  • The underwriters will require a “comfort letter” to be provided from the Company’s accountants giving comfort as to the financial information contained in the Prospectus
  • Under U.S. comfort letter rules, comfort letter may be dated no more than 135 days after the date of the most recent audited financial statements or interim period review (may not apply if no U.S. tranche is planned)
  • In a premium listing, the Sponsor will require a “long form report” analyzing various financial and business matters relating to the Company; a report on the Company’s financial reporting procedures (“FRP”) and a working capital analysis to support the Company’s working capital statement
  • The underwriters will require a “comfort letter” to be provided from the Company’s accountants giving comfort as to the financial information contained in the Prospectus
  • Under U.S. comfort letter rules, comfort letter may be dated no more than 135 days after the date of the most recent audited financial statements or interim period review
  • The underwriters will require a “comfort letter” to be provided from the Company’s accountants giving comfort as to certain financial information contained in the Prospectus
  • In addition, a comfort letter from the sponsor (financial adviser) on any profit forecasts and the sufficiency of the Company’s working capital may also be required
  • Under U.S. comfort letter rules, comfort letter may be dated no more than 135 days after the date of the most recent audited financial statements or interim period review (may not apply if no U.S. tranche is planned)

4 The accounts of overseas companies can be drawn up in conformity with IAS, if the HKSE so approves.

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Posted on

2014-09-16