Listing on the Hong Kong Stock Exchange
Charltons provides high impact advice to companies looking to list on the Hong Kong Stock Exchange. We have brought both private and state-owned Chinese enterprises to market, and also acted on listings involving overseas companies. We have been involved in some of the largest and most ground-breaking deals to have come to the Hong Kong market in the past decade. We acted as Hong Kong legal adviser to the major shareholder of AIA, which raised more than HK$159 billion in its 2010 IPO.
Charltons has particular experience in advising on the listing of Chapter 21 funds on the Hong Kong Stock Exchange and of mineral company IPOs under Chapter 18 of the Hong Kong Stock Exchange Listing Rules. We also have considerable experience in helping smaller dynamic companies take their first steps in the public equity markets. Charltons is actively involved in advising companies listing on Hong Kong’s Growth Enterprise Market (GEM). The firm can also bring to bear its extensive experience in representing underwriters and sponsors on IPO projects to advise listing applicants.
Charltons guides it clients through all stages of the listing process and offers complete IPO project management, from advising on listing criteria, pre-IPO planning and structuring (including due diligence, pre-IPO investments and group reorganisations) and making pre-application submissions to the Stock Exchange on key issues, to prospectus drafting, review and verification, and negotiation of underwriting agreements and other key contracts. We understand that an IPO is one of the biggest steps a company will ever take and a listing applicant needs its lawyers to provide an insightful and highly personalised service coupled with smart and practical advice.
Charltons is involved not only in advising on the listing process and application of the Listing Rules, but also in shaping the regulatory framework. Julia Charlton was a member of the Listing Committee of the Hong Kong Stock Exchange from 2012 – 2018 serving the maximum permitted continuous term of six years. Julia Charlton was appointed to the SFC’s Takeovers Panel and Takeovers Appeals Panel on 1 October 2005 and continues to serve on these panels. Charltons has been involved in market consultations on many of the major rule changes and developments through which the Hong Kong capital markets have evolved in recent years. Most recently, we acted as coordinating counsel on the drafting of the Hong Kong Sponsor Due Diligence Guidelines, a major market initiative creating a set of guidelines relating to the Hong Kong legal and regulatory requirements and market practice for IPO due diligence on listing applicants. Charltons can assist through every step of the listing process with the Hong Kong Stock Exchange.
The Stock Exchange of Hong Kong (the “Exchange”) operates two markets: the Main Board and the GEM. The Main Board is a market for more established companies that meet the profit or other financial requirements set by the Hong Kong Stock Exchange. Issuers can choose to list on the Hong Kong Main Board in the form of shares or Hong Kong depositary receipts. The GEM caters for smaller growth companies and the admission criteria are lower. A transfer of listing from the GEM to the Main Board requires the appointment of a sponsor at least two months before the listing application is submitted. A Main Board listing applicant (except a mineral company which may be exempted) must meet one of the following financial standards:
- having a profit of not less than HK$20 million in the most recent financial year, and a profit of not less than HK$30 million in aggregate for the two financial years before that. Further, there must be an expected market capitalisation of at least HK$500 million at the time of listing; or
- having (i) a positive cash flow (from operating activities to be listed) of not less than HK$100 million in aggregate for the three most recent financial years; (ii) a revenue of not less than HK$500 million for the preceding audited financial year; and (iii) a market capitalisation (at the time of listing) of not less than HK$2 billion; or
- having (i) a revenue of not less than HK$500 million for the preceding audited financial year; and (ii) a market capitalisation (at the time listing) of not less than HK$4 billion.
A GEM listing applicant must have a market capitalisation of at least HK$150 million at the time of listing and a positive cash flow (from operating activities) of at least HK$30 million in aggregate for the most recent two financial years. Hong Kong Stock Market Hong Kong Stock Exchange Index