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Hong Kong IPO process: How to list your company in Hong Kong.

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Hong Kong IPO process: How to list your company in Hong Kong

Preparation for the listing process in Hong Kong requires 2 to 3 years of careful and strict planning before implementation.

A thorough reorganisation of the company to meet the listing requirements and regulations is required, as well as preparation for the company’s long-term fund-raising targets.

Listing criteria

Before you can list on the Hong Kong Stock Exchange, your company has to meet certain criteria. The HKEx has two listing boards – the Main Board and GEM (Growth Enterprise Market).

Main Board listing criteria

The main listing criteria for the Main Board require:

  • Trading record of at least three financial years
  • Management has remained unchanged for the last two financial years
  • Ownership remains unchanged for the latest financial year
  • One of the following three tests must also be satisfied:
    Profit test:
    • Latest three years’ aggregate profit needs to be equal to or greater than HKD 80 million, of which the first two years had an aggregate profit of at least HKD 45 million and the third year a profit of at least HKD 35 million, and
    • Market capitalisation at the time of listing of at least HKD 500 million.
    Market capitalisation/revenue test:

    Last year, revenue was at least HKD 500 million, and market capitalisation was at least HKD 4 billion.

    Market capitalisation/revenue/cash flow test:

    Market capitalisation of at least HKD 2 billion, revenue of at least HKD 500 million for the latest financial year and operating cash flow of at least HKD 100 million in the aggregate for the three preceding financial years.

  • Management has remained unchanged for the last three years
  • The company has at least 300 shareholders
  • Ownership remained unchanged during the latest year
  • Public float at least 25%

A typical Main Board IPO has two tranches of offering:

  • One offer tranche available to retail investors; and
  • One international offer or “placing” tranche available to institutional investors

GEM listing criteria

The main listing criteria for GEM is more relaxed, and it requires:

  • Latest two years’ aggregate operating cash flow of at least HKD 30 million
  • Market capitalisation of at least HKD 150 million
  • Management has remained unchanged for the last two financial years
  • Ownership remains unchanged for the latest financial year
  • Public float between 15% – 25 % if the market capitalisation of the issue at the time of listing exceeds HK$10 billion

Hong Kong IPO process: IPO stages

Listing and IPOs in Hong Kong are generally carried out in three steps: initial preparation, regulatory vetting and marketing, and offering.

Once the decision to go public is made, you should be aware of the key figures necessary to carry on the process. Key figures during an IPO in Hong Kong include:

  • Your company, also known as the listing applicant: Your company will be assisting all the parties involved in better understanding the business you have created and your strategy. You will also be helping all parties involved when the time for due diligence comes. This will entail providing all sorts of documents related to your entity, helping with the prospectus drafting and verification, and making presentations in front of future investors.
  • Sponsor: The sponsor is appointed not later than two months before the submission of the listing application. The primary role of the sponsor during the IPO is to represent the company in front of the Stock Exchange of Hong Kong (SEHK), conduct due diligence on the listing company, its shareholders, and management, and make sure that the prospectus is accurate and contains all necessary information. The sponsor coordinates all parties involved in the IPO and holds meetings with the SEHK and the Securities and Futures Commission (SFC). Multiple sponsors can be appointed, but at least one must be independent of the company. Usually, the appointed sponsor is an investment bank.
  • Reporting accountant: Another important figure in this process is the reporting accountant. He/she will prepare a report and unaudited pro forma financial information which will be disclosed in the prospectus. The accountant will also be providing assistance in the overall financial matters by issuing comfort letters to sponsors and underwriters concerning the financials in the prospectus or certificates of indebtedness, the sufficiency of working capital, and reviewing cash flows and profit forecasts.
  • Legal advisers: There will be two groups of legal advisers. One team will be acting for you and your company, and the other team will be acting for the sponsor and the underwriters.
  • Others. Other key figures in the IPO process include company secretary, property valuers, internal control advisers, market research consultants, investors/public relations consultants, professional printers, receiving banks and share registrars.

Stage 1: Initial preparation

The initial preparation stage of an IPO begins approximately 1 to 2 years before the listing date, and it includes the overall assessment of the listing company and its reorganisation. Stage 1 usually includes the following steps:


The assessment step in stage one will aim to conclude whether the listing company:

  • Meets all listing requirements
  • Is able to rectify existing legal or accounting issues


Following the initial assessment, your company will most probably:

  • Restructure the listing group (ie making sure the directors have the qualifications and experience required by the listing rules) and incorporate the listing vehicle (a public limited company).
  • Transfer all contractual rights, licenses and assets to the listing group.
  • Identify which business is excluded from the listing group.

The listing company will assume the form of a public limited company (PLC). PLCs are derived from medium to large private companies that want to expand their investor base and raise capital from the public. This type of company can have more than 50 shareholders. Listed public companies are subject to the Stock Exchange of Hong Kong Rules Governing the Listing of Securities as well as the regulations on Takeovers and Mergers and Share Buy-backs. These are issued by the Hong Kong Securities and Futures Commission (SFC) in consultation with the Takeovers and Mergers Panel.

Kick-off meeting

A meeting between all key figures is arranged to kick-off the IPO procedure. Usually, a timetable is agreed upon, and concrete milestones are established.

The key figures will discuss all relevant details related to the offering and its size, proceeds distribution, etc. They will also identify any issues and their implication on the IPO.

During this meeting, the management of the company will also give a presentation of the business, its financials and growth plan.

Due diligence

The sponsors, the issuer and their legal teams simultaneously conduct an extensive review of the legal, business and financial aspects of the listing company. The sponsors make sure that all material information from the due diligence is included in the draft listing application document.

Prospectus drafting

The key figures will together start the preparation of the listing prospectus and what the prospectus will include is regulated by the Listing Rules. If the prospectus is found to be inaccurate, the sponsor, the issuer and its directors may carry civil and criminal liability. The prospectus is also referred to as the listing document, and it serves as the main document for listing and marketing purposes. It contains the main information concerning the issuer based on which regulators perform their vetting and approve the listing.

A1/5A Submission

The Form A1 (for mainboard) and Form 5A (for GEM) is submitted not later than 80 days before the listing date. This is the official request for listing submitted in front of the SEHK, and it contains a detailed draft of the prospectus.

Stage 2: Vetting and hearing


Once the A1 and the listing set of documents are submitted, the SEHK will carry a three-day preliminary assessment and check whether all documents from the checklist have been submitted. If some documents are missing, the SEHK will reject the application, and the applicant will be able to resubmit its application only after eight weeks. If accepted, the SEHK will send the listing company a notification.

Within four weeks from the acceptance of the set of documents, the SEHK will give its comments on the submitted documents. The prospectus is revised, and additional written submissions are filed whenever required. It is extremely important during this stage of the process to address all SEHK’s comments in a timely manner to ensure that the listing application proceeds according to schedule.

There is no time frame for the vetting step as it always depends on the quality of submitted documents and argumentation as well as the issues identified during the due diligence process.


Once all SEHK comments are resolved, a hearing date will be scheduled during which the application and the major outstanding issues will be discussed with the SEHK. The hearing usually takes place 20 days before the listing.

Stage 3: Marketing and offering

Following the hearing, the SEHK will decide whether to approve the application or set additional criteria to be met before the offering can take place. Once the final approval is received by SEHK, the issuer will hold a board meeting during which the board will approve the listing. The post-hearing decision and prospectus are published on the SEHK’s website, and roadshows start taking place with the aim of identifying demand and establishing a general idea on the initial offering price of the shares.

The Hong Kong public offering starts with the registration of the prospectus with the Hong Kong Registrar of Companies. The offer is up for approximately three and a half days and usually ends with the book-building process. At this stage, the initial offering price is set, and the underwriting agreement is signed. Public offering commences.


Companies seeking to raise capital from the public capital markets for the first time greatly benefit from hiring an experienced independent advisor to act as their advocate during this often-bewildering process. As your trusted advisors, we will help you prepare a comprehensive strategy for going public in Hong Kong, raise visibility on the stock exchange and mitigate transaction risks.

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