Industry News | Lowering the IPO Threshold: The Hong Kong Stock Exchange Officially Publishes a Consultation Document on New Listing Rules for Specialized Technology Companies

News on October 19, the Hong Kong Stock Exchange published a consultation document on the new listing rules for special technology companies: the Stock Exchange proposes to set up a new channel to allow special technology companies to obtain   Listed on the Hong Kong Stock Exchange, the new rules will apply to companies in five technology industries: next-generation information technology; advanced hardware; advanced materials; New energy and energy saving.    Environmental protection; and New Food and Agricultural Technologies, for two months from the Stock Exchange for market advice.

The main contents are as follows:

1. Listing qualification

Commercialization Revenue Threshold: A commercialized company is defined as a company that generated revenue of at least HK$250 million from its specialty technology business in the audited most recent fiscal year

Expected minimum market capitalization at listing: HK$8 billion (commercialized companies) or HK$15 billion (non-commercialized companies) 

R&D: All applicants must have been engaged in R&D for at least three financial years prior to listing, and the amount of R&D investment must account for at least 15% (commercialized companies) or 50% (non-commercialized companies) of total operating expenses 

Minimum third-party investment: A listing applicant must receive a substantial amount of investment from a sophisticated independent investor. As an indicative benchmark, applicants who meet the following requirements will generally be deemed to have met such requirements:

have received significant investments from at least two senior independent investors of Vanguard at least 12 months prior to the listing application date; and

The aggregate investment amount from all senior independent investors shall reach the minimum percentage of the issued share capital of the listing applicant at the time of listing, i.e. 10% to 20% (commercialized company) or 15% to 25% (non-commercialized company), depending on the expected market capitalization of the listing applicant

Commercialization pathway: Non-commercialized companies must demonstrate and disclose in their listing documents a credible path that can meet the commercialization revenue threshold

2. Regulations on initial public offerings

More efficient marketplace pricing process

The free float after listing will reach at least HK$600 million

Information to be disclosed includes pre-IPO investments, commercialisation status and prospects, and appropriate warning statements

3. Post-IPO regulations

Restrictions on the post-IPO lock-up period for controlling shareholders, key persons and senior independent investors of Vanguard

impose additional ongoing obligations on non-commercialized companies, including additional disclosure in interim and annual reports of the issuer's progress towards commercialization income thresholds and disclosure of updates to any business and financial estimates set out in the relevant listing documents

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