Consultation launched on new Hong Kong listing rules for emerging and innovative companies

The Hong Kong Stock Exchange has announced a one-month consultation on Listing Rule changes to implement the reforms announced in its December 2017 consultation conclusions.  

These reforms will enable the listing of pre-revenue biotech companies and companies with weighted voting right structures that are innovative and high growth.  

In addition, a concessionary route will facilitate Hong Kong secondary listings for innovative companies listed on certain other qualifying exchanges. Please see our e-bulletin for details of the December consultation conclusions.

The latest consultation paper contains drafts of three new chapters to the Listing Rules to implement the proposals:

• Chapter 8A covers weighted voting rights
• Chapter18A explains the rules for the listing of biotech companies
• Chapter 19C covers the Hong Kong secondary listings of companies listed on certain other qualifying exchanges.

The rules may be adjusted following the consultation, but the Stock Exchange has already considered the views of the Hong Kong SFC and various stakeholders prior to publishing the consultation paper.

Consultation will last for one month only, and the Stock Exchange has indicated that its final conclusions will be published as early as late April 2018 (barring any major adjustments triggered by the consultation).

Impact

This speedy timetable is good news for biotech companies and those in innovative sectors looking to list in Hong Kong.

Although listing applications can only be submitted once the consultation conclusions are published and the new rules finalised, the exchange has indicated it will respond to enquiries on the new regime now on an informal basis.

We are already seeing significant interest from companies in these new routes to listing in Hong Kong. The publication of the draft rules enables companies to progress their listing plans in preparation for the imminent implementation of the final rules.

Our Hong Kong capital markets experience

Herbert Smith Freehills has one of the leading equity capital markets practices in the Greater China region. Our team has worked on many innovative IPOs, including spin-off listings, A to H listings and A and H dual listings.

We are regularly retained by major issuers and investment banks as advisers on high profile IPOs in Greater China. Our strong IPO experience is complemented by a US securities team based in Hong Kong to provide on-the-ground support on US securities laws and liability issues.