On 19 October 2022, the Stock Exchange of Hong Kong Limited (“Exchange”) published a consultation paper (“Consultation”) seeking market feedback on proposals to enable the listing of Specialist Technology Companies on the main board of the Exchange (“Main Board”). The deadline for submissions is 18 December 2022.
Specialist Technology Companies currently face difficulties meeting the financial eligibility requirements of the Main Board as many of them are still engaged in R&D to bring their products and/or services to commercialisation. This leads to Hong Kong lagging behind the United States and Mainland China in terms of listing of Specialist Technology Companies.
While there would be strong appetite among investors in Hong Kong for the listings of Specialist Technology Companies due to their high growth potential, there are also certain regulatory issues over their listings such as (a) difficulty in reaching a consensus on valuation; (b) absence of a competent authority (i.e. an independent external body with relevant expertise or experience); (c) viability of a product or service; (d) failure to successfully commercialise; and (e) reliance on external funding to support operations.
The Exchange has set out the proposals in the Consultation with the objectives to strike the right balance between upholding market quality and creating a commercially viable chapter that meets the fundraising needs of the leading companies of tomorrow.
The key proposals cover the follows:
- Scope of “Specialist Technology Industries”
- Listing Requirements for Commercial and Pre-Commercial Companies
- Meaningful Investment from Sophisticated Independent Investors
- Post-IPO Lock-up Period
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