HONG KONG: HKEX Proposes Expansion to Listing Regime

Tuesday December 19 2017

On 15^th December 2017, Hong Kong Exchanges and Clearing Limited (HKEX) has proposed an expansion to its current Listing Regime. This development was made following the findings of a recent Concept paper and discussion with the Securities and Futures Commission.

The Exchange has determined to proceed to expand the existing listing regime by introducing two new chapters to the Main Board Listing Rules to allow the listing of (i) Biotech issuers which are pre-profit / pre-revenue; and (ii) issuers from emerging and innovative sectors that have WVR structures, subject to additional disclosure and safeguards.

Companies with Weighted Voting Rights (WVR) structures would be required to have a minimum expected market capitalisation of $10 billion and, if below $40 billion of market capitalisation, would need to meet a higher revenue test of $1 billion in the full financial year before listing.  Pre-revenue companies listing under the new Biotech chapter would be required to have a minimum expected market capitalisation of $1.5 billion.

The Exchange also proposes to modify the existing Listing Rules in relation to overseas companies (and also make consequential changes to the 2013 Joint Policy Statement) to create a new concessionary secondary listing route to attract issuers from emerging and innovative sectors that are primary listed on the New York Stock Exchange, Nasdaq or the “premium listing” segment of the London Stock Exchange’s Main Market.

The Exchange is in the process of finalising the proposals and has commenced the drafting of the proposed amendments to the Listing Rules to put the proposals into effect. A formal consultation is expected to take place in the first quarter of 2018 which will examine and the proposed expansion to listing arrangements.

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