Hong Kong is the market of choice in Asia for companies, including Hong Kong and Mainland Chinese companies, seeking to go public and raise funds in a world-class market. For the past two decades the Hong Kong Exchanges and Clearing Limited (HKEx) has hosted 595 Mainland enterprise listings, which together have raised a total of US$384 billion. The HKEx raised almost US$53 billion in initial public offerings in 2010. Companies pursue listing in Hong Kong for reasons that are unique to the particular circumstances of each company and its shareholders, however, the key drivers that have attracted companies to list in Hong Kong are (1) its close proximity to Mainland China, (2) its well-established legal system and (3) its transparent and effective regulatory framework and listing regime.
Companies interested in listing with the Hong Kong Exchanges and Clearing Limited (HKEx) have several options to consider, including primary listing on The Stock Exchange of Hong Kong Limited's (SEHK) Main Board or Growth Enterprise Market (GEM), secondary listing on the SEHK Main Board, or dual listing on the SEHK Main Board or GEM together with another trading market, such as the NASDAQ Capital Market. The industries of companies listed on the Main Board range from conglomerates and banks to utilities corporations, while companies listed on GEM usually view it as a stepping stone to the SEHK Main Board.
Before making a decision regarding which HKEx listing to pursue, a company should consider, among other things, its long-term objectives, such as whether it wishes to migrate from its current capital market or whether the listing is only for fund raising purposes. In most cases, listing will require a company to redomesticate to one of the HKEx acceptable jurisdictions for an issuer's place of incorporation, such as Hong Kong, the People's Republic of China, Bermuda, the Cayman Islands and the British Virgin Islands. Furthermore, each of the listing options mentioned above has its own application requirements and financial criteria. Additionally, companies must be able to show management continuity in the last three financial years, as well as ownership continuity and control for at least the most recent financial year.
We have the knowledge and specialization to guide you through the process of listing securities on the SEHK Main Board or GEM. Our Hong Kong attorneys have extensive legal experience in representing public companies in connection with Securities and Futures Commission (SFC) and HKEx listing and compliance issues. Some of them also have acted in the capacity of directors on the board of listed companies of the SEHK Main Board.
Representative Hong Kong Listing Matters
- Assisted a foreign listed bank to restructure their group and apply for authorization as a deposit-taking company in Hong Kong. The foreign listed bank intends to list on the Main Board of the Hong Kong Stock Exchange.
- Advised a large Chinese financial institution (a company incorporated in the PRC), on the proposed listing of its H shares on the Hong Kong Stock Exchange. The company is a financial institution with core businesses in life insurance, property and casualty insurance, trust and investment, securities and banking in the PRC.
- Advised a fashion garment group engaged in the retailing and trading business with retail stores in China and throughout Southeast Asia, on its financial restructuring. The company is incorporated in Bermuda with its shares listed on the Main Board of the Hong Kong Stock Exchange. Advice involved the negotiation of standstill arrangements with bank creditors, and the granting of a security facility by a wholly-owned subsidiary of another Hong Kong listed company.
- Advised a Hong Kong listed company that provides services on warehouse, storage, transportation and distribution, on its financial restructuring involving negotiations of standstill arrangements with bank creditors, a restructuring of the indebtedness of the group and disposal of non-core businesses of the group.
- Advised the direct investment arm of a major US financial services group, in relation to an investment in the convertible preference shares of a long-established global consumer electronic, interactive product and toy manufacturer, a company incorporated in the Cayman Islands with its shares listed on the Main Board of the Hong Kong Stock Exchange.
- Advised a Hong Kong listed company that provides services on warehouse, storage, transportation and distribution, on its very substantial disposal of its investment properties to and a lease back arrangement with an investor in an aggregate consideration of HK$2.2 billion.
- Advised a Hong Kong listed investment company on a share transaction involving the acquisition of effective interest in a PRC enterprise, and on a connected transaction involving the acquisition of the effective interest in a US company and including the making of a submission to the Stock Exchange and successfully obtaining a waiver from the requirement to obtain shareholders' approval at a general meeting.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.