Hong Kong Exchanges and Clearing Limited (HKEx) published a consultation paper today (Friday) on a proposed change to the Market Capitalisation/Revenue Test under the Listing Rules for the Main Board.

The consultation paper seeks views on a proposal to change the minimum shareholder requirement for the Market Capitalisation/Revenue Test from 1,000 to 300 shareholders.  This test is one of three listing eligibility tests under the Listing Rules.

A Main Board applicant may list under:

(a)    the Profit Test, 

(b)    the Market Capitalisation/Revenue/Cash Flow Test or 

(c)    the Market Capitalisation/Revenue Test.

The applicant must distribute shares to a minimum of 300 shareholders if it lists under either of the first two tests.  However, if it chooses the Market Capitalisation/Revenue Test, it must distribute shares to a minimum of 1,000 shareholders.  The consultation paper proposes reducing this to 300 shareholders.

"We are proposing this change in response to market comments that the current minimum shareholder requirement is too demanding because an applicant has to generate significant interest from both retail and institutional investors," said Mark Dickens, HKEx’s Head of Listing. 

"Some market participants also commented that for a large market capitalisation company or revenue generator, distribution to at least 300 shareholders should be sufficient to ensure an open market and enough retail investor interest."

The proposal will not affect the listing criteria of the Profit Test and the Market Capitalisation/Revenue/Cash Flow Test.  If adopted, the proposal will bring the Market Capitalisation/Revenue Test in line with the minimum shareholder requirements for the other two tests.

The consultation paper can be downloaded from the HKEx website.  Interested parties are encouraged to respond to the consultation paper by completing and submitting the questionnaire.

The deadline for replies to the consultation paper is 12 November 2010.

Ends