Basic Listing Requirements for Equities 
19/05/2016 
 

The following shows some of the basic requirements for listing equity securities on the Exchange.  For details of the listing requirements, please refer to our Listing Rules.

Note: On 9 May 2008, the Exchange announced the framework for issuers to list on the Main Board in depositary receipt (HDR) form.  The listing requirements for HDR issuers are generally the same as for issuers of shares.  Any company which can meet the requirements of the Main Board Listing Rules and is in compliance with its local regulatory regime can apply to list in HDR form.  For more information on listing your company by way of HDR, please visit our “Depositary Receipt Framework" section.

(I) Financial Requirements:

Main Board

GEM

A Main Board new applicant must have a trading record of not less than three financial years and meet one of the following three financial criteria:

 
1. Profit Test
2. Market Cap/ Revenue Test
3. Market Cap/ Revenue/ Cashflow Test
Profit Attributable to Shareholders At least HK$50 million in the last 3 financial years (with profits of at least HK$20 million recorded in the most recent year, and aggregate profits of at least HK$30 million recorded in the 2 years before that)

-

-

Market Cap

At least HK$200 million at the time of listing

At least HK$4 billion at the time of listing At least HK$2 billion at the time of listing
Revenue

-

At least HK$500 million for the most recent audited financial year At least HK$500 million for the most recent audited financial year
Cashflow

-

-

Positive cashflow from operating activities of at least HK$100 million in aggregate for the three preceding financial years

Note:

The Exchange may accept a shorter trading record period and/or may vary or waive the above profit or other financial standards requirement. For further details, please see Special Listing Requirements for Equities.

A GEM new applicant must have a trading record of at least two financial years comprising:

i.

A positive cashflow generated from operating activities in the ordinary and usual course of business of at least HK$20 million in aggregate for the two financial years immediately preceding the issue of the listing document

ii. Market cap of at least HK$100 million at the time of listing

(II) Acceptable Jurisdictions:

Chapter 19 of the Main Board Listing Rules and Chapter 24 of the GEM Listing Rules provide the general framework applicable to all overseas companies seeking a listing on the Exchange.  Main Board Rule 19.05(1)(b) and GEM Rule 24.05(1)(b) and the explanatory notes thereto set out the shareholder protection standards that are expected of an overseas company when seeking a primary listing on the Exchange.

Applicants incorporated outside Hong Kong and other recognised jurisdictions seeking a primary listing on Main Board and GEM are assessed on a case-by-case basis and have to demonstrate they are subject to appropriate standards of shareholder protection, which are at least equivalent to those required under Hong Kong law.  In September 2013, the Exchange and the SFC published a revised “Joint Policy Statement Regarding the Listing of Overseas Companies” (“revised JPS”).  The revised JPS aims to provide transparency in the listing process, provide regulatory certainty for overseas companies seeking either a primary or secondary listing in Hong Kong and maintain the quality of Hong Kong’s financial market.

(III) Accounting Standards:

A new applicant's accounts must be prepared in accordance with Hong Kong Financial Reporting Standards, International Financial Reporting Standards or China Accounting Standards for Business Enterprises (PRC issuer only).

Banking companies must also comply with the Financial Disclosure by Locally Incorporated Authorised Institutions issued by the Hong Kong Monetary Authority.

Main Board GEM

For Main Board new applicants, accounts of an overseas-incorporated issuer seeking a secondary listing on the Exchange prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP) or other accounting standards may be acceptable by the Exchange on a case by case basis.

For GEM new applicants whose principal activity does not consist of property developments and/ or investments, accounts prepared in accordance with US GAAP are acceptable if the company is listed, or will be simultaneously listed, on either the New York Stock Exchange or the NASDAQ National Market.

(IV) Suitability for Listing:

Both the issuer and its business must, in the opinion of the Exchange, be suitable for listing.

An issuer or its group (other than an investment company) whose assets consist wholly or substantially of cash or short-dated securities will not normally be regarded as suitable for listing, except where the issuer or group is solely or mainly engaged in the securities brokerage business.

(V) Operating History and Management:

Main Board GEM

A Main Board new applicant must have a trading record period of at least 3 financial years with:

  1. management continuity for at least the 3 preceding financial years; and
  2. ownership continuity and control for at least the most recent audited financial year.

Exception:
Under the Market Cap/Revenue test, the Exchange may accept a shorter trading record period under substantially the same management if the new applicant can demonstrate that:

  1. its directors and management have sufficient and satisfactory experience of at least three years in the line of business and industry of the new applicant; and
  2. management continuity for the most recent audited financial year.

A GEM new applicant must have a trading record of at least 2 full financial years with:

  1. substantially the same management throughout the 2 full financial years; and
  2. a continuity of ownership and control throughout the full financial year immediately preceding the issue of the listing document.

Exception:
The Exchange may accept a shorter trading record period and waive or vary the ownership and management requirements for:

  1. newly-formed "project" companies; and
  2. mineral companies.

(VI) Minimum Market Capitalisation:

The expected market capitalisation of a new applicant at the time of listing must be at least,

Main Board GEM

HK$200 million

HK$100 million

(VII) Market Capitalisation of Public Float:

The expected market capitalisation at the time of listing of the securities of a new applicant which are held by the public must be at least,

Main Board GEM

HK$50 million

HK$30 million

 

(VIII) Public Float:

At least 25% of the issuer's total number of issued shares must at all times be held by the public. Where the issuer has one class of securities or more apart from the class of securities for which listing is sought, the total securities of the issuer held by the public on all regulated markets at the time of listing must be at least 25% of the issuer's total number of issued shares. However, the class of securities for which listing is sought must not be less than 15% of the issuer's total number of issued shares, having an expected market capitalisation at the time of listing of not less than,

Main Board GEM

HK$50 million

HK$30 million

The Exchange may, at its discretion, accept a lower percentage of between 15% and 25% in the case of issuers with an expected market capitalisation at the time of listing of over HK$10 billion.

(IX) Spread of Shareholders:

Main Board GEM
The equity securities seeking for listing must be held among at least 300 holders.

The equity securities in the hands of the public should be held among at least 100 persons.

Note: Not more than 50% of the securities in public hands at the time of listing can be beneficially owned by the three largest public shareholders.

(X) Offering Mechanism:

Main Board GEM

A new applicant may not list by way of placing only if there is likely to be significant public demand for its securities.

The Main Board Listing Rules set out certain procedures to be adopted in the allocation of shares in initial public offerings. For further details, please see Practice Note 18 of the Main Board Listing Rules on Initial Public Offer of Securities.

A new applicant is free to decide on its offering mechanism and may list on our Exchange by way of placing only.

 

(XI) New Issue Price:

Both the Main Board and the GEM Listing Rules do not impose conditions on the new issue price. However, new shares cannot be issued at a price below their nominal value.