A company that wishes to conduct an initial public offering (“IPO”) in Hong Kong and be listed on the Main Board will need to fulfil all requirements as set out under the listing rules of Hong Kong and apply to the Stock Exchange of Hong Kong (“HKEx”) for listing. The general qualification for listing outlined under Chapter 8 of the Hong Kong Main Board Listing Rules are set out below.
Financial Requirements
Under main board listing rule 8.05, the company would need to satisfy either one of the profits test, market capitalisation/cash flow test or market capitalisation/revenue test.
Profits Test: The company maintained 3 years of trading records and reveal that its ordinary and usual course of business generates:
- HK$35,000,000 profit in the most recent year; and
- In total not less than HK$45,000,000 profit in regard to the two preceding years
Market capitalisation/cash flow Test: The company maintained 3 years of trading records and reveal:
- Market capitalisation of at least HK$2,000,000,000 at the time of listing;
- Revenue generated from the principal activities of the company of at least HK$500,000,000 for the most recent audited financial year; and
- Positive cash flow from operating activities of at least HK$100,000,000 in aggregate for the three preceding financial years.
Market capitalisation/revenue Test: The company maintained 3 years of trading records and reveal:
- Market capitalisation of at least HK$4,000,000,000 at the time of listing; and
- Revenue generated from the principal activities of the company of at least HK$500,000,000 for the most recent audited financial year
Further, variation to requirements of respective tests may apply to mineral companies, newly formed ‘project companies’ (e.g., companies which conduct the business of infrastructure), or companies with experienced directors and management.
Management and Control Requirements
The company’s management must continue to be in place (i.e., remain unchanged) for at least the three preceding financial year. In addition, the control of the company must remain unchanged for the most recent audited financial year.
Further, the company must have least two of its executive directors be ordinarily resident in Hong Kong, to fulfil the requirement of sufficient management presence in Hong Kong.
Shareholding Requirements
Public Floatation: At least 25% of the Company’s issued shares will need be held by the public at all times. Except under special circumstances, the HKEx may allow a lower public float percentage. Further, not more than 50% of the shares can be owned by three public shareholders.
Expected market capitalisation of the issued shares: The expected market capitalisation of the listed shares must be at least HK$500,000,000 at the time of listing. Further, the shares held by the public must be expected to have market capitalisation of at least HK$125,000,000.
Quantity of Shareholders: The Company must have at least 300 shareholders.
Transferability of shares: The listed shares must be freely transferable. Partly-paid securities will normally be regarded as fulfilling this condition provided that in the Exchange’s view their transferability is not unreasonably restricted and dealings in them can take place on an open and proper basis.
