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KC PRO > Services​ > IPO in Hong Kong

IPO in Hong Kong

HKEx is one of the stock exchanges with the largest market capitalization and active trading in the world. It is an ideal platform for enterprises to go public for raising capital.

 

Through listing in Hong Kong, an enterprise will attain a desirable valuation and enhance its corporate governance. In addition, relatively shorter time to obtain listing approval or approval for follow-up finance can help an enterprise to rapidly expand into overseas markets. 

 
Pre-IPO: Removing All Obstacles to Create Favourable Conditions for Listing 
 

  • Assessing the eligibility of the company to be listed in Hong Kong 

  • Preparing a feasibility report for listing 

  • Formulating a development direction of the company for the purposes of listing 

  • Examining the accounting system and accounting record of the company and giving advice for improvements 

  • Devising a tax saving plan for the company and individuals (shareholders) 

  • Designing a restructuring plan 

  • Recommending venture capital or private equity fund for the development of the company 

 

Execution of IPO: Coordinating the Listing Team to Shorten the Listing Process 
 

  • Assisting in choosing the best time for listing 

  • Assisting in the selection of appropriate intermediaries 

  • Coordinating on the company behalf the intermediary teams to complete their work as scheduled 

  • Assisting the sponsors in the performance of due diligence 

  • Helping answer inquiries from the Stock Exchange 

  • Helping seek capital at the Pre-IPO stage and help increase market awareness on the company 

 

Follow-up Management: Providing Advice to Facilitate Sustainable Development
 

  • Providing a timely update on accounting standards, the Listing Rules, and other regulatory requirements and make a recommendation 

  • Providing professional advice on subsequent mergers and acquisitions

  • Assisting clients in the issue of bonds/convertible bonds/issue of new shares/top-up issue 

 

 

More details for Main Procedures of IPO

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More details for Requirement of Mainboard IPO

 

More details for Requirement of GEM IPO

 

Please feel free to call or email us and our dedicated team will provide you with the services you need.

Main Procedures of IPO

Preparation period

 

The company decides IPO

To convene meetings of directors and shareholders to decide IPO in Hong Kong, according to future development strategy; to select and engage major intermediaries.

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The 1st intermediary coordination meeting

The company holds the 1st IPO meeting with underwriter, accountant, solicitor and evaluator, and cooperates with all intermediaries in concerted efforts, until IPO.

 

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Due diligence

The underwriter, accountant, and solicitor, will carry out careful investigation of the business, financial condition, future prospects, major risk factors, legal issues and others, to ensure correct procedures and that nothing is omitted in content of all public documents.

 

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Reorganisation

The underwriter, accountant, and solicitor, will provide professional advice to the company, to reorganize the business, structure and financial condition of the company in consideration of direction of future development, to make the company a new entity conforming to IPO rules, to attract investors.

 

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File making

The underwriter, accountant, and solicitor, will write all documents necessary for all kinds of IPO, including prospectus, accountants report and legal opinion.

 

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Submitting Form A1

The underwriter helps the company to submit preliminary application for IPO to the IPO Division of the Exchange.

 

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Approval period
 

Answering questions and submitting other IPO documents

After Form A1 is submitted, the Hong Kong Exchange will ask questions for the company to answer, and the underwriter and all intermediaries will help in complete the task.

 

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Hearing

The IPO Committee of the Exchange will hold court to hear whether the proposed public company is eligible for IPO, and after approval, the company and underwriter can start a series of propaganda for issuance of shares.

 

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Propaganda period
 
Analyst's study report

It is generally written by an industrial analyst working for the underwriter, and the industrial analyst will prepare the report to be recommended to investors and fund managers through visits to top management of the company for understanding the business, financial and other conditions of the company, which work is completely independent of the due diligence of the underwriter, and generally prepared after submission of Form A1 and published before road show.

 

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Road show

The road show recommendation organized by the underwriter for the Company is generally in two forms: lunch promotion meeting and one-on-one meeting. Generally, the underwriter will accompany the company top management to visit Hong Kong, Singapore, Tokyo and occidental major cities.

 

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Issue period

 

Accumulative tendering

To determine a price range according to the market condition in issuing, then to invite investors to show their subscription intent in advance within the price range, and finally to determine final issue price by final subscription results.

 

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Placing and public offering

The issue of shares is generally divided into two parts: placing and public offering in Hong Kong IPO. Placing is directional sales to global funds and other institutional investors; and public offering is sales to Hong Kong public.

 

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Pricing and IPO

To seek a desirable equilibrium point according to accumulative subscription order results and market condition in issuing, to determine final issue price of shares. A simple and solemn IPO ceremony will be held in the Trading Hall of the Exchange, Generally on the day of IPO.

Main Procedures of IPO

Requirement of Mainboard IPO

Requirement of Mainboard IPO

Enterprise who intents to IPO in Hong Kong shall apply to Hong Kong Exchanges and Clearing Limited, according to the procedures and requirements of Mainboard IPO in Hong Kong set out in "IPO Rules - Mainboard".

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Requirements are as follows:

The enterprise must meet one of the following three criteria

 

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Profits Test

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  • 3 years' aggregate profits after tax ≥ HKD50 million; and

 

  • Market Capitalisation ≥ HKD200 million

Market Capitalisation/ Revenue Test

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  • Market Capitalisation ≥ HKD4 billion; and

 

  • Recent 1 year's revenue ≥ HKD500 million

Profits Test

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  • 3 years' aggregate profits after tax ≥ HKD50 million; and

 

  • Market Capitalisation ≥ HKD200 million

Business Record Requirement​

  • 3 years (if meeting market capitalisation/revenue/test, can be shorter than 3 years)

  • Administration and operation under substantially the same management

  • Operation under substantially the same ownership and control in recent 1 year

 

Management Requirement & Undertaking

 

Management Requirement
  • 3 years(if meeting market capitalisation/revenue/test, can be shorter than 3 years)

  • Administration and operation under substantially the same management

 

Shareholders Undertaking

  • Disclosure in IPO documents not to sell its interests in the company within the first six months after IPO

 

Management Undertaking

  • Not to sell its interest in the company within 12 months after IPO, so that it is no longer the controlling shareholder of the company, keeping at least 30% interest in the company

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Recognized Jurisdiction

  • Australia

  • Bermuda

  • Brazil

  • British Virgin Islands

  • Canada - Alberta

  • Canada - British Columbia

  • Canada - Ontario

  • Cayman lslands

  • China

  • Germany

  • Hong Kong

Profits Test

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  • 3 years' aggregate profits after tax ≥ HKD50 million; and

 

  • Market Capitalisation ≥ HKD200 million

Market Capitalisation/ Revenue Test

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  • Market Capitalisation ≥ HKD4 billion; and

 

  • Recent 1 year's revenue ≥ HKD500 million

Profits Test

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  • 3 years' aggregate profits after tax ≥ HKD50 million; and

 

  • Market Capitalisation ≥ HKD200 million

  • Italy

  • Japan

  • jersey

  • Luxembourg

  • Singapore

  • United Kingdom

  • Canada - British Columbia

  • Canada - Ontario

  • Cayman lslands

  • China

  • Germany

  • Hong Kong

Minimum Public Float

  • The public float in IPO shall not less than HKD50 million

  • The public shareholding percentage in IPO is more than 25% of issued share capital

  • If the market capitalisation in IPO is more than HKD10 billion, the Hong Kong Exchange will reduce the public shareholding to 15%-25%

 

Other Requirement

  • The controlling shareholder or director can conduct business competing with the company, subject to full disclosure

  • The company is unable to do IPO in sole manner of placing

  • The portion of public subscription shall be fully underwritten

  • There is no issue of new shares within the first six months after IPO of the company​

 

Please feel free to call or email us and our dedicated team will provide you with the services you need.

Requirement of GEM IPO

Requirement of GEM IPO

Enterprises who intent to IPO on GEM in Hong Kong shall apply to Hong Kong Exchange and Clearing Limited and relevant procedures and requirements are set out on GEM Listing Rules.

 
Financial Requirements

  • No profit requirement

  • Previous 2 year's cash inflow from operation activities ≥ HKD20 million

  • Market Capitalisation at the time of listing ≥ HKD100 million

 

Business Record Requirement

  • Trading record of at least two financial years;

  • Management continuity throughout the two preceding financial years; and

  • Ownership continuity and control throughout the preceding full financial year.

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Management Requirement & Undertaking
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Management Requirement

  • At least three independent non-executive directors

  • Establish an audit committee comprising at least three members

 

 

Shareholders Undertaking

  • Disclosure in IPO documents not to sell its interests in the company within the first six months after IPO

 

Management Undertaking

  • Not to sell its interest in the company within 12 months after IPO, so that it is no longer the controlling shareholder of the company, keeping at least 30% interest in the company

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Recognized Jurisdiction

  • Australia

  • Bermuda

  • Brazil

  • British Virgin Islands

  • Canada - Alberta

  • Canada - British Columbia

  • Canada - Ontario

  • Cayman lslands

  • China

  • Germany

  • Hong Kong

  • Italy

  • Japan

  • jersey

  • Luxembourg

  • Singapore

  • United Kingdom

Minimum Public Float

  • At least 25% of the issuer's total issued share capital subject to a minimum of HK$30 million (US$3.8 million) must at all times be held by the public.

  • For issuers with an expected market capitalisation of over HK$10 billion (US$1.3 billion) at the time of listing, the Exchange may accept a lower percentage of between 15% and 25%.

 

Other Requirement

  • At least 100 public shareholders

  • No more than 50% of the securities in public hands at the time of listing can be beneficially owned by the three largest public shareholders

  • The controlling shareholder or director can conduct business competing with the company, subject to full disclosure

  • The company is able to do IPO in sole manner of placing

  • Underwriting is not compulsory

  • There is no issue of new shares within the first six months after IPO of the company

 

Please feel free to call or email us and our dedicated team will provide you with the services you need.

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EMAIL

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92 Granville Road, Tsim Sha Tsui, Hong Kong

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