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Listing in Hong Kong Highlights of listing requirements for the Main Board versus Growth Enterprise Market
www.pwc.com/ua/capital-markets
Сapital Markets
Listing requirements
Hong Kong Main Board Hong Kong Growth Enterprise Market
Track record and market capitalisation requirements
• Tradingrecordofnotlessthanthreefinancialyears(exceptwherenotedbelow)
• Tradingrecordofnotlessthantwofinancialyears
• Managementcontinuityforatleastthethreeprecedingyearsandcontinuityofownershipandcontrolforatleastthemostrecentauditedfinancialyear
• Mustbeundersubstantiallythesamemanagementforthetwoprecedingfullfinancialyearsandupuntilthedateoflistingandhavecontinuityofownershipandcontrolfortheprecedingfullfinancialyearandupuntilthedateoflisting
• Threetests(itissufficienttomeetanyonetest):
I.Profittest–ProfitsofatleastHK$20millionformostrecentyearandof
HK$30millionforthefirsttwoyearsinaggregate–MarketcapitalisationofatleastHK$200millionatthetimeof
listing
II.Marketcapitalisation/revenue/cashflowtest–RevenueofatleastHK$500millionforthemostrecent
auditedfinancialyear–PositivecashflowfromoperatingactivitiesofatleastHK$100
millioninaggregateforthethreeprecedingfinancialyears–MarketcapitalisationofatleastHK$2billionatthetimeof
listing
III.Marketcapitalisation/revenuetest–RevenueofatleastHK$500millionforthemostrecent
auditedfinancialyear–MarketcapitalisationofatleastHK$4billionatthetimeoflisting
UndertheMarketcapitalisation/revenuetest,theExchangemayacceptashortertradingrecordperiodundersubstantiallythesamemanagementifthenewapplicantcandemonstratethat:
–itsdirectorsandmanagementhavesufficientandsatisfactoryexperienceofatleastthreeyearsinthelineofbusinessandindustryofthenewapplicant;and
–managementcontinuityforthemostrecentauditedfinancialyear
I.Noprofitrequirement
II.PositivecashflowfromoperatingactivitiesofatleastHK$20millioninaggregateforthetwoprecedingfinancialyears
III.MarketcapitalisationofatleastHK$100millionatthetimeoflisting
TheExchangemayacceptashortertradingrecordperiodandwaiveorvarytheownershipandmanagementrequirementsfor:
–newly-formed“project”companies;and–naturalresourcesexploitationcompanies
supportedbyreasonsacceptabletotheExchange
• Afocusedlineofbusinessnotspecificallyrequired,butthecorebusinessshouldmeettheminimumfinancialrequirement
• N/A
Minimum public float
• MarketcapitalisationofatleastHK$50millionheldbythepublicatthetimeoflisting
• MarketcapitalisationofatleastHK$30millionheldbythepublicatthetimeoflisting
• Minimum25%oftheissuer’stotalissuedsharecapitalatthetimeoflisting
• TheExchangemay,atitsdiscretion,acceptapercentageofpublicfloatbetween15%and25%ifthemarketcapitalisationoftheissueratthetimeoflistingexceedsHK$10billion
Future prospects
• Nospecificrequirementbuttheapplicantisrequiredtoincludeageneralstatementoffutureplansandprospects
• Statementofbusinessobjectivesfortheperiodcoveringtheremainingfinancialyearduringwhichlistingoccursandthetwofullfinancialyearsthereafter
• Inclusionofprofitforecastisoptional
Listing requirements
Hong Kong Main Board Hong Kong Growth Enterprise Market
Accounting standards
• FinancialstatementsmustbepreparedinaccordancewitheitherHongKongFinancialReportingStandards,InternationalFinancialReportingStandards,orPRCCAS
• GenerallyacceptedaccountingprinciplesintheUnitedStatesofAmerica(USGAAP)orotheraccountingstandardsmaybeacceptedbytheExchangeundercertaincircumstances
• GenerallyacceptedaccountingprinciplesintheUnitedStatesofAmerica(USGAAP)areacceptableifthecompanyislisted,orwillbesimultaneouslylisted,oneithertheNewYorkStockExchangeortheNASDAQNationalMarket
• Ingeneral,theaccountants’reportcoversatleastthethreecompletefinancialyearsimmediatelyprecedingtheissueoftheprospectus
• Ingeneral,theaccountants’reportcoversatleasttwocompletefinancialyearsimmediatelyprecedingtheissueoftheprospectus
• Thelatestfinancialperiodreportedonbythereportingaccountantsmustnothaveendedmorethansixmonthsbeforethedateofthelistingdocument
Corporate governance
• Atleastthreeindependentnon-executivedirectorsrequired
• Auditcommitteerequired • Complianceofficerrequired
• Requiredtoappointacomplianceadviserfortheperiodcommencingoninitiallistingandendingonpublicationoffinancialresultsforthefirstfullfinancialyearafterlisting
• Requiredtoappointacomplianceadviserfortheperiodcommencingoninitiallistingandendingonpublicationoffinancialresultsforthesecondfullfinancialyearafterlisting
Acceptable jurisdictions
• Australia,Bermuda,Brazil,BritishColumbia(Canada),BritishVirginIslands,California(USA),CaymanIslands,Cyprus,France,Germany,HongKongandotherPeople’sRepublicofChina,Italy,Japan,Jersey,Luxembourg,Singapore,theIsleofMan,Ontario(Canada)andtheUnitedKingdom
• OtherjurisdictionswhicharesubjecttoappropriatestandardsofshareholderprotectionthatareequivalenttothoserequiredunderHongKonglawmaybeconsidered
• Forsecondarylistings,otherjurisdictionswillbeconsidered
Restrictions on controlling shareholders
• Acontrollingshareholderatthetimeoflistingmustundertake:–Nottodisposeofanyofhisinterestintheissuerwithinsixmonthsoflisting–Nottodisposeofhisinterestintheissuerintheperiodbetweensixandtwelvemonthsafterlisting,suchthathe
wouldceasetobea“controllingshareholder”(definedasatleasta30%interestintheissuer)
• Asignificantshareholderatthetimeoflistingmustundertakenottodisposeofhisinterestintheissuerwithinsixmonthsoflisting
Other considerations
• Competingbusinessesofcontrollingshareholdersordirectorsareallowedbutfulldisclosureisrequired
• Competingbusinessesofmanagementshareholders,substantialshareholdersordirectorsareallowedbutfulldisclosureisrequired
• Newissuemustbefullyunderwritten • Nounderwritingrequirement
• Listedissuerisnotallowedtoissuenewsecuritiesinthefirstsixmonthsafterlisting
• Listedissuerisnotallowedtoissuenewsecuritiesinthefirstsixmonthsafterlistingexceptforthepurposeofacquiringassetswhichwillcomplementitsbusiness
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www.pwc.com/ua/capital-markets
19.09.2012
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