The Securities and Futures Commission (the SFC) and The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), are pleased to jointly announce today (Friday) an enhanced timeframe for the New Listing1 application process (Enhanced Application Timeframe), to further elevate Hong Kong’s attractiveness as the leading international listing venue in the region.
Over the years, the SFC and the Exchange have made continuous efforts to enhance the application process for New Listing applications, offering guidance, clarity and transparency to the market. Since 2023, both regulators have made their work processes more transparent by publishing additional vetting statistics. In addition, the Exchange also consolidated all guidance materials into one published Guide for New Listing Applicants to facilitate the market in preparing New Listing applications and disclosures.
The Enhanced Application Timeframe, among the other initiatives, underscores the regulators’ ongoing commitment to facilitate the listing of quality companies in Hong Kong and uphold the public interest.
Current Regulatory Framework
Under the current structure for reviewing New Listing applications, the SFC, as the statutory regulator, administers the Securities and Futures (Stock Market Listing) Rules (SMLR) and the Securities and Futures Ordinance (SFO). It reviews all New Listing applications and engages in targeted intervention in more serious listing matters that fall within the scope of the SMLR or the SFO. The Exchange, as the frontline regulator, administers the Listing Rules and is responsible for making decisions under the Listing Rules on matters such as determining suitability for listing. The Listing Committee considers and decides whether to approve New Listing applications and, where appropriate, raises comments on eligibility and suitability for listing, as well as on material listing document disclosures.
Enhanced Application Timeframe
The Enhanced Application Timeframe will provide greater clarity and certainty to the timeline for reviewing New Listing applications by the SFC and the Exchange.
Applications Fully Meeting Requirements
The SFC and the Exchange work closely together on the New Listing application process and will continue to coordinate their regulatory actions under the Enhanced Application Timeframe. Where an applicant and its sponsor submit a New Listing application and related materials that meet all applicable requirements and guidance under the SFO, the SMLR and/or the Listing Rules (Applications Fully Meeting Requirements), the SFC and the Exchange will, after close communication to avoid duplication of comments, individually assess and indicate any material regulatory concerns (Regulators’ Assessment) after a maximum of two rounds of regulatory comments. In this scenario, the time taken by each regulator to confirm whether there are any material regulatory concerns will be no more than 40 business days2. Upon confirmation of no material regulatory concern, the Exchange will work with the applicant and its sponsor to finalise the disclosure in the listing document, following which the application will move forward to the Listing Committee Hearing.
The applicant and its sponsor are expected to take a total of around 60 business days to satisfactorily address regulators’ comments. Subject to obtaining approvals from the Listing Committee and other authorities or regulators, the application process would be completed within the six-month application validity window. Please refer to the attached chart (Appendix) for an illustration of the Enhanced Application Timeframe under such scenario.
Accelerated Timeframe for Eligible A-share Listed Companies
If an existing A-share listed company meets the following criteria when submitting a New Listing application: (a) it is expected to have a minimum market capitalisation of HK$10 billion3; and (b) it can confirm, with the support of legal advisers’ opinion, that it has complied with all laws and regulations, in all material respects, applicable to its A-share listing throughout the two full financial years immediately preceding the New Listing application and up to the date of submitting the New Listing application, then the A-share listed company is eligible for an accelerated timeframe for the New Listing application process (Accelerated Timeframe).
Under the Accelerated Timeframe, if an eligible A-share listed company submits an Application Fully Meeting Requirements, the Regulators’ Assessment will be completed after one round of regulatory comments. In this scenario, each regulator will take no more than 30 business days (instead of 40 business days for other New Listing applications under “Applications Fully Meeting Requirements” above) to complete the Regulators’ Assessment.
If the SFC and/or the Exchange indicate that they have material regulatory concerns over the New Listing application of an eligible A-share listed company, as determined by the Regulators’ Assessment, the Accelerated Timeframe will no longer apply. In such case, the application process will be subject to the procedures set out in “Applications Requiring Longer Process” below.
Applications Requiring Longer Process
If the SFC and/or the Exchange have material concerns regarding an applicant’s compliance with the SFO, the SMLR and/or the Listing Rules and/or the quality of listing document preparation, or if there are new material developments or incomplete responses to regulators’ comments, the SFC and the Exchange will proactively engage with the applicant and its sponsor to enhance their understanding of the relevant regulatory concerns.
In particular:
- After the issue of the first comment letter (1CL), the SFC and/or the Exchange will, where necessary, engage with the key representatives of the applicant and its sponsor, as well as other advisers, to facilitate their understanding of the material regulatory concerns and outline the regulators’ expectations on their subsequent response.
- If any subsequent responses to the regulatory comments are materially incomplete, the SFC and/or the Exchange will inform the applicant and its sponsor of the deficiency and suspend the vetting process until a complete and satisfactory reply is received.
- If the applicant and its sponsor do not adequately address the material regulatory concerns raised by the SFC and/or the Exchange after two rounds of regulatory comments (or one round under the “Accelerated Timeframe for Eligible A-share Listed Companies” above), the SFC and/or the Exchange will issue a direct requisition letter under the SMLR (SMLR Letter) and/or a major concerns letter (MCL) as appropriate. The progress of the application will then be subject to the applicant and its sponsor satisfactorily addressing the material regulatory concerns set out in the SMLR Letter and/or the MCL.
Under such scenario, the timeline of the application process may be lengthened.
The SFC and the Exchange believe that the Enhanced Application Timeframe will help better support the Hong Kong listing journey for prospective issuers, as it provides more clarity and certainty regarding the timing and rounds of comments from both regulators, as well as enhanced transparency in the application process for New Listing applications. Applicants and their sponsors are encouraged to communicate with the regulators should they have any questions on the regulators’ comments.
Mr Michael Duignan, the SFC’s Executive Director of Corporate Finance, said: “The SFC has always been committed to transparency, accountability and better efficiency in listing regulation. We fully support the Enhanced Application Timeframe initiative, which is in line with our strategic priority to improve the global competitiveness and appeal of Hong Kong’s capital markets.”
Ms Katherine Ng, HKEX’s Head of Listing, said: “At HKEX, we are committed to fulfilling our regulatory responsibilities by carefully and efficiently reviewing New Listing applications. We believe that the Enhanced Application Timeframe, including the introduction of the Accelerated Timeframe for eligible A-share listed companies, will provide greater clarity and certainty in the application process for New Listing applications, thereby assisting potential applicants and their advisers in formulating their listing plans, and further elevating Hong Kong’s attractiveness as an IFC. We look forward to continuing to work closely with our prospective issuers and their advisers, and, together with their cooperation and support, contribute to an even more efficient and timely vetting process.”
The SFC and the Exchange will continue to welcome market feedback and appreciate the commitment of applicants and their advisers to high standards when preparing New Listing applications, to realise the benefits of the Enhanced Application Timeframe.
The Enhanced Application Timeframe will be applicable to New Listing applications filed after the date of this Joint Statement.
Notes:
- “New Listing” has the meaning ascribed to it (but excluding any new listing of interests in a real estate investment trust or any reverse takeover of a listed issuer which is a deemed new listing under the Listing Rules) in Rule 1.01 of the Listing Rules.
- This refers to the number of business days in the hands of the regulators and excludes the response time of the applicant and its sponsor.
- Calculated with reference to (i) the A-share market capitalisation based on the average A-share closing price for the five business days immediately preceding the date of the New Listing application; and (ii) the expected H-share market capitalisation at the time of listing on the Exchange.
Appendix
.jpg)
