Hong Kong listing regime and Listing Rules requirements
Hong Kong listing regime and Listing Rules requirements
This domain tests eligibility for listing on the Main Board and GEM, the structure of a listing application, and the Listing Rules that govern the route from Form A1 to the first day of dealings.
Eligibility - the three financial tests (Main Board)
- Profit test: aggregate profit of at least HK$80 million over the three most recent financial years, including at least HK$35 million in the most recent year and HK$45 million aggregate over the two preceding years.
- Market capitalisation/revenue test: expected market capitalisation of at least HK$4 billion at listing and revenue of at least HK$500 million in the most recent audited financial year.
- Market capitalisation/revenue/cash flow test: market capitalisation of at least HK$2 billion, revenue of at least HK$500 million in the most recent audited year, and positive cash flow of at least HK$100 million aggregate for the three preceding years.
The common conditions
- Trading record of at least three financial years, management continuity for those three years, and ownership continuity for at least the most recent audited year.
- Expected market capitalisation at listing of at least HK$500 million.
- Public float of at least 25% of issued share capital, or 15% where expected market capitalisation at listing exceeds HK$10 billion; the float must be worth at least HK$125 million and be held by at least 300 shareholders.
- Sufficient operations or assets (Rule 13.24) and a listing document meeting Chapter 11, authorised by the SFC and registered with the Registrar.
The process
Appoint sponsors (two-month rule) → due diligence and drafting → Form A1 with dual filing → Exchange review, comments and Listing Committee hearing → prospectus authorisation and registration → marketing and pricing → listing. GEM serves smaller issuers with a shorter trading record and lower financial thresholds but the same disclosure philosophy.
Worked example
A Main Board applicant reports audited profits of HK$18 million, HK$27 million and HK$40 million for the three most recent years. Aggregate = HK$85 million (meets HK$80 million); most recent year HK$40 million (meets HK$35 million); the two earlier years aggregate HK$45 million (meets the threshold exactly). It passes the profit test on these figures, so the analysis moves to the qualitative tests, market capitalisation and public float.
Traps
- Using the superseded HK$50 million/HK$20 million profit figures.
- Mis-ordering the years: the toughest profit test applies to the most recent year.
- Assuming the HK$500 million market capitalisation requirement replaces the public float test; both apply.
- Overlooking ownership continuity, which bites where control changed shortly before the application.
- Forgetting that the sponsor must be appointed two months before filing, not two months before listing.