Mon. Nov 28th, 2022

In an effort to close the gap with the U.S. and Mainland China in terms of the number and market capitalization of publicly listed companies in certain advanced or new technology industries, on October 19, 2022, the Hong Kong Stock Exchange (the “Exchange”) published a consultation paper on a proposed new listing regime for specialist technology companies. The proposed regime will relax certain eligibility requirements and offer greater listing opportunities for specialist technology companies that are unable to meet the Exchange’s current profit, revenue, or cash flow requirements for a Main Board listing.
The proposed rules will be set forth under Chapter 18C of the Exchange’s Main Board Listing Rules and apply to only “specialist technology companies,” being companies primarily engaged in the research and development of, and the commercialization and/or sale of, a product and/or service that applies science and/or technology within an acceptable sector of a specialist technology industry.
The initial five acceptable specialist technology industries are:
The Exchange may, after consultation with and approval from the Securities and Futures Commission, update the list of acceptable specialist technology industries and sectors from time to time, taking into account the following principles:
The Exchange will have the discretion to reject a listing application from a specialist technology company if it displays attributes inconsistent with the above principles.
Interestingly, under the proposed listing regime for specialist technology companies, biotech companies relying on a regulated product as the basis of their listing application should continue to follow the requirements under Chapter 18A (Biotech Companies) instead of Chapter 18C of the Listing Rules. Medical technology companies developing medical robotics, nanomaterials, or synthetic biological materials that are not required to be regulated may nevertheless benefit from the proposed regime for specialist technology companies. Such companies interested in seeking a listing in Hong Kong should pay close attention to the consultation conclusion for the proposed new listing regime.
The Exchange will classify specialist technology companies into two categories: (i) commercial companies that have revenue of at least HK$250 million (approx. US$31.9 million) for the most recent audited financial year, and (ii) pre-commercial companies that have not yet achieved the revenue threshold. The list below sets out the key proposed eligibility requirements:
The proposed listing regime is expected to attract more innovative technology companies operating in the five specialist technology industries, including pre-revenue companies, to list on the Exchange. Additional rules on eligibility, price discovery, offering requirements, disclosure, post-listing lock-up, and ongoing obligations for specialist technology companies are also being consulted on. The consultation period will end on December 18, 2022.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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