IPO process accelerated: Enhanced application timeframes by SFC and SEHK

1. The Enhanced Application Timeframe

The SFC and the SEHK will coordinate their regulatory actions under the Enhanced Application Timeframe. The regulators will remain focused on ensuring that the application materials conform to all applicable requirements and guidelines as set forth in the Securities and Futures (Stock Market Listing) Rules (SMLR), the Securities and Futures Ordinance (SFO), and the SEHK’s Listing Rules (Listing Rules).

(a) Fully Compliant Applications

When an applicant submits an IPO application that fully meets all requirements set out above (Fully Compliant Application), the SFC and SEHK will each aim to complete the assessment on material regulatory concerns (Regulators’ Assessment) in a maximum of two rounds of comments and within 40 business days³.

In the absence of material regulatory concerns, the Applicant and its sponsors shall then finalize the prospectus together with the SEHK, and the IPO application may proceed to the Listing Committee Hearing. Please refer to the flowchart for an illustration of a possible process.

Generally, Applicants and the sponsors are expected to take about 60 business days in total to satisfactorily address comments of the regulators. In such a case, the IPO application process may be completed within 6 months, subject to the approvals of the Listing Committee and other relevant authorities.

(b) Eligible A-Share Listed Applicants

If an A-share listed company meets the following criteria when submitting an IPO application: (a) an expected minimum H-share market capitalisation of HK$10 billion; and (b) compliance with all laws and regulations throughout the two full financial years preceding the application in all material respects (and supported by legal opinions), it is eligible for an accelerated process (A-share Listed Applicant).

For an A-share Listed Applicant who submits a Fully Compliant Application, the SFC and SEHK pledge to further streamline the Regulators’ Assessment, which is expected to be completed in a maximum of one round of comments from each regulator, and within 30 business days³. An A-share Listed Applicant with no material regulatory concerns may proceed with the Listing Committee Hearing after finalisation of the prospectus with SEHK. Please refer to the flowchart for an illustration of a possible process.

(c) IPO Applications with Longer Process

The SFC or SEHK may extend the IPO application process on the follow grounds:

1. Applicant’s material compliance issues with the SFO, SMLR, or Listing Rules,
2. concerns on the quality of the application materials,
3. new material developments, or
4. incomplete responses to regulators’ comments
   (collectively, the Scenarios)

As a consequence, the Applicants may face the SFC’s and/or SEHK’s direct requisition letters under the SMLR (SMLR Letter) and/or a major concern letter (MCL). The vetting process may even be suspended, pending their satisfactory responses.

The SFC and SEHK however commit to proactively engage with the Applicants, sponsors, and advisors in the Scenarios after the first comment letters to clarify the regulatory concerns and expectations, so as to facilitate the application process.

Please refer to the flowchart for an illustration of a possible process.

2. Maximizing Benefits from the Enhanced Application Timeframe

(a) Comprehensive preparation is the key

The Enhanced Application Timeframe aims to expedite IPO applications that meet all legal and regulatory requirements, allowing listings within six months. To fully benefit from this, meticulous preparation of application materials before submission of listing application is crucial. Staying vigilant in market developments and engaging experienced advisors can also help avoid common pitfalls.

(b) Active Communications with the Regulators

The SFC and SEHK encourage Applicants and sponsors to communicate with them about the regulators’ comments. Leveraging on this communication channel can ensure the Applicant’s accurate and timely responses to the regulators’ questions, thereby taking advantage of this accelerated process.

3. Conclusion: Strengthening Hong Kong’s Position as a Premier International Financial Centre

The accelerated IPO process under the Enhanced Application Timeframe, coupled with the coordinated regulatory efforts of the SFC and SEHK, and their dedication to maintaining open communication with stakeholders, represent a significant advancement over the previously protracted listing procedures.

This demonstrates the regulators' commitment to facilitate the listing of quality companies on the SEHK, and the strengthening of Hong Kong's global competitiveness and attractiveness as an international financial centre.