- Access to capital for growth opportunities to raise funds at time of listing and there after
- Broader shareholder base Investors from a more liquid market
- Employee incentive Link up commitment with employee by granting of employee share options
- Higher profile and visibility Bring confidence to the Company’s suppliers and customers
- Increased corporate transparency Better credit to bankers
- Well established legal system Best protection to issuers and investors
- Simple tax system Low profits tax rate, no tax on dividend income and capital gain
- No foreign exchange control Capital is freely circulate among different locations
A decision to list must be made after due and careful assessment of your company, its business strategy and the intentions of its shareholders and management.
You should consider the following questions:
- what is the rationale for listing the company? Is the company looking for capital to fund its development? And does a listing fit into the company’s overall strategy?
- are the company and its management aware of the time and cost involved in a listing exercise?
- are the shareholders ready to accept a degree of loss of control in the company, where certain transactions may require the prior approval of the company’s independent shareholders?
- is the management prepared to accept the rigorous on-going obligations that is demanded of a listed company and accept closer scrutiny by the public?
- are the directors aware that any changes of personnel at the board level may affect the company’s share price and investor confidence?
- is the company’s management willing to commit time to meeting and communicating with its investors and research analysts?
- will the management be able to balance the company’s short term performance such as maximising shareholders’ value with its longer term corporate strategy?
- are the directors aware of their fiduciary duties and restrictions on dealings once a company is listed?
Procedures for IPO
- Management Intent to Launch IPO in Hong Kong
- Establish a Professional Team (Solicitor, Certified Public Accountants, Listing Agent, Financial Advisor, Bookrunners, Underwriters, etc)
- Preparing due diligence and prospectus and Accountant’s Report
- Submit the Advance Booking Form (Appendix 5A to the Listing Rules)
- Hearing by Listing Division
- Approval for IPO
- Roadshow and Issue of Prospectus & Formal Notice
- Dealings in IPO Shares
Chapter 19 of the Main Board Listing Rules and Chapter 24 of the GEM Listing Rules provide the general framework applicable to all overseas companies seeking a listing on the Exchange. Main Board Rule 19.05(1)(b) and GEM Rule 24.05(1)(b) and the explanatory notes thereto set out the shareholder protection standards that are expected of an overseas company when seeking a primary listing on the Exchange.
Applicants incorporated outside Hong Kong and other recognised jurisdictions seeking a primary listing on Main Board and GEM are assessed on a case-by-case basis and have to demonstrate they are subject to appropriate standards of shareholder protection, which are at least equivalent to those required under Hong Kong law. A roadmap that compromises a schedule of shareholder protection matters is set out in the attachment to the Joint Policy Statement dated 7 March 2007 to distil the key requirements for ensuring appropriate standards of shareholder protection from Exchange’s current approach.
A new applicant’s accounts must be prepared in accordance with either Hong Kong Financial Reporting Standards or International Financial Reporting Standards. Banking companies must also comply with the Financial Disclosure by Locally Incorporated Authorised Institutions issued by the Hong Kong Monetary Authority.
Contact Dexin Assurance now for a non-obligatory consultation on your HK IPO journey!