While the Securities and Futures Commission performs an excellent job as being watchdog to create a level playing field for all parties in the capital market and protection of minority interests of listed companies, the Hong Kong Stock Exchange (HKEx) continues its search to expand and innovate to ensure the competitiveness of HK as one of the top international financial centers is maintained. With effect from 30 April 2018, a new listing regime is being introduced. 3 new chapters will be added to the Main Board Listing Rules to cover Biotech, weighted voting rights and secondary listings.
Pre-revenue pre-profit biotech companies must have passed their concept stage and their products regulated or to be regulated by US Food and Drug Administration (FDA), China Food and Drug Administration (CFDA), European Medicines Agency (EMA), others to be considered on a case by case basis. The market capitalization must be greater than HK$1.5 billion with cornerstone investor(s). Companies must be in the same line of business for at least 2 financial years with more or less the same management. Any change of business line after listing must have the consent of the HKEx. Accelerated de-listing process will be introduced.
Innovative companies with weighted voting rights (WVRs) will also be accepted for listing. Minimum market capitalization is HK$10 billion. The voting rights are capped at 10 times and are restricted to directors who have been indispensable to the rapid growth of the business of their companies. There will not be further increase in the proportion of WVRs after listing. On certain material matters e.g. appointment / removal of independent non-executive directors, appointment / removal of auditors, variation of the rights of shares, amendment to the companies’ constitutional documents, voluntary winding up etc. will be on one-share-one-vote basis. Further enhancement to the authority of the corporate governance committee and the requirement to appoint an ongoing compliance officer will be implemented.
Greater efforts will also be made to attractive innovative companies including Greater China issuers listed in the New York Stock Exchange, Nasdaq, London Stock Exchange Main Market to have secondary listing in HK.
First published on: https://www.linkedin.com/pulse/hong-kong-new-listing-regime-belinda-wong/