Introduction

On 18 October 2024, the Securities and Futures Commission (the “SFC”) and the Stock Exchange of Hong Kong Limited (the “Stock Exchange”) jointly announced an enhanced timeframe for the New Listing application process (“Enhanced Application Timeframe”). We will summarise the new arrangements under the Enhanced Application Timeframe below.

Current regulatory framework

Under the current regulatory framework for reviewing New Listing applications, applications are vetted by both the SFC and the Stock Exchange. The SFC would raise comments in relation to the Securities and Futures (Stock Market Listing) Rules (“SMLR”) and the Securities and Futures Ordinance (“SFO”). The Stock Exchange makes decisions under the Listing Rules relating to matters such as the suitability for listing. The Listing Committee of the Stock Exchange considers whether to approve New Listing applications and raises comments regarding the eligibility and suitability for listing and the disclosures in the listing document.

Enhanced Application Timeframe

Under the Enhanced Application Timeframe, arrangements are introduced for (1) applications fully meeting the listing requirements, (2) accelerated timeframe for eligible A-share listed companies, and (3) applications requiring longer process.

Applications fully meeting requirements

If the New Listing application and the related materials submitted by an applicant and its sponsor can satisfy all applicable requirements and guidance under the SFO, the SMLR and/or the Listing Rules, the SFC and the Stock Exchange will would individually assess the application and raise material regulatory concerns (“Regulators’ Assessment”), if any, after a maximum of two rounds of regulatory comments. The time taken by each of the SFC and the Stock Exchange to confirm whether there are any material regulatory concerns will be no more than 40 business days. After the SFC and the Stock Exchange confirmed that there is no material regulatory concern, the Stock Exchange will work with the applicant and its sponsor to finalise the disclosure in the listing document, and will proceed to the Listing Committee hearing afterwards.

The expected time for the applicant and its sponsor to satisfactorily address the SFC’s and the Stock Exchange’s comments is around 60 business days. Subject to obtaining approvals from the Listing Committee and other regulators (if applicable), the application process would be able to be completed within the six-month application validity window.

Accelerated timeframe for eligible A-share listed companies

Under the Enhanced Application Timeframe, an accelerated timeframe for the New Listing application process (“Accelerated Timeframe”) is introduced for eligible A-share listed companies. An existing A-share listed company is eligible for the Accelerated Timeframe if, when submitting the New Listing application, it meets the following criteria:

1.      it is expected to have a minimum market capitalisation of HK$10 billion; and 

2.      it can confirm, with the support of legal advisers’ opinion, that it has complied with all laws and regulations, in all material respects, applicable to its A-share listing throughout the two full financial years immediately preceding the New Listing application and up to the date of submitting the New Listing application.

Under the Accelerated Timeframe, if the application submitted by an eligible A-share listed company satisfies all applicable requirements and guidance under the SFO, the SMLR and/or the Listing Rules, the Regulators’ Assessment will be completed after one round of regulatory comments. Each of the SFC and the Stock Exchange will take no more than 30 business days to complete the Regulators’ Assessment.

If the SFC and/or the Stock Exchange raise any material regulatory concerns over the New Listing application of an eligible A-share listed company as indicated under the Regulators’ Assessment, the Accelerated Timeframe will no longer apply, and the application process will be subject to the procedures set out in “Applications Requiring Longer Process” below.

Applications requiring longer process

If the SFC and/or the Stock Exchange raise material concerns in relation to the quality of disclosures in the listing document, and/or the applicant’s compliance with the SFO, the SMLR and/or the Listing Rules, or if there are new material developments or incomplete responses to the regulators’ comments, the SFC and the Stock Exchange will work with the applicant and its sponsor in relation to their regulatory concerns, which may lengthen the application process.

After the issue of the first comment letter, the SFC and/or the Stock Exchange will, where necessary, engage with the key representatives of the applicant, its sponsor and other advisers, to facilitate their understanding of the material regulatory concerns and outline the regulators’ expectations on their subsequent response.

If any subsequent responses to the regulatory comments are unsatisfactory, the SFC and/or the Stock Exchange will inform the applicant and its sponsor of the deficiency and suspend the vetting process until a complete and satisfactory reply is received by the SFC and/or the Stock Exchange.

If the applicant and its sponsor could not adequately address the material regulatory concerns raised by the SFC and/or the Stock Exchange after two rounds of comments, or one round under the “Accelerated Timeframe for Eligible A-share Listed Companies” above, the SFC and/or the Stock Exchange will issue a major concerns letter and/or a direct requisition letter under the SMLR. In such circumstances, the application progress will be subject to whether the applicant and its sponsor could satisfactorily address the material regulatory concerns set out in the major concerns letter and/or the requisition letter.

Conclusion

The Enhanced Application Timeframe provides a more precise vetting framework in relation to the timing and rounds of comments from the regulators regarding New Listing applications. The Enhanced Application Timeframe will be applicable to New Listing applications filed after the date of the joint statement, i.e. 18 October 2024.