Tag Archives: IPOs

HKSE still has tough rules for tech IPO hopefuls, analysts say

Hong Kong might be the obvious choice for Chinese tech IPOs after the central government tightened rules on overseas listings, but tough accounting and disclosure requirements still stand in the way, suggesting it could be months before the stock exchange (HKSE) starts to benefit, and even then, many aspiring companies might not make it. This is according to an analysis on SCMP written by its veteran capital-markets reporter, Enoch Yiu.

Companies that want to shift their listing from the US to Hong Kong may have to rework their accounts and application documents to comply with the tougher standards imposed by the Hong Kong bourse operator than US exchanges, accounting and legal sources said.

Some of the biggest differences include accounting principles and reporting standards, offshore ownership structures and classes of shares with variable voting rights. “Listing requirements in Hong Kong are stricter,” said Wang Hang, a partner at legal firm Baker McKenzie in Beijing. “The key is to evaluate whether the issuer can fulfil the listing conditions. That is to say, not all of these companies are capable of shifting [their choice of venue] to Hong Kong.”

More on SCMP

China to review all offshore listings

The Cyberspace Administration of China will implement new regulations that would require nearly all Chinese companies seeking to list overseas to undergo a data security review, confirming a Bloomberg report from last week that said the CAC was considering such a move. There will be a review and consultation period in which the CAC seeks feedback to its proposed rules, which cover companies that hold data on more than 1 million users. The CAC said it was concerned that such data and personal information could be “affected, controlled, and maliciously exploited by foreign governments,” it said in a statement.

The new rules will cover just about every company wanting to do an IPO in the US, analysts said, and regulators are also considering requiring Variable Interest Entities (VIEs) like Alibaba Group, which have already gone public, to seek approval for additional share offerings offshore, according to Bloomberg.

So far this year, 37 Chinese companies have listed in the US, surpassing last year’s count, and raised a combined $12.9 billion, according to Bloomberg.

Read more on Bloomberg

Read our analysis of what this means for Hong Kong.