HKEx - IPO

Hong Kong

Exchange, IPO, Listing

[A] Overview - Process

• 'Indicative timeline for an IPO in Hong Kong' (A&O Shearman, August 2024) <https://www.aoshearman.com/en/insights/indicative-timeline-for-an-ipo-in-hong-kong>, archived at <https://archive.is/GpXFZ>. 

• 'Introduction to Listing on the Main Board of the Hong Kong Stock Exchange' (Charltons, 2014) <https://www.charltonslaw.com/media/hong-kong-law/Introduction-to-listing-of-HK-and-overseas-companies-on-the-Main-Board-of-HKEx.pdf>. 

• 'IPO Listing on the Stock Exchange of Hong Kong Limited' (Charltons, 2020) <https://www.charltonslaw.com/legal/ipo/Initial-public-offering-in-Hong-Kong.pdf>. 

• 'Hong Kong Listing Rules Summary' (Timothy Loh, 2011) <https://www.timothyloh.com/insights/guides/hong-kong-stock-exchage-guide-to-listing>.

• 'Are You Ready for a Hong Kong IPO?' (Skadden, June 2024) <https://www.skadden.com/-/media/files/publications/2024/06/are-you-ready-for-a-hong-kong-ipo/are-you-ready-for-a-hong-kong-ipo_061024.pdf?rev=81f6de02b8cb428983c0d2beddee4ddc&hash=90CEAA3BEEBB5A46243B7BA9D2885FD1>, archived at <https://web.archive.org/web/20251211233103/https://www.skadden.com/-/media/files/publications/2024/06/are-you-ready-for-a-hong-kong-ipo/are-you-ready-for-a-hong-kong-ipo_061024.pdf?rev=81f6de02b8cb428983c0d2beddee4ddc&hash=90CEAA3BEEBB5A46243B7BA9D2885FD1>. 

• Christopher Betts, 'Hong Kong' (2017) 1 Initial Public Offerings Law Review ch 5 <https://www.skadden.com/-/media/files/publications/2017/06/hong_kong_ipo.pdf>, archived at <https://web.archive.org/web/20260504014058/https://www.skadden.com/-/media/files/publications/2017/06/hong_kong_ipo.pdf>.  

[B] SEHK - HKEx - Rules - Listing - Delisting

• Stock Exchange of Hong Kong Ltd ‘Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong’. <https://www.hkex.com.hk/Listing/Rules-and-Resources/Listing-Rules?sc_lang=en>. 

> Consolidated Main Board Listing Rules <https://en-rules.hkex.com.hk/sites/default/files/net_file_store/consol_mb.pdf>. 

Regulatory Framework

• ** 'Rules Governing the Listing of Securities' in Halsbury's Laws of Hong Kong (LexisNexis) [95A(8)(3)] <https://perma.cc/PUA3-PLTQ>. 

• ** 'Listing' in Halsbury's Laws of Hong Kong (LexisNexis) [183(1)(4)] <https://perma.cc/WYV7-9DSQ>. 

• * 'Securities Law in Hong Kong' in Halsbury's Laws of Hong Kong (LexisNexis) [183(1)(1)] <https://perma.cc/7APA-2HQ4>. 

• "13. The Exchange is a company incorporated under the (hk) Companies Ordinance (Cap 32) and is authorised by (hk) s 19 of the Securities and Futures Ordinance (Cap 571) (the SFO) to operate a stock exchange in Hong Kong. It is controlled by a parent company, namely, the Hong Kong Exchanges and Clearing Ltd. The Exchange’s activities are supervised, monitored and regulated by the Securities and Futures Commission (the SFC) under s 5 of SFO. The SFC is a body corporate established by legislation. A regulatory objective of the SFC is to, among other things, maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry. 14. In order to trade in the Exchange, public companies must agree to be bound by the ‘Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited’ (the Listing Rules). The executive directors of these companies are also required to give an undertaking (Declaration and Undertaking with regard to Directors) (the undertaking) to use their best endeavours to ensure their companies comply with the Listing Rules. 15. The Listing Committee of the Exchange is responsible for its management. Its members are not employees of the Exchange but are independent persons drawn from practitioners of the stock market and experts of the securities and futures industries. 16. The actual administration of the Exchange is carried out by its employees who constituted the Listing Division. They include legally qualified persons. 17. This division is responsible for the enforcement of the Listing Rules. It investigates any breach of the rules and conduct subsequent prosecution in disciplinary proceedings. ... The Listing Rules  19. Section 23(1) of the SFO empowers the Exchange to make rules for, among other things, the proper regulation of its exchange participants and holders of trading rights. In particular it may make rules for ‘the imposition on any person of obligations to observe specified standards of conduct or to perform, or refrain from performing, specified acts reasonably imposed in connection with the Listing or Continued Listing of securities’ (s 23(2)(d)). These rules must be approved by the SFC under s 24.": New World Development Co Ltd v Stock Exchange of Hong Kong Ltd [2005] 2 HKC 506 (Cheung JA).

• "[49]   Viability and sustainability is to be examined in the context of a qualitative assessment as to whether an issuer has a viable and sustainable business which warrants the continued listing of its shares. Under the statutory framework and the GEM Listing Rules, whether the threshold of viability and sustainability warranting continued listing has been met is a matter of professional judgment for the members of the Listing Division, the Listing Committee and the Review Committee, see Sanyuan Group Ltd v The Stock Exchange of Hong Kong CACV 191/2008 (21 July 2009). In the absence of any error of law or failure in taking account of relevant matters or taking irrelevant matters into account, the court should not intervene with such professional judgments.": China Trends Holdings Ltd v The Stock Exchange of Hong Kong Ltd [2021] HKCU 3173; SEE also China Trends [2026] HKCU 554, [37].

• "[39]   The SEHK is a recognised exchange company under section 19 of the Securities and Futures Ordinance Cap 571 (“SFO”) . Section 21 of the SFO imposes on the SEHK an overriding duty not only to ensure an orderly, informed and fair market, but also to act in the interest of the public, particularly the investigating public. The interest of the public is to prevail when it conflicts with the interest of the recognised exchanged company. [40]   Section 23 of the SFO empowers the SEHK to have made the Listing Rules. [41]   Rule 6.01 of the Listing Rules materially provides that: Listing is always granted subject to the condition that where the Exchange considers it necessary for the protection of the investor or the maintenance of an orderly market, it may at any time direct a trading halt or suspend dealings in any securities or cancel the listing of any securities in such circumstances and subject to such conditions as it thinks fit, whether requested by the issuer or not. The Exchange may also do so where: … (3) the Exchange considers that the issuer does not carry on a business as required under rule 13. 24; or (4) the Exchange considers that the issuer or its business is no longer suitable for listing. [42]   Rule 6.01A(1) provides that: Without prejudice to its power under rule 6.01, the Exchange may cancel the listing of any securities that have been suspended from trading for a continuous period of 18 months. [43]   Rule 13. 24(1) provides that: An issuer shall carry out, directly or indirectly, a business with a sufficient level of operations and assets of sufficient value to support its operations to warrant the continued listing of the issuer’s securities. [44]   The SEHK’s Guidance Letter HKEX-GL95-18 (“GL95-18”) gives further guidance to suspended issuers on the operation of the delisting rules, including as follows: 12. Under the Rules, the Exchange would cancel the listing of a long suspended issuer upon the expiry of the remedial period (prescribed or specific) if the issuer has not remedied the issues causing the suspension and re-complied with the Rules. This remedial period sets a deadline referenced to the resolution of the relevant issues and resumption of trading, as opposed to submission of a resumption proposal as in the previous regime. … 19. To ensure the effectiveness and credibility of the delisting framework and prevent undue delay of the delisting process, the Listing Committee may only extend the remedial period in exceptional circumstances. It may do so where: (a) an issuer has substantially implemented the steps that, it has shown with sufficient certainty, will lead to resumption of trading; but (b) due to factors outside its control, it becomes unable to meet its planned timeframe and requires a short extension of time to finalise the matters. The factors outside the issuer’s control are generally expected to be procedural in nature only. This may happen where, for example, an A1 application has been approved by the Exchange but, due to a delay in the court hearing for approving a scheme of arrangement, the issuer requires additional time to implement the relevant transactions. The Exchange envisages that if an extension of time is given on the expiry of the remedial period, the Listing Committee would not normally extend the remedial period for a second time. [45]   It is also not in dispute that a listed issuer may request the decision of the Listing Committee to be referred to the LRC for a further and final review. Such review hearings are heard de novo, and the LRC will consider the decision of the previous decision making body and state the reasons for its own decision. The LRC will also address the prior decision (and the basis therefor) in its own decision, whether it is upholding or overturning that prior decision.": Tenwow International Holdings Ltd (in Provisional Liquidation) v The Stock Exchange of Hong Kong Ltd [2020] HKCU 4254.

Summaries

• 'IPO and Listing Process on the SEHK with Highlights' (HKEx, Sept 2019) <https://www.hkex.com.hk/-/media/HKEX-Market/News/Research-Reports/HKEx-Research-Papers/2019/CCEO_GIS(ListingProcess)_201909_e.pdf>, archived at <https://web.archive.org/web/20220120113203/https://www.hkex.com.hk/-/media/HKEX-Market/News/Research-Reports/HKEx-Research-Papers/2019/CCEO_GIS(ListingProcess)_201909_e.pdf>. 

• 'IPO Laws and Regulations 2025 - Hong Kong' (GLI, July 2025) <https://www.globallegalinsights.com/practice-areas/initial-public-offerings-laws-and-regulations/hong-kong/>, archived at <https://archive.is/lL97b>. 

[C] Legal's Role

• Brayden Call, 'Legal’s Role in an IPO' (IPO Hub, 30 May 2023) <https://www.ipohub.org/article/legals-role-in-an-ipo>, archived at <https://archive.md/6VHPj>. 

[D] Commission

Powers

• "[50]   Instead, s 213 creates a substantive statutory cause of action which is vested in the Commission. The purpose is to provide a statutory regime whereby the Commission, as regulator, can take action to obtain civil remedies for the benefit of investors, who may otherwise be deterred by cost and other considerations from instituting legal proceedings individually to obtain redress for their relatively small losses: see the Court of Appeal’s decision in Securities and Futures Commission v Tiger Asia Management LLC [2012] 2 HKLRD 281 at §24 per Tang VP. There is a wider public interest in this because, as Steyn LJ put it in Pantell at p 282B-C: ‘The civil law provides a framework for the redress of individual grievances. But it also fulfils a wider social purpose in setting standards for the markets and in discouraging aberrant behaviour. But if resort to civil remedies is impracticable for most individual investors the sanctions of the civil law cannot play their proper role.’": SFC v Qunxing Paper Holdings Co Ltd [2018] 4 HKC 465.

Grey Market

• "[1]  This case raises an interesting, and apparently unsettled, question as to the legal obligation upon a stockbroker arising from the trading in Hong Kong of shares on the 'grey market’ which, as at the date of such trading, have not yet been the subject of their initial public offering ('IPO’), and thus are not yet issued and available for trading upon the Hong Kong Stock Exchange. ... [46]  It is not contended, for example, that such 'grey market’ transactions as were entered into by CEF on behalf of Mr Woo were binding on the brokerage 'come what may’. [47]  If, for example, the onset of the Asian financial crisis had impacted on Hong Kong somewhat earlier than in fact was the case, and if this had resulted in the China Telecom IPO being withdrawn by its underwriters prior to 'opening day’, it is not asserted otherwise than that these purported transactions necessarily would have fallen to the ground, with no liability enuring therefor; in principle, therefore, the plaintiff accepts that such 'grey market’ deals were no more than conditional contracts’, subject to a 'condition subsequent’, which was that the relevant public listing would in fact proceed upon the due day. [48]  Nor is it said that there is or was a particular 'custom and practice’, or 'market convention’ within the Hong Kong share market that a brokerage such as CEF, which is participating in 'grey market’ trading on behalf of its clients, ultimately bears personal liability to such clients should such transactions go off and be dishonoured by the counterparty’s failure to complete. [49]  In this regard Mr Westbrook SC also expressly disavows any such argument. [50]  Nor is it said that in Hong Kong there is in place any specific regulatory framework —whether of the HK Stock Exchange or of the Securities and Futures Commission — which expressly governs the factual situation whereby 'grey market’ trades are dishonoured, and which delimits who shall be liable to whom, when and why. [51]  To the contrary. It is accepted that there is no such relevant regulatory regime applicable to the 'pre-listing’ market — unlike, for example, the situation in London, wherein there are specific rules and regulations as to the rights and obligations arising from the trading of IPO stocks in the 'grey market’, also known as 'the when issued market’, such term implying that trades which are made prior to listing day are to be governed by the rules of the exchange "when issued". [52]  Nor, finally — and in my view significantly — is any alternative case now sought to be made by the plaintiff to the effect either that in terms of the 'grey market’ transactions in question that the defendant brokerage acted qua principal to those transactions, or that in such share allocation as did take place there had been any breach of fiduciary duty on the part of CEF, or that there had been negligent conduct of the defendant brokerage, for example in failing to retain any or any proper records or 'paper trail’ of such failed 'grey market’ transactions, thereby resulting in the plaintiff’s 'loss of the chance’ successfully to pursue the defaulting purchaser in the 'grey market’ trade in question; initially I had thought that such 'loss of chance’ contention would be prayed in aid as part of the plaintiff’s argument in this case, but in response to queries from the Bench Mr Westbrook SC once more disavowed reliance upon such argument. [53]  In short, therefore, the plaintiff’s analytical case wholly is premised upon the perceived obligation of the broker, in this instance CEF Brokerage Ltd, to honour the 'grey market’ bargain it earlier had purported to enter on behalf of its client, Mr Woo, by 'crossing’ the putative transaction on 'opening day’, the first day of trading of the listed stock — notwithstanding that it was known that such transaction would be dishonoured by the counterparty — and thereby to incur personal liability to the client seller, Mr Woo, by reason of the operation of the existing rules of the Hong Kong Stock Exchange regulating the trading of listed stocks; these rules lay down that all trades have to be settled through Hong Kong Clearing and Settlement procedures, thereby guaranteeing that clients remain at 'arms length’ from each other, and within the Clearing House system which is in place in order to provide certainty of settlement between market participants.": Woo Hing Keung Lawrence v CEF Brokerage Ltd [2007] HKCU 520.

[E] Director Duties - SEHK - HKEx - Listing Rules

• "[9]  Before turning to the factual matters, it is convenient to address the principles applicable to directors duties. The various duties owed by directors are well settled and accepted by each of the Respondents. [10]  As directors, the Respondents owed at least the following duties (“Duties”) to the Company: (1)a duty to act in good faith in the best interests of the Company and for proper purposes, including a duty to disclose all relevant material information to the Company and the shareholders; (2)a duty to exercise reasonable care, skill and diligence in the performance of their duties as directors of the Company; (3)a duty to exercise independent judgment in the performance of the duties as a director of the Company; and (4)a duty to ensure full compliance with the Listing Rules of the SEHK. [11]  Indeed, fiduciary duties include the requirements to act honestly, in good faith and in the interests of the company; to act for proper purposes; to avoid situations where the director’s interests may conflict with that of the company; and not to obtain any undisclosed profit through his position. [12]  There is a common law duty to exercise due and reasonable care, skill and diligence that would be exercised by a reasonably diligent person with the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as carried out by the director in relation to the company, and with the general knowledge, skill and experience that the particular director has. [13]  There is also a duty to ensure full compliance with the Rules Governing the Listing of Securities on the GEM of the SEHK (“GLR”), and a duty properly to supervise the affairs of the company’s subsidiaries. [14]  It is settled that executive directors and non-executive directors have the same responsibility in law as to the management of a company’s business. But, in its application, the duty may and usually will differ. Whilst a non-executive director cannot place unquestioning reliance on others to do their job, the extent to which a non-executive director may reasonably rely on the executive directors and other professionals to perform their duties is fact-sensitive. A company may reasonably look to non-executive directors for independence of judgment and supervision of executive management. Further, whilst a proper degree of delegation and division of responsibility is permissible, and is often necessary, there cannot be total abrogation of responsibility. A board of directors must not permit one individual to dominate them and use them. [15]  In practice, when deliberating on a matter, directors should ask themselves what competing arguments exist for and against the proposed course of action and they should have regard, when assessing them, on the proposed course of action’s impact on the interests of different groups of shareholders. [16]  Directors will have different expertise and experience, and it may be that not all of them would necessarily be equally active in the deliberations which result in a board ultimately taking a collective decision. However, members of the board must scrutinise proposals, particularly important ones, which impact directly on the interests of shareholders. Members of the board must not just take it on good faith that if a director tasked with a particular area of responsibility says something within his remit is a good idea, then it can be approved without critical appraisal.": Securities and Futures Commission v Andrew Liu [2026] HKCU 598. 

• Re Mr John Manners Jarvis QC [2008] HKCU 1685.

• "[52]  The Sanctions were imposed on the Applicants in the context of the well-established duty on company directors to act with reasonable care and skill in the management of the company. [53]  Specifically, Rule 3.08 of the Listing Rules provides that directors of a listed issuer must fulfil fiduciary duties and duties of skill, care and diligence to a standard at least commensurate with the standard established by Hong Kong law. Hence, in this regard, directors of listed issuers must take an active interest in the issuer’s affairs and follow up on anything untoward that comes to their attention. [54]  Relevantly for present purposes, such duties may include the duty to cause the company to establish and maintain an adequate internal control system. [55]  Directors of listed issuers must also undertake to use their best endeavours to procure the issuer to comply with the Listing Rules (“Directors’ Undertaking”). The Listing Rules also contain requirements for the purpose of promoting good corporate governance through oversight by INEDs and an audit committee. [56]  Rule 3.10 requires the board of directors of every listed issuer to include at least three INEDs, at least one of whom must have appropriate professional qualifications or accounting or related financial management expertise. Rule 3.10A requires the INEDs to make up at least one third of the board. [57]  Rule 3.21 requires all listed issuers to establish an audit committee made up of non-executive directors only, with a minimum of three members, at least one of whom is an INED with appropriate professional qualifications or accounting or related financial management expertise. The majority of the audit committee members must be INEDs of the listed issuer, and the audit committee must be chaired by an INED. [58]  Rule 3.22 requires the audit committee to have written terms of reference clearly establishing the audit committee’s authority and duties. The terms of reference are expected to include monitoring the integrity of the issuer’s financial statements, and overseeing the issuer’s internal control systems. [59]  Rule 2A. 09 empowers the Listing Committee to impose sanctions in case it finds that there are breaches of the Listing Rules by any director of a listed issuer. The imposition of sanctions is not contingent upon any finding that the breaches resulted in loss to the listed company. The purposes of disciplinary sanctions include deterring future breaches, educating the market, influencing compliance culture and attitude, and enhancing corporate governance.": Fan Ren Da Anthony v The Stock Exchange of Hong Kong Limited [2023] HKCU 4947.