HKEX Consults on Listing Rules for Specialist Tech Companies

Warsaw Stock Exchange Aims to Continue IPOs
  • The Exchange proposes a new channel to listing on HKEX’s markets for Specialist Technology Companies
  • New Rules would apply to companies in one of five Specialist Technology Industries: next-generation information technology; advanced hardware; advanced materials; new energy and environmental protection; and new food and agriculture technologies
  • Market feedback is sought over a two-month consultation period

The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), today (Wednesday) published a consultation paper seeking public feedback on proposals to expand Hong Kong’s existing listing regime to permit listings of Specialist Technology Companies.

HKEX Chief Executive Officer, Nicolas Aguzin, said: “Connecting capital with opportunities sits at the core of HKEX’s strategy and as part of this we are committed to further elevating Hong Kong’s position as the listing venue of choice for innovative companies from around the world. These new proposals will expand the range of companies that can access Hong Kong’s deep, liquid, international markets and will offer investors even greater choice.”

“Just as the launch of our biotech chapter led to a whole new healthcare financing ecosystem in Hong Kong, we expect the new proposed Specialist Technology rules will help to drive growth in talent and investment across these five frontier industries, such as in greentech, in the region and beyond,” said Mr Aguzin.

Under the proposed regime, Specialist Technology Companies will be categorised into Commercial Companies2 and Pre-Commercial Companies3, with more stringent requirements for Pre-Commercial Companies given their risk profile.

HKEX Head of Listing, Bonnie Y Chan, said: “In developing these proposals, we took into account the unique features of Specialist Technology Companies, in particular, the uniqueness of the role technology plays in their business and their early stage of development relative to other listing applicants. We believe our proposed rules strike the right balance between upholding market quality and creating a commercially viable chapter that meets the fundraising needs of the leading companies of tomorrow.”

The Exchange invites market feedback on its proposals and the proposed Listing Rules and guidance that will give effect to the proposals. The public comment period ends on 18 December 2022. Interested parties are encouraged to respond to the Consultation Paper by completing and submitting a questionnaire on the HKEX website.

A summary of the key proposals in the Consultation Paper is set out below:

Qualifications for Listing

  • Commercialisation Revenue Threshold: Commercial Companies are defined as those that have at least HK$250 million revenue arising from their Specialist Technology business segment for the most recent audited financial year
  • Minimum expected market capitalisation at listing: HK$8 billion for Commercial Companies and HK$15 billion for Pre-Commercial Companies
  • Research and Development: all applicants must have been engaged in research and development (R&D) for at least three financial years prior to listing, with investment amounting to at least 15 per cent of total operating expenditure for Commercial Companies and 50 per cent for Pre-Commercial Companies
  •  Minimum third party investment: the listing applicant must have received meaningful investment from Sophisticated Independent Investors. As an indicative benchmark, an applicant meeting the following requirements will generally be considered as having received “meaningful investment”:
    • at least two “Pathfinder” Sophisticated Independent Investors4 having made large investments5 in the applicant at least 12 months before the date of its listing application; and
    • aggregate investment from all Sophisticated Independent Investors meeting the prescribed minimum percentage of issued share capital of the applicant at the time of listing ranging from 10 per cent to 20 per cent (Commercial Company) or 15 per cent to 25 per cent (Pre-Commercial Company), depending on the applicant’s expected market capitalisation at listing
  • Path to commercialisation: a Pre-Commercial Company must demonstrate a credible path to achieving the Commercialisation Revenue Threshold and disclose this in its listing document

IPO requirements

  • an optimised price discovery process
  • a minimum free float6 of at least HK$600 million upon listing
  • disclosures including on pre-IPO investment obtained, commercialisation status and prospects, and appropriate warning statements

Post-IPO requirements

  • Post-IPO lock-ups on controlling shareholders, key persons7 and the Pathfinder Sophisticated Independent Investors
  • Additional continuing obligations for Pre-Commercial Companies, including additional disclosures in interim and annual reports on the progress made towards achieving the Commercialisation Revenue Threshold, and updates on any business and financial estimates provided in the Listing Document


  1. A Specialist Technology Company is a company primarily engaged in the research and development of, and the commercialisation and/or sales of, products and/or services that apply science and/or technology within an acceptable sector of a Specialist Technology Industry. The list of Specialist Technology Industries and the respective acceptable sectors considered by the Exchange to fall within the scope of the proposed regime will be published in a guidance letter (a draft of which is set out in Appendix V of the Consultation Paper), and will be updated from time to time.
  2. A Commercial Company means a Specialist Technology Company that is able to meet the proposed Commercialisation Revenue Threshold at the time of listing.
  3. A Pre-Commercial Company means a Specialist Technology Company which has not yet met the Commercialisation Revenue Threshold at the time of listing.
  4. To be considered a Sophisticated Independent Investor, the investor must not be a core connected person of the listing applicant (excluding a person being connected only by virtue of being a substantial shareholder); and must meet the indicative size thresholds or qualification requirements as set out in the Consultation Paper.
  5. These Pathfinder Sophisticated Independent Investors must each hold such amount of shares or securities convertible into shares equivalent to 5 per cent or more of the issued share capital of the applicant as at the date of the listing application and throughout the 12-month period before the date of its listing application.
  6. Free float means shares that are not subject to disposal restrictions.
  7. Key persons comprise founders, the beneficiaries of weighted voting rights, executive directors and senior management, and key personnel responsible for the technical operations and/or R&D of the Specialist Technology Company.

HKEX 2022 Q3 Results

Nicolas Aguzin, Chief Executive Officer said:

“This has been a productive quarter for HKEX with a number of potentially significant strategic initiatives announced or going live. These include the addition of ETFs in Stock Connect, the announcement of the next phase in the Connect franchise – Swap Connect, the establishment of the Hong Kong International Carbon Market Council and a number of new product launches and market enhancements. These are all further exciting building blocks, as we shape the long term sustainable and successful future of our business and our markets. Despite continued global market fragility, a rising interest rate environment, inflationary pressures and ongoing geopolitical tensions, we are also today pleased to report a resilient set of quarterly results. Our numbers are down on record comparables and we continue to see softness in our Cash Market. However, there are early signs of renewed momentum in the IPO market, a buoyant Derivatives Market and continued strength in both Stock Connect and Bond Connect. We are positioned well for when market sentiment recovers. Looking forward we will continue to invest in talent and technology, whilst still actively and prudently managing our cost base; and we will drive both excellence in execution and delivery as we remain fully focused on our vision to build the Marketplace of the Future.”

Strategic Highlights

  • ADV of derivatives contracts traded on HKFE and during After-Hours Trading both reached record nine-month highs
  • Bond Connect Northbound ADT reached a record nine-month high
  • ETFs were included into Stock Connect, initially with four eligible Southbound ETFs and 83 eligible Northbound ETFs
  • Stock Connect trading calendar enhancements announced, facilitating trading on all days where both the Hong Kong and Mainland markets are open
  • IR Connect launched
  • Hong Kong International Carbon Market Council launched
  • Swap Connect, a new mutual access programme between Hong Kong and Mainland China’s interbank interest rate swap markets, was announced
  • IPO market showed signs of recovery in Q3 2022, with IPO funds raised more than double that from 1H 2022; IPO pipeline remained strong, with 144 active applications including three special purpose acquisition companies (SPACs) as at 30 September 2022
  • Introduced seven new ETPs, including the first green bond ETF
  • MSCI A 50 Connect Index Derivative Warrants listed, Hong Kong’s first A-share structured products
  • Weekly OTC position reporting framework introduced by LME for all physically delivered metals; accountability levels extended to all reportable OTC positions
  • HKEX ESG Academy updated on the Corporate Governance Code; HKEX Biotech Summit 2022 explored latest developments shaping the global healthcare industry

Click here for full details.

Source: HKEX

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