Enhanced Timeframe for New Listing Applications in Hong Kong

Background

On 18 October 2024, the Securities and Futures Commission (SFC) and The Stock Exchange of Hong Kong Limited (Exchange) released a joint statement regarding an enhanced timeframe for the new listing application process (Enhanced Application Timeframe). This initiative aims to improve Hong Kong's position as a premier international listing venue by offering more guidance, clarity, and transparency in the application process. The Enhanced Application Timeframe introduces a streamlined process aiming to complete applications within six months, and provide guidance for applications requiring a longer process due to regulatory concerns. This initiative underscores the SFC's and the Exchange's commitment to supporting the listing of quality companies in Hong Kong, enhancing the city's appeal as an international financial centre.

The Enhanced Application Timeframe will be applicable to new listing applications filed after 18 October 2024.

Enhanced Application Timeframe

Where a listing applicant and its sponsor submit a new listing application and related materials that satisfies all applicable requirements and guidance under the Securities and Futures Ordinance (SFO), the Securities and Futures (Stock Market Listing) Rules (SMLR) and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (Listing Rules), the SFC and the Exchange will each take no more than 40 business days and a maximum of two rounds of regulatory comments to assess and indicate whether there are any material regulatory concerns.¹

To minimise duplication of comments, the SFC and the Exchange will closely communicate. If both regulators share the same regulatory concerns, the SFC will issue a letter via the Exchange to notify the listing applicant through its sponsor. This will be counted as one round of comments from the SFC. 

The listing applicant and its sponsor are expected to take about 60 business days in total to satisfactorily address the SFC's and the Exchange's regulatory comments. Upon the regulators' confirmation of no material regulatory concerns, the Exchange will work with the listing applicant and its sponsor to finalise the disclosure in the listing document. Once the listing document is ready and the requisite approvals from other authorities or regulators, if necessary, have been obtained, the application will proceed to the Listing Committee Hearing.

The Enhanced Application Timeframe is designed to provide clearer timelines for new listing applicants, and to reduce the rounds of regulatory comments for applications that fully meet requirements to improve efficiency and predictability in the review process.

1. The business days taken for each round of comments may be subject to slight adjustments, but overall it is expected that the time taken by each regulator will be no more than 40 business days.

2. It refers to the acknowledgement of listing application.

3. If the SFC shares the same regulatory concerns as those included in the Exchange’s comment letters, it will issue a letter via the Exchange to notify the applicant through its sponsor, which will be counted as one round of comments from the SFC.

4. Upon confirmation of no material regulatory concerns, the Exchange will issue a Hearing Bundle Letter (HBL) setting out the matters to be dealt with or addressed by the applicants and their sponsors to finalise the disclosure in the listing document. When the applicants and their sponsors have a listing document that is ready for Listing Committee Hearing, and having obtained all requisite approvals from other authorities or regulators, where applicable, the application will proceed to the Listing Committee Hearing.

Accelerated Timeframe for Eligible A-share Listed Companies

An existing A-share listed company is eligible for an accelerated timeframe if it meets the following criteria when submitting a new listing application:

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

• 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 with the Exchange.

Where an eligible listing applicant satisfies all applicable requirements and guidance under the SFC, the SMLR and the Listing Rules, each of the SFC and the Exchange will take no more than 30 business days and one round of regulatory comments to assess and indicate whether there are any material regulatory concerns (Accelerated Timeframe).

Applications Requiring Longer Process

In cases where the SFC and/or the Exchange have material regulatory concerns regarding a listing applicant, the timeline of the application process may be lengthened. These concerns may include:

• compliance with the SFO, the SMLR and/or the Listing Rules;

• quality of listing document preparation;

• new material developments; and

• incomplete responses to the SFC's and/or the Exchange's comments.

To address these concerns, the regulators will proactively engage with the applicant and its sponsor. Their efforts will aim to enhance the applicant's and its sponsor's understanding of the regulatory concerns. In particular,

• the SFC and/or the Exchange will engage with key representatives of the applicant and its sponsor to outline the regulators' expectations on their subsequent response; and

• the SFC and/or the Exchange will inform the applicant and its sponsor of any deficiencies and suspend the vetting process if any subsequent responses to the regulatory comments are materially incomplete, until a complete and sufficient reply is received.

Additionally, if the applicant and its sponsor do not adequately address the material regulatory concerns raised after two rounds of regulatory comments (or one round under the Accelerated Timeframe), the regulators may:

• issue a direct requisition letter under the SMLR to the applicant and its sponsor; and/or

• issue a major concerns letter to the applicant and its sponsor.

The application progress will then be subject to the applicant and its sponsor satisfactorily addressing the material regulatory concerns set out in the direct requisition letter and/or the major concerns letter.

Conclusion

The Enhanced Application Timeframe and the Accelerated Timeframe signify a strategic enhancement of Hong Kong's status as a leading international listing venue. This initiative promises a more streamlined, transparent, and efficient process, with clear guidelines for the listing process. This development underscores the commitment of the SFC and the Exchange to enhance the competitiveness and appeal of Hong Kong's capital markets, benefiting prospective issuers and reinforcing the city's global financial prominence.

¹ 40 business days refer to the number of business days in the hands of the regulators and exclude the response time of the applicant and its sponsor.