The Straits Times
Published on Dec 12, 2012

HK watchdog unveils tough new regulation for IPO sponsors


HONG KONG (REUTERS) - Banks preparing companies for listing on Hong Kong's stock exchange will be made explicitly liable for IPO prospectuses, although they will also have more powers to ensure that their clients play by the rules, the city's market watchdog said on Wednesday.

The proposals by the Securities and Futures Commission (SFC) follow a six-month consultation but are still likely to draw opposition from a Hong Kong banking community which forced the abandonment of similar ideas in 2005.

Bankers had hoped for a watering down of the proposals, which would change Hong Kong company law to ensure that sponsors of initial public offerings explicitly face the same civil and criminal liability as company directors if a listing prospectus is found to have misled investors.

The proposals come at a tough time for Hong Kong's stock exchange, where IPO volumes have fallen 63 per cent this year, according to Thomson Reuters data, while issuance has increased at Southeast Asian rivals Malaysia, the Philippines and Thailand.