China weighs tighter rules for firms to list in Hong Kong

BEIJING – China’s securities regulator is considering tightening the criteria for mainland companies to sell shares in Hong Kong, after an offshore fund-raising boom raised concerns over deal quality, people familiar with the matter said.

The China Securities Regulatory Commission (CSRC) has been deliberating on raising regulatory and compliance thresholds for companies pursuing so-called H-share listings, the sources said, asking not to be named as the matter is private.

One potential measure would be to set a minimum market capitalisation limit, according to the sources. Publicly traded Chinese companies seeking a dual listing in Hong Kong are also facing more scrutiny.

The proposals remain under discussion, with no final decision yet reached, the sources said. They reflect a broader effort by Beijing to support the capital markets and the economy while curbing excess speculation and ensuring high-quality offshore issuers. The CSRC did not immediately respond to a request for a comment.

One Chinese brokerage was guided to set the market value threshold at 30 billion yuan (S$5.5 billion) for companies in China seeking dual listings in Hong Kong, as smaller ones might fail to get registry approval by the CSRC, a person familiar with the matter said. Chinese brokers such as China International Capital Corp (CICC) and Citic Securities are among the leaders in arranging initial public offerings (IPOs) in Hong Kong.

The move would cool a frenzy in Hong Kong’s equity fund-raising market, which is helping the city’s overall economy to emerge from a protracted slump. Hong Kong was the global leader in share sales in 2025, largely driven by a surge in fund raising by mainland Chinese companies, including a US$5.26 billion (S$6.7 billion) deal by Contemporary Amperex Technology, or CATL.

The Hong Kong Exchanges & Clearing (HKEX) declined to comment. CICC and Citic did not immediately respond to a request for a comment. 

The exchange’s share price slid as much as 1.5 per cent to HK$422 at the close on Jan 23 in Hong Kong. The stock is up 44.5 per cent over the past year.  

The city now has more than 350 companies waiting to sell shares, HKEX chief executive Bonnie Chan said in an interview from Davos, Switzerland. Hong Kong saw about US$4 billion from 11 listings in just the first three weeks of the year, according to Ms Chan.

Secondary listings of Chinese companies remain a sizeable chunk of 2026’s deal pipeline in Hong Kong. Imminent listings that may fetch more than US$1 billion each in proceeds include those of pig breeder Muyuan Foods and energy-drink maker Eastroc Beverage Group. There is no indication that either of these would be affected by the planned rule changes.

The surge is in part due to new regulations implemented by the CSRC in 2023. That moved approvals of overseas listings to an easier filing-based system instead of a “small roadshow approval” mechanism. There is no official minimum market value at present, and companies are required to submit an overseas listing application to the CSRC within three days of filing in Hong Kong.  

While Chinese officials have voiced strong support for Hong Kong as an international financial centre, they have also emphasised the need to guard against regulatory arbitrage and risks to China’s reputation.

Chinese regulators have grown concerned over a large number of small and medium-sized companies with minimal revenue, persistent losses and a lack of core technologies.

More than 30 companies seeking Hong Kong listings were required to submit additional documents in the past three weeks. Several companies became the focus of regulatory inspections owing to issues such as sustained losses and flaws in compliance qualifications, according to CSRC data. These regulatory measures are seeking to fill the gap in screening after the previous roadshows were cancelled.

Before the current filing mechanism, companies needed acceptance from the CSRC before submitting to Hong Kong. Officials would then review each offering and decide on whether it would proceed.

Hong Kong’s exchange has also eased listing requirements over the past few years to drum up business, offering an easier path for “specialist technology” companies on the main board with minimum market capitalisation of HK$6 billion (S$981 million). HKEX has reduced the required market value for pre-commercial companies to list to at least HK$10 billion from HK$15 billion. 

Hong Kong officials have also raised concerns about sub-standard work in the listings rush. Hong Kong’s market watchdog and stock exchange in December admonished investment banks working on deals over filing shoddy and incomplete applications.

Hong Kong’s Securities and Futures Commission “remains firmly committed to holding sponsors to the high standards”, a spokesperson said in a statement. The regulator is “fully prepared to exercise powers available under the current regulatory framework where warranted”, it said.  

Ms Chan said IPO quality is “non-negotiable” and that the recent warning letter about sub-par applications was a reminder to professionals that “speed has to go in parallel with quality”.

She emphasised that the letter was not a reflection on the quality of those seeking to list, but a reminder to professionals involved in preparing IPOs.   

The decline in standards includes the use of artificial intelligence-generated documents and a fundamental lack of business understanding. A significant friction point involves Chinese companies, which often submit incomplete placeholder applications to HKEX to start the regulatory approval process on China’s side, according to people familiar with the matter.

Despite these lapses, officials have refrained from returning applications – a move that would publicly shame the banks involved – to avoid upsetting issuers during the market recovery, two of the sources said. Ms Chan said on Jan 21 that the exchange would use its “established mechanism” if stronger action is needed.

A price war has further eroded quality, with some mainland Chinese legal firms charging as little as one-tenth of standard fees, according to the sources.

The HKEX did recently return one application: that of Beijing Deltaphone Technology, which was sponsored by Sunny Fortune Capital. BLOOMBERG