Hong Kong pledges to shrink IPO vetting to about 100 days
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For companies fully meeting listing requirements, the stock exchange and regulator will limit the question-and-answers in two rounds to no more than 40 business days.
PHOTO: REUTERS
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Hong Kong has pledged to vet and debut companies in about 100 days in a bid to guarantee a set timeframe for initial public offering (IPO) applicants.
For companies fully meeting listing requirements, the stock exchange and regulator will limit the two rounds of question-and-answer sessions to within 40 business days, according to a joint statement by Hong Kong Exchanges and Clearing (HKEX) and the Securities and Futures Commission (SFC).
It is expected that another 60 business days will be needed by applicants and sponsoring banks to address any comments by regulators. The median time to get approved is now 173 business days.
For mainland-listed firms with a market capitalisation of at least HK$10 billion (S$1.7 billion) and that are compliant with all laws and regulations, Hong Kong regulators will further squeeze the timeframe for their queries into one round under 30 business days, according to the statement.
The move comes as IPOs are stirring back to life after a prolonged lull. China in late September unleashed a barrage of measures designed to jump-start the economy and support stock markets.
The new timeline will “provide greater clarity and certainty in the application process for new listing applications, thereby assisting potential applicants and their advisers in formulating their listing plans”, said HKEX’s head of listing, Ms Katherine Ng.
The SFC fully supports the plan as it is in line with its strategic priority to improve the global competitiveness and appeal of Hong Kong’s capital markets, said its executive director of corporate finance, Mr Michael Duignan.
The plan could add further momentum to the city’s market. Capital raised through IPOs surged more than sixfold to HK$42.3 billion in the third quarter, while average daily stock turnover in Hong Kong rebounded 21 per cent, according to Bloomberg Intelligence.
The accelerated timeline does not apply to applications with complex regulatory implications or those of doubtful quality, the statement added.
The initiative was announced last week by the city’s Chief Executive John Lee in his policy address.
The new timeline applies to listing applications made after Oct 18. BLOOMBERG
