Charltons provides high impact advice to companies seeking advice on requirements for listing on the Hong Kong Stock Exchange. We have long experience of bringing mainland Chinese companies to the Hong Kong market, and have been involved in some of the largest and most ground-breaking deals to have come to the Hong Kong market in the past decade. We acted as Hong Kong legal adviser to the major shareholder of AIA, which raised more than HK$159 billion in its 2010 IPO.
Charltons has particular experience in advising on the listing of Chapter 21 funds on the Hong Kong Stock Exchange and of mineral company IPOs under Chapter 18 of the Hong Kong Stock Exchange Listing Rules. We also have considerable experience in helping smaller dynamic companies take their first steps in the public equity markets. Charltons is actively involved in advising companies listing on Hong Kong’s Growth Enterprise Market (GEM). The firm can also bring its extensive experience in representing underwriters and sponsors on IPO projects to bear in advising listing applicants.
Charltons guides it clients through the complex qualifications for listing on the Main Board and GEM, including acceptable incorporation jurisdictions for listing vehicles, sufficiency of trading record and financial thresholds, minimum public shareholding and market capitalisation requirements, board composition and director qualifications. We also advise on additional or alternative listing criteria for mineral companies and investment funds. Charltons also advises on major issues that might impact on an applicant’s suitability for listing, such as competing businesses of, and independence from, controlling shareholders, connected transactions, and management continuity and ownership. Where appropriate, we can make pre-application submissions to the Stock Exchange on key issues on behalf of clients.
In addition to advising on listing requirements, Charltons provides advice on all stages of the listing process and offers complete IPO project management, from pre-IPO planning and structuring (including due diligence, pre-IPO investments and group reorganisations), to prospectus drafting, review and verification, and negotiation of underwriting agreements and other key contracts. We understand that an IPO is one of the biggest steps a company will ever take and a listing applicant needs its lawyers to provide an insightful and highly personalised service coupled with smart and practical advice.
Charltons is involved not only in advising on the listing process and application of the Listing Rules, but in shaping the regulatory framework. Julia Charlton was a member of the Listing Committee of the Hong Kong Stock Exchange from 2012 – 2018 serving the maximum permitted continuous term of six years. Julia Charlton was also appointed to the SFC’s Takeovers Panel and Takeovers Appeals Panel in October 2005 and continues to serve on these panels. We have been involved in market consultations on many of the major rule changes and developments through which the Hong Kong capital markets have evolved in recent years. Notably, we acted as coordinating counsel on the drafting of the Hong Kong Sponsor Due Diligence Guidelines, a major market initiative creating a set of guidelines relating to the Hong Kong legal and regulatory requirements and market practice for IPO due diligence on listing applicants.
Public Float Requirements under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Exchange”) (the “Hong Kong Listing Rules”)
The public float requirement is contained in Hong Kong Listing Rule 8.08(1)(a) and requires that at least 25% of the issuer’s total issued share capital be held by the public. Hong Kong Listing Rule 8.24 further clarifies that the shares held by the following persons will not be regarded as being held by the public: (i) connected persons (as defined under the Hong Kong Listing Rules), (ii) persons whose acquisition of the securities was financed, directly or indirectly, by a connected person, and (iii) persons accustomed to take instructions from a connected person in relation to the securities registered in his name or otherwise held by him.