Hong Kong Stock Exchange published a consultation paper proposing new listing regime for “Specialist Technology Companies” under a new chapter (Chapter 18C) of the Listing Rules, providing an alternative route for listing for certain innovative science and technology companies with high growth potential which have not yet satisfied the traditional financial requirements. The consultation period will end on 18 December 2022. We provide a brief overview of the proposal, including key listing qualification and disclosure requirements under this new regime.
Hong Kong stock exchange proposes new listing regime for innovative science and technology companies
Background
On 19 October 2022, The Stock Exchange of Hong Kong Limited (the “Exchange”) published a consultation paper proposing a new regulatory framework for the listing of “Specialist Technology Companies” under a new chapter (Chapter 18C) to the Rules Governing the Listing of Securities on the Main Board of the Exchange (the “Listing Rules”). The consultation period will end on 18 December 2022. This client alert aims to provide a brief overview of the proposal.
Specialist Technology Companies are companies that primarily engage in the research and development (“R&D”) of, and the commercialisation and/or sales of, products and/or services (the “Specialist Technology Products”) with science and/or technology applied thereto (the “Specialist Technology”) within an acceptable sector of a Specialist Technology Industry. Due to the evolving nature of technology, the Exchange will set out the Specialist Technology Industries and acceptable sectors in a non-exhaustive list to be updated from time to time, which currently covers:
- next-generation information technology – including cloud-based services and artificial intelligence;
- advanced hardware – including robotics and automation, semiconductors, advanced communication technology, electric and autonomous vehicles, advanced transportation technology, aerospace technology, advanced manufacturing, quantum computing and metaverse technology;
- advanced materials – synthetic biological materials, smart glass and nanomaterials;
- new energy and environmental protection – new energy generation, new energy storage and transmission technology and new green technology; and
- new food and agriculture technologies – new food technology and new agriculture technology.
The Exchange indicated that the proposal does not limit to those applicants with "leading-edge" technologies as it is believed that the success of a Specialist Technology Company would often be attributed to the successful commercialisation of the core technology rather than the innovativeness of the technology itself. Companies with multiple business segments may also take advantage of the proposed new regime as long as they are "primarily engaged" in the relevant business of a Specialist Technology Industry.
Specialist Technology Companies are categorised into (i) companies that have commercialised their Specialist Technology Products and have generated meaningful revenue, i.e. the Commercial Companies, and (ii) companies that are (a) primarily engaged in R&D and are raising funds to further their R&D to commercialise their Specialist Technology Products and/or (b) have not yet generated meaningful revenue, i.e. the Pre-commercial Companies. Pre-commercial Companies are subject to more stringent listing requirements given the heightened risks they are associated with.
Key Listing Qualification Requirements
Key Offering and Disclosure Requirements
Key Post-IPO Requirements