Business
Hong Kong Accelerates IPO Vetting Process: Aiming for Transparency, Cost-Efficiency, and Global Competitiveness
Hong Kong is set to speed up its Initial Public Offering (IPO) approval procedure to enhance its attractiveness as a capital-raising location. Experts suggest that the new timeline for IPO application processing could bring about more openness and clearness, possibly reducing expenses for applicants.
The Securities and Futures Commission (SFC) and the Hong Kong Exchanges and Clearing (HKEX) have committed to evaluating new Initial Public Offering (IPO) proposals and highlighting any regulatory or suitability issues within 40 working days, as per a mutual announcement made on Friday. The involved parties, including their sponsors and advisers, are allowed a 60 working day period to resolve these issues, the statement further clarified.
"Provided that they receive authorization from the Listing Committee and other regulatory bodies, the application procedure should be finalized within the six-month validity period of the application," was the statement given.
The updated timeline provides more clearness and openness to Hong Kong's IPO procedure, which can range from a few months to a couple of years due to overlapping and communication problems. Businesses generated US$7.14 billion from IPOs this year until September 30th, positioning Hong Kong as the fifth most active place globally. It has secured the top spot in the worldwide IPO ranking seven times between 2009 and 2019.
Chinese stocks, both domestically and internationally, have experienced an over 20% increase following Beijing's significant stimulus declaration on September 24. This has boosted valuations, enabling companies to ask for more for their newly issued shares.
"John Lee Chen-kwok, vice-chairman and head of Greater China global banking at UBS, believes the decision is definitely beneficial as it provides a more defined schedule for corporations seeking to register in Hong Kong. He added that this will boost the appeal of the Hong Kong IPO market in comparison to foreign exchanges."
The SFC and HKEX have also set a 30-business-day deadline for assessing IPO applications from companies listed in Shanghai and Shenzhen that have a minimum market capitalisation of HK$10 billion (US$1.28 billion), provided all the necessary documents and disclosures have been submitted.
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