(March 13): Hong Kong plans to expand its “name-and-shame” regime for sloppy listing applications to include law firms and auditors, stepping up a campaign to improve the quality of initial public offerings (IPO) in the city.
Under a new enhanced return mechanism proposed by Hong Kong Exchanges & Clearing Ltd on Friday, all professional parties involved in a deal will be publicly identified if a listing application is rejected for being “not substantially complete.”
The proposal, unveiled in a market consultation paper, marks an escalation in regulatory pressure as IPOs have boomed in the city, making it the world’s biggest listing venue last year. Currently, the exchange only identifies the listing applicant and sponsoring banks when a filing is returned.
The bourse operator is looking to increase accountability across the entire IPO pipeline, arguing that broader public exposure will act as a more effective deterrent against substandard work.
Law firms and reporting accountants would join sponsors in the public spotlight if a filing fails to meet basic standards, in order to provide an incentive for all parties to ensure documents are “ready-to-publish” upon submission.
The move comes as Hong Kong seeks to bolster its reputation as a global financial hub by ensuring higher disclosure standards. By including legal and accounting advisers in the public record of failed applications, the exchange aims to force more rigorous due diligence before filings ever reach the regulator’s desk.
See also: China clamps down on key route to Hong Kong IPOs after deal boom — Bloomberg
Others that would be singled out are industry consultants, experts who have consented to include their comments in the listing applications and promoters of SPAC transactions.
The public has until May 8 to submit comments.
At the same time, the exchange proposed a number of moves to ease listings in the city, including lowering the minimum market value for dual-class shares, allowing all companies to file listing applications confidentially and expanding eligibility to a wider array of innovative business models.
See also: DayOne Data Centers close to confidential filing for US IPO — Bloomberg
The local regulator has also increased scrutiny over bankers’ work on IPOs, asking for improvement plans and capped the number of deals principal bankers can sign off at one time.
The audit regulator also urged the industry to better safeguard quality of IPOs.
Uploaded by Evelyn Chan
