Hong Kong Stock Market: In a notable move since Tuesday, Hong Kong stock market applicants are no longer required to declare their China business operations, aligning with similar laws in Beijing. A report on July 21 indicated changes in the stock market listing requirements, eliminating the need for companies to disclose China’s business and legal concerns.
The shift comes after the China Securities Regulatory Commission (CSRC) issued rules in February for selling shares to foreign investors, and Hong Kong will be reviewing its own regulations in the upcoming week.
Hong Kong Exchanges and Clearing Ltd. (0388.HK) announced on July 21 that the rule amendments were aimed at accommodating corporate needs and reflecting recent developments in China’s business landscape. These adjustments seek to ensure compliance with global business standards and foster a conducive environment for companies.
Previously, the stock exchange’s rules had different requirements for companies incorporated in the People’s Republic of China. However, the recent consultation sought to unify the requirements for all companies incorporated overseas, bringing uniformity to the application process. The exchange’s spokesperson clarified this update in an email statement.
The exchange management now advises companies seeking listings to carefully review the admission process, with Chinese firms being urged to disclose relevant information as well.
In a related development, the China Securities Regulatory Commission held a meeting with local lawyers on July 20, during which stock market paper lawyers were prohibited from making critical remarks about China’s policies or its business and legal environment. Violating these restrictions could potentially impede an Initial Public Offering (IPO) process.
Both Hong Kong and the US have witnessed numerous Chinese IPOs, attracting international investors who carefully assess IPO prospectuses to weigh ownership advantages and risks. Recently, the US Securities and Exchange Commission mandated that Chinese enterprises listed on US stock markets must disclose information about the Chinese government’s involvement in their companies and potential restrictions related to Uyghur imports, underlining the growing importance of transparency in such disclosures.
As companies navigate the listing process, Hong Kong’s listing rules continue to apply, necessitating discussions on various risks, including government policies, business challenges, international cash limits, and currency rate fluctuations. Chinese companies planning to list in Hong Kong since the introduction of new listing requirements on March 31 have surged, indicating a strong interest in tapping into the city’s robust capital market. Beijing has seen limited company listings, reflecting a more cautious approach in recent times.