IPO Services

Pre-listing

We provide professional advisory service to avoid pitfalls, maximize transaction value and minimize overall deal costs before the IPO process formally starts by :

• Assist in assessing the company’s readiness for a registered offering versus private placements
• Provide strategic advice on capital market alternatives and fund raising possibilities
• Perform a preliminary study of the impact of complying with the relevant financial reporting requirements, both from a burden of regulatory compliance and a sensitivity of disclosure standpoint, to identify any potential “deal breakers”, offer practical solutions, and assess the magnitude of the task
• Assist your company in putting together a listing plan to orchestrate the registration process
• Work with management to identify accounting policy and internal controls areas needing improvement or additional attention

During the listing

We can assist you and your management team during the IPO process in dealing with onerous regulations and paperwork by:

• Advising on the corporate structure for the proposed listing vehicle
• Offering guidance on setting up an audit committee, and the composition of the board
• Assisting in establishing policies and procedures for non-audit clients to allow for public company certification and accelerated financial reporting process
• Providing technical and transaction advice including risk management, technical accounting and reporting guidance
• Providing tailored project advice to assist your company with meeting its the specific project goals
• Assisting in the identification and development of disclosures required in the footnotes to the financial statements, pro forma financial statements, and other separate financial statements required by regulatory agencies, U.S. GAAP, HKFRS, and/or IFRS, in the context of the best practices in the relevant industry
• Advising the company in developing the Operating and Financial Review (OFP) and other parts of the prospectus or offering circular
• Reviewing the prospectus prior to filing and providing suggestions to assist the company comply with the technical requirements
• Anticipating the Regulator’s comments and advising the company on preparing responses to the comments
• Advising on Carve-out financial statement preparation

Post listing

Once your company is listed, maintaining your market reputation will be a primary consideration as you will face greater regulatory, investor, and public scrutiny.  We could provide on-going advice on:

• Capital market transactions, such as new secondary share issuances and major transactions
• Current corporate governance practices, accounting and regulatory changes

Accounting Advisory Services under IFRS

• Track record and market capitalisation requirements

  • Trading record of not less than three financial years
  • Management continuity for at least the three preceding years and ownership continuity and control for at least the most recent audited financial year
  • Three tests:
    • Profit test
      • Profits of HK$20 million for most recent year and of aggregate of HK$30 million for the first two years
      • Market capitalisation of at least HK$200 million at the time of listing
    • Market capitalisation/revenue/cashflow test
      • Revenue of at least HK$500 million for the most recent audited financial year
      • Positive cashflow from operating activities of at least HK$100 million in aggregate for the three preceding financial years
      • Market capitalisation of at least HK$2 billion at the time of listing
    • Market capitalisation/revenue test
      • Revenue of at least HK$500 million for the most recent audited financial year
      • Market capitalisation of at least HK$4 billion at the time of listing
      • Track record of less than three years may be accepted if:
        • Directors and management have sufficient and satisfactory experience of at least three years in the line of the listing business and industry
        • Management continuity for the most recent audited financial year
  • Exemptions may be granted for mineral companies and newly formed project companies, such as major infrastructure projects, which can have shorter trading records
  • A focused line of business not specifically required, but its core business should meet the minimum financial requirement
  • Must have control over its business

Minimum public float

• Market capitalisation of at least HK$50 million held by the public at the time of listing
• Minimum 25% of the issuers’ total issued share capital at the time of listing
• The Exchange may, at its discretion, accept a percentage of public float between 15% and 25% if the market capitalisation of the issuer at the time of listing exceeds HK$10 billion

Future prospects

• No specific requirement but the applicant is required to include a general statement of future plans and prospects
• Inclusion of profit forecast is optional

Accountants’ report

• Must be prepared in accordance with either Hong Kong Financial Reporting Standards or International Financial Reporting Standards
• Generally accepted accounting principles in other jurisdictions may be acceptable by the Exchange under certain circumstances
• In general, accountants’ report covers at least three complete financial years, immediately preceding the issue of the prospectus
• The latest financial period reported on by the reporting accountants must not have ended more than six months before the date of the listing document

Corporate governance

• Three independent non-executive directors required
• Audit committee required
• Required to appoint a compliance adviser for the period commencing on initial listing and ending on publication of financial results for the first full financial year after listing

Acceptable jurisdictions

• Hong Kong, Bermuda, the Cayman Islands and the People’s Republic of China
• Other jurisdictions which are subject to appropriate standards of shareholder protection that are equivalent to those required under Hong Kong law may be considered
• Other jurisdictions for secondary listing will be considered

Restrictions on controlling shareholders

• A controlling shareholder at the time of listing must undertake:
  • Not to dispose of his interest in the issuer from the prospectus issue date to the first six months after listing
  • Not to dispose of his interest in the issuer in the next six months such that he would cease to be a controlling shareholder: at least 30% interest in the issuer

Other considerations

• Competing businesses of controlling shareholders or directors are allowed but full disclosure is required
• May not list by way of placing only
• New issue must be fully underwritten
• Listed issuer is not allowed to issue new securities in the first six months after listing