Pre-IPO Preparation Stage - Companies choose to IPO on the Hong Kong Stock Exchange (HKEX) due to its advantages such as access to international capital, flexible listing rules, and high liquidity with an average daily trading volume of approximately HKD 130 billion in 2023 [3][4] - Basic conditions for IPO on HKEX include a net profit of at least HKD 50 million over the last three years, a market capitalization of at least HKD 500 million, and a public float of at least 25% [3][4] - Special conditions for biotech companies (Chapter 18A) allow them to list without profitability, focusing instead on their potential for international financing and flexible voting structures [3][4] - Special conditions for specialized technology companies (Chapter 18C) were introduced in 2023, targeting sectors like advanced hardware and renewable energy [4] Selection of Intermediaries and Due Diligence - Key intermediaries in the IPO process include sponsors, lawyers, accountants, underwriters, and industry consultants, each with specific responsibilities [5][6][7][8] - Sponsors are responsible for the overall compliance of the IPO process and must hold a HKEX sponsorship license [5] - Lawyers assist in structuring equity and compliance documentation, while accountants audit financial statements and ensure compliance with HKFRS or IFRS [6] Restructuring and Guidance - Common structures for mainland companies going public in Hong Kong include red-chip structures, H-share structures, and VIE structures, each with specific regulatory considerations [9][10] - The 2023 regulations require submission of a filing report to the China Securities Regulatory Commission (CSRC) for companies using VIE structures [10][11] HKEX Application and Review Process - The HKEX IPO review process has been streamlined with the introduction of the FINI platform, significantly reducing the time required for approval [11][12] - The process includes pre-communication with the exchange, submission of formal applications, and multiple rounds of inquiries from the exchange [11] Pricing and Allocation - The pricing mechanism for HKEX IPOs utilizes a bookbuilding approach, with cornerstone investors playing a crucial role in stabilizing market confidence [13][14] - The initial allocation typically consists of 10% for public offerings and 90% for international placements, with a mechanism for reallocation based on demand [14] Post-Listing Maintenance - Companies listed on HKEX must adhere to continuous disclosure obligations as outlined in Chapter 13 of the Listing Rules, including timely reporting of significant events [15] - The introduction of enhanced ESG disclosure requirements starting in 2024 mandates all listed companies to report on climate-related information [15] Recent Regulatory Developments - Recent changes include the launch of the FINI platform, the introduction of Chapter 18C for specialized technology companies, and stricter VIE structure regulations requiring legal analysis of control agreements [15]