Core Concept - Control Trust is a common structure in HKEX IPOs that helps issuers maintain stable control, achieve concentrated ownership, or meet specific governance needs [2] Group 1: Basic Concept of Control Trust - Control Trust involves the major shareholder injecting their shares into a trust managed by a licensed trustee, allowing them or designated beneficiaries to retain control indirectly [2] - The core function of the trust is to separate ownership from control, ensuring concentrated and stable control through the trustee exercising shareholder rights [2] Group 2: Establishment Process of Control Trust - Initial preparation includes clarifying the purpose and designing the structure [3] - Key terms in the trust deed must include objectives such as maintaining control stability, family wealth succession, tax planning, and employee incentives [4] - Selection of a licensed trustee must be made from HKEX-approved companies, ensuring independence and good reputation [4] - The trust structure typically involves shares of a holding company rather than direct shares of the issuer to simplify disclosure [4] Group 3: IPO Application and Information Disclosure - HKEX requires full disclosure of control trust details in the prospectus, focusing on the stability of control and compliance with regulations [5] Group 4: Regulatory Key Points - HKEX emphasizes the stability of control, requiring compliance with Listing Rules and ensuring the trust structure does not lead to control changes [6] - The trust must demonstrate that the actual control remains with the founder/beneficiary through mechanisms like "directive voting rights" [6] - The trust's duration is preferred to be long-term or permanent to avoid questions about control stability [6] Group 5: Common Regulatory Inquiries - Common inquiries from HKEX focus on control change risks, independence of beneficiaries, tax implications, and corporate governance [9] - The trust structure must ensure that the board's independence is not compromised and that all relevant relationships are disclosed [9]