Initial Public Offering Listing on the Growth Enterprise Market of - PowerPoint PPT Presentation

 Initial Public Offering – Listing on the Growth Enterprise Market of Stock Exchange of Hong Kong Limited www.charltonslaw.com 0

Hong Kong – a leading international market London London (4th: USD 4,239.3bn ) Tokyo Tokyo (3rd: USD 4,512.7bn ) New York New York Shanghai Shanghai (1st: USD 17,397.3bn ) (7th: USD 2,588.2bn ) Shenzhen Shenzhen NASDAQ NASDAQ Singapore Singapore (11th: USD 1,476.8bn ) (2nd: USD 6,011.3bn) (21st: USD 751.7bn ) By market capitalisation, Hong Kong is the world’s 6th largest and Asia’s 2nd largest (after Japan) exchange Hong Kong In terms of IPO funds raised, Hong Kong ranked 3nd (6th: USD3,113.1bn) worldwide in 2013 and in world’s top 5 for 12 consecutive years (expected to rank 3 rd for 2014) Source: World Federation of Exchanges (as at end of November 2013), Hong Kong Exchange and Clearing Limited 1

Why List in Hong Kong? World’s top 5 in terms of IPO  IPO Funds Raised (2013) funds raised for 12 consecutive years 50 46.6 45 No. 1 International Financial  40 Centre in Aisa USD bn 35 No.1 Free Economy in the  30 world for 19 consecutive 25 21.8 20.2 years 20 18.1 15 No. 1 Globalised Economy for  10.2 9.8 10 2 consecutive years 5 Top 3 most competitive  0 NYSE HKEx LSE NASDAQ Tokyo SE ASX advanced economy Sources: Bloomberg, World Federation of Exchanges, Dealogic, World Economic Forum, The Heritage Foundation and Wall Street Journal, Fraser Institute and Economic Freedom Network, Economist Intelligence Unit and Ernst & Young, International Institute for Management Development, The Chinese Academy of Social Sciences (as at end of 2012), IMD World Competitiveness Centre, Dealogic 2

World Top Five in IPO Funds Raised (HK$ billion) 1000 Ranked top 5 globally for 12th year in a row since 2002  900  Active secondary market 800 700 409 600 500 394 298 191 400 230 300 208 361 136 450 200 214 185 334 292 155 260 248 100 166 167 59 97 39 90 66 59 52 26 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 IPO Follow-on Source: Hong Kong Exchanges and Clearing Limited 3

Global Leader in IPO Funds Raised IPO Funds Raised (2009-2013) 60 (US$ bn) 50 40 HKEx NYSE 30 LSE Nasdaq SGX 20 10 0 2009 2010 2011 2012 2013 Source: WFE, SGX (as at end of 2011), HKEx, Dealogic 4

World’s Top IPOs Hong Kong has the most World’s Top 10 IPOs for the period 2006-2013 (US$ m) Source: Blomberg, WFE, WEF, WSJ 5

Accommodates Smaller as well as Large issuers Source: Hong Kong Exchanges and Clearing Limited Note: Trading of 35 issuers (including 8 GEM companies) is suspended as of Jan 2010 6

Growth of Natural Resources Sector in Hong Kong Market Capitalization of natural resources companies listed on the HKEx grew more than 30 times for the past decade. Source: Hong Kong Exchanges and Clearing Limited 7

Gateway to Mainland China Mainland % of Unit Total Enterprise Total As at 31 December 2013 No. of listed companies Number 1,643 797 49% Market capitalisation HK$bn 24,043 13,691 57% As of 31 December 2013 Total equity funds raised HK$bn 374.3 308.6 82% - IPO funds raised HK$bn 166.5 152.2 91% - Post IPO funds raised HK$bn 207.8 156.3 75% Average daily turnover HK$bn 62.6 32.9 72% Source: Hong Kong Exchanges and Clearing Limited 8

Strong Market Liquidity (HK$ m) Average daily market turnover 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Hong Kong Exchanges and Clearing Limited 9

Hong Kong is Transforming into an International Listing Platform 2011 IPO Funds Raised: HK$259.8bn Source: Hong Kong Exchanges and Clearing Limited 10

International Companies Increasingly Choose to List in Hong Kong By Numbers Increasing number of  international companies continue to list in Hong Kong 2008 - 2011: the  listing of international companies almost doubled Source: Hong Kong Exchanges and Clearing Limited 11

Selected International Listings Source: Hong Kong Exchanges and Clearing Limited 12

Hong Kong’s Markets  Main Board For established companies able to meet its profit or other financial o requirements. Growth Enterprise Markets (“GEM”)  Is a second board for smaller growth companies o Has lower admission criteria o Provides a stepping stone to Main Board listing o 13

Accepted Jurisdictions  The Main Board and GEM Listing Rules allow the listing of companies incorporated in Hong Kong, China, Bermuda and the Cayman Islands The Exchange has accepted 21 jurisdictions as acceptable jurisdictions of  incorporation – Australia, Brazil, the British Virgin Islands, Canada (Alberta, British ○ Columbia and Ontario), Cyprus, France, Germany, Guernsey, the Isle of Man, Italy, Japan, Jersey, Luxembourg, Republic of Korea, Labuan, Singapore, the United Kingdom and the United States (State of California and State of Delaware). Recognition of New Jurisdiction in 2013 Labuan 14

Principal GEM Listing Requirements GEM Operating History A GEM applicant must have a trading record of at least 2 full financial years and Management with: substantially the same management for the 2 preceding financial a. years; and continuity of ownership and control for the preceding full financial b. year. Financial tests A GEM applicant must have: positive cash flow from operating activities of >HK$20 million a. (US$2.6 million) in aggregate for the 2 preceding financial years; and market cap of >HK$100 million (US$13 million) at the time of listing b. 15

Principal GEM Listing Requirements (Cont’d) GEM Public Float At least 25% of the issuer's total issued share capital must be held by  the public at all times. The market capitalisation at the time of listing of the publicly held  shares must be at least HK$50 million (US$6.4 million) (for Main Board issuers) and HK$30 million (US$3.8 million) (for GEM issuers). Spread of There must be at least 100 public shareholders (which can include  Shareholders employee shareholders) At the time of listing, not more than 50% of the publicly held securities  can be beneficially owned by the 3 largest public shareholders 16

Other Listing Requirements  Accountants’ Report: A listing document must include an accountant report on the financial information for the track record period. The latest period reported on must end no more than 6 months before the date of the listing document. Independent non-Executive Directors: Must be at least 3: one must have appropriate  professional qualifications or accounting or related financial management expertise. INEDs must comprise at least 1/3 of the Board.  Authorised Representatives: Must be at least 2: either 2 directors or a director and the company secretary. Company Secretary: Must be professionally qualified in HK.  Share Registrar: Issuer must employ an approved share registrar in HK to maintain register  of members. 17

Other Listing Requirements (Cont’d)  Audit Committee: Must be made up of non-executive directors only; have 3 or more members; one must have appropriate professional qualifications or accounting or related financial management expertise; majority of members must be INEDs. Remuneration Committee: Majority of members (incl. Chairman) must be INEDs.  Process Agent for Overseas Issuer: An overseas company must appoint a person  authorised to accept service of process and notices on its behalf in Hong Kong.  Compliance Adviser: Newly listed companies must appoint a Compliance Adviser for the period starting on the listing date and ending on the date of publication of results for the second full financial year commencing after listing (for GEM issuers). Compliance Officer (for GEM issuers only): GEM issuers must appoint one of their  executive directors as a compliance officer. 18