On Friday, Hong Kong announced a streamlined and more transparent timeline for initial public offerings (IPOs), aimed at increasing the city's appeal as a top international listing destination. The updated rules provide greater clarity and certainty, especially for companies listed on mainland China's A-share market, and aim to simplify the approval process while maintaining regulatory standards.

The new framework was introduced by the Securities and Futures Commission (SFC) and Hong Kong Exchanges and Clearing Limited (HKEX) through a joint statement. It focuses on three main areas: improving the clarity of the process for applicants fully meeting regulatory requirements, expediting approval for qualifying A-share companies, and extending timelines for applications requiring additional regulatory scrutiny.

Revised IPO Approval Process

Under the existing regulatory system, the SFC and HKEX work together to review all IPO applications. The SFC, as the statutory regulator, enforces the Securities and Futures (Stock Market Listing) Rules and the Securities and Futures Ordinance. Meanwhile, HKEX is responsible for implementing the Listing Rules and assessing the suitability of companies for public listing.

For IPO applications that meet all applicable rules and guidelines, the new framework simplifies the approval process. The regulators will limit their review to a maximum of two rounds of regulatory queries, focusing on identifying any major regulatory concerns. Both the SFC and HKEX will aim to complete their regulatory assessments within 40 business days. Once it is confirmed that there are no significant concerns, the IPO can proceed to the HKEX’s Listing Committee hearing for final approval.

For A-share listed companies, an even faster process is available. If these companies meet specific criteria—such as having an expected market value of at least HKD 10 billion and being fully compliant with all mainland China regulations—the review period will be shortened to 30 business days, with only one round of regulatory queries. This "fast-track" system is designed to expedite approvals for large, established mainland companies seeking a dual listing in Hong Kong.

Extended Timelines for Complex Applications

For companies that raise significant regulatory concerns or have incomplete documentation, the approval process will take longer. In such cases, the SFC and HKEX will issue detailed feedback and require the applicant to address any deficiencies before proceeding. The review process will be suspended until the necessary information is provided.

Michael Duignan, SFC's executive director of corporate finance, emphasized that the changes aim to enhance the transparency and efficiency of the IPO process while safeguarding the interests of investors.

The new framework is expected to provide a clearer pathway for companies looking to go public in Hong Kong, supporting its role as a global financial center. The revised approval process will apply to new IPO applications submitted after the joint statement.