HK new listing regime for innovative science and technology companies with no revenue or no profit | Hogan Lovells

The Hong Kong Stock Exchange has issued a consultation paper proposing a new listing regime for “specialized technology companies” under a new chapter (Chapter 18C) of the Listing Rules, providing an alternative listing route for certain innovative science and technology companies with high growth potential not yet met the traditional financial requirements. The consultation period ends on December 18, 2022. We provide a brief overview of the proposal, including key listing qualifications and disclosure requirements under this new regime.

The Hong Kong Stock Exchange proposes a new listing regime for innovative science and technology companies

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On October 19, 2022, The Stock Exchange of Hong Kong Limited (the “Exchange‘) issued a consultation paper proposing a new regulatory framework for the listing of ‘Specialist Technology Companies’ under a new chapter (Chapter 18C) of the Rules Governing the Listing of Securities on the Main Board of the Exchange (the ‘listing rules“). The consultation period ends on December 18, 2022. This customer announcement is intended to provide a brief overview of the proposal.

Specialized technology companies are companies primarily engaged in research and development (“R&D“) of and the commercialization and/or sale of products and/or services (the “Specialized technology products’) with science and/or technology applied thereto (the ‘Specialized Engineering’) within an acceptable sector of a specialized technology industry. Due to the advancement of technology, the Exchange will list the specialized technology industries and acceptable sectors in a non-exhaustive list, which will be updated from time to time and currently includes:

  • Next generation information technology – including cloud-based services and artificial intelligence;
  • advanced hardware – including robotics and automation, semiconductors, advanced communications technology, electric and autonomous vehicles, advanced transportation technology, aerospace technology, advanced manufacturing, quantum computing and metaverse technology;
  • advanced materials – synthetic biological materials, smart glass and nanomaterials;
  • new energy and environmental protection – new energy generation, new energy storage and transmission technology and new green technology; and
  • new food and agricultural technologies – new food technology and new farming technology.

The exchange noted that the proposal is not limited to applicants with “leading” technologies, as it is believed that the success of a specialty technology company often stems from the successful commercialization of the core technology, rather than the innovative ability of the technology itself. Companies with Multiple business segments can also benefit from the proposed new regime as long as they are “primarily” engaged in the relevant business of a specialized technology industry.

Specialized technology companies are categorized into (i) companies that have commercialized their specialized technology products and generated significant revenues, i.e., the trading companies, and (ii) companies that (a) are primarily engaged in research and development and raise funds to carry out their research and development to commercialize their specialized technology products and/or (b) have not yet generated significant revenues, ie the pre-commercial companies. Pre-commercial companies are subject to more stringent licensing requirements due to the increased risks they face.

Key qualification requirements for listing

Important Offering and Disclosure Requirements

Important post-IPO requirements

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