Lower bar to entry for innovative companies to list in Hong Kong, chamber says The Chamber of Hong Kong Listed Companies (CHKLC) is urging Hong Kong to further lower the bar for innovative companies to go public in the city, so as to encourage more technology firms to raise funds here, according to the chamber’s chairman. The Hong Kong Exchanges and Clearing (HKEX) unveiled its biggest listing reforms since 2018 in March, expanding the scope of businesses eligible for listing under a weighted-voting rights regime and redefining its classification for innovative companies, in order to allow biotechnology firms and non-technology issuers with innovative business models to go public in Hong Kong. According to an HKEX consultation paper, the exchange will only allow innovative companies with technologies that are “novel in themselves, or essential to the novelty of the applicant’s core business” to apply to list via the weighted voting rights. Chan Ka-keung, chairman of the CHKLC, said the current proposal requiring the innovative company to pass through the “novelty test” was too high a bar for many. “The chamber recommends removing the ‘novelty test’ as it means maybe only the first one to use certain technology or business model to qualify to adopt the weighted voting right model to list,” Chan said at a media briefing on Friday. “This will fail a lot of good, quality innovative companies which have new technologies or business models but may not be the first one to do so.” “Hong Kong would need to compete with many other markets for the innovative companies to list, while the US market has no requirement for innovations to list with weighted voting rights,” he said. Chan, who was Hong Kong’s Secretary for Financial Services and the Treasury from 2007 to 2017, said lowering barriers would entice more firms to make an initial public offering (IPO) in the city. “We should make sure our system is capable of capturing the founders who play a pivotal role in the business to choose Hong Kong to raise funds.” Chan added that the CHKLC supports other proposals under the HKEX consultation, including cutting down market capitalisation requirements for weighted voting right companies to list, as well as allowing companies to file listings confidentially. Established in 2002, the CHKLC represents some 300 listed firms, which account for about 30 per cent of Hong Kong’s market capitalisation. The association focuses on promoting corporate governance and shares the government and regulators’ views on market reforms. The chamber on Friday set up a new committee to help listing candidates understand local listing rules and assist existing companies in building networks to better fundraise after going public. Nelly Pai will chair the newly-established committee, called the Hong Kong International Capital Markets Affairs Committee, which comprises eight members, including investment bankers, lawyers, accountants and family office managers. “Many mainland companies want to use Hong Kong as a gateway to go global, while many international firms also want to use the city to enter into Asia or mainland markets,” Pai said. “We would like to see the committee play a role in helping more companies understand the Hong Kong capital market.” Committee member Alan Fung, who is also a partner at Asia Greentech Fund, said Hong Kong has over 1,500 smaller companies with a market capitalisation below HK$1 billion (US$127.62 million), many of which have low turnover and have difficulty raising funds after listing. “The new committee would hope to arrange more activities to increase the awareness of these smaller listed companies so as to help them to raise funds more easily,” Fung said. Another committee member, Cliff Ip Wang-hoi, a partner at Wings Capital, a family office operator, said many family offices are interested in investing in Hong Kong-listed companies, but they need more information about the companies before they can make the investment. “The smaller companies may tap funds from private credit or other new fundraising methods in the private markets to assist their development,” Ip said. https://www.scmp.com/business/article/3357063/lower-bar-entry-innovative-companies-list-hong-kong-says-chamber?pgtype=live (ICE HONG KONG)

Fonte notizia: South China Morning Post