Hong Kong Exchanges and Clearing Limited (HKEX) announced the completion of its listing regime reforms at a press conference on Tuesday.
On April 30, it will begin to accept IPO applications from three types of businesses which were unable to do so in the past.
These three types of companies cover those dealing in biotech business, having a weighted voting right (WVR) structure, or seeking a secondary listing.
Biotech firms with no track record of revenue or profit will no longer be turned away by the main board financial eligibility tests. Other thresholds will apply to prove their qualification for an IPO.
Innovative businesses with the WVR arrangement, a pattern most favored by such companies, will not need to worry about their ownership structure as they plan for entry into the Hong Kong stock market.
Companies boasting a sound track record at the exchanges in the Chinese mainland or other places will be permitted to seek a secondary listing in Hong Kong.
Amid its reform measures, the HKEX also pays considerable attention to the protection of investors.
For example, it requires that the WVRs should confer a voting power of no more than ten times versus common shares and that the ratio of WVRs in a company should not increase once it gets listed.
During the two-month consultation phase, the proposed listing reforms received overwhelming support from stakeholders.
Charles Li, chief executive of HKEX, expects to see the listings of the innovative firms in June or July.
Up to now, more than a dozen firms have contacted us about their listings in Hong Kong, as he remarked at the press conference.
These new rules, marking the most profound reforms of the Hong Kong stock market in 25 years, aim to attract new economy players and sharpen Hong Kong's competitive edge as a global financial center.
With this move, Hong Kong's stock market will be further diversified. Currently, most firms in this market operate in the financial and real estate sectors while new economy players make up only three percent of its total market capitalization.