Hong Kong’s listing reform 2.0: can it outshine global rivals for innovative firms?

Fang Liu, a partner at global law firm Clifford Chance, counts among his clients many technology companies that are keen to list in Hong Kong, but find the current requirements cumbersome.Clifford Chance has helped more than a dozen innovative companies raise funds under the new listing regime since 2018, when Hong Kong Exchanges and Clearing (HKEX) introduced reforms for pre-revenue biotech firms and companies with weighted voting rights (WVR), where one class of shareholders carries more voting rights than others.“The current market cap requirement for WVR [firms] is out of reach for the substantial majority of potential listing candidates,” said Fang, whose firm helped 14 companies market their initial public offerings (IPOs) in the first quarter and raise US$5.7 billion.“The HKEX proposal to lower the market cap requirement will enhance the attractiveness of Hong Kong, as many of the relatively smaller innovative companies now have the option to list here [under the WVR framework],” he said.Expectations rose anew when the HKEX last month announced its biggest listing reform since 2018. The consultation period for the proposal ends on May 8.Under the proposed reform, the bourse operator has halved the minimum valuation for WVR companies to HK$20 billion (US$2.6 billion), easing the pathway for overseas-listed issuers to list in Hong Kong, among other enhancements to listing requirements. All listed companies can file confidentially, and they only have to disclose information to the public after receiving listing approval.