The Hong Kong Stock Exchange plans to optimize the listing mechanism: the IPO confidentiality application process is proposed to be expanded to all new applicants, the threshold for secondary listings is proposed to be further lowered, and the "return" mechanism will be strengthened.

The Securities and Futures Commission of Hong Kong (hereinafter referred to as the SFC) published a consultation document on March 13, seeking public opinions on several proposals to enhance the competitiveness of Hong Kong’s listing mechanisms. The goal of this consultation is to create a more diverse and vibrant market environment, meet global investors’ demand for high-quality innovative assets, and further strengthen Hong Kong’s position as a leading international financial center.

The “Daily Economic News” reporter found that this consultation mainly focuses on significantly optimizing the listing process.

The core reform proposals concentrate on three key areas. First, the Hong Kong Stock Exchange (HKEX) recommends substantially lowering the financial criteria for the “Different Voting Rights” (also known as dual-class share structures) listing mechanism: the standard market capitalization threshold for Class A shares is reduced from HKD 40 billion to HKD 20 billion, and for Class B shares from HKD 10 billion to HKD 6 billion, with an income threshold lowered from HKD 1 billion to HKD 600 million. For issuers with a market value of HKD 40 billion at listing, the maximum ratio of voting rights can be relaxed to 20 times, and the minimum economic interest for beneficiaries must meet a 5% shareholding and HKD 4 billion amount requirement.

Entities issuing under the “Different Voting Rights” structure must meet the HKEX’s criteria for “Innovative Industry Companies.” The HKEX also plans to further refine the definition of “Innovative Industry Companies,” dividing it into “Technology Path” and “Business Model Path,” and automatically consider all qualifying biotech and specialized tech companies (even if not listed under Chapters 18A or 18C) as “Innovative Industry” companies, without the need for individual proof.

Second, for overseas-listed issuers, the HKEX proposes to simultaneously lower the financial qualification threshold for secondary listings. The market value requirement for issuers with a “Same Voting Rights” (no different voting rights) structure would be reduced from HKD 10 billion to HKD 6 billion, aligning with the “Different Voting Rights” standards. Additionally, the HKEX aims to optimize guidelines related to main board transfers, clarifying compliance steps to facilitate overseas issuers listing in Hong Kong.

Regarding initial listing rules, the HKEX suggests including scenarios of “control changes without management impact” within the scope of compliance to prevent misjudgments of “backdoor listings.” It also proposes expanding the scope of the U.S. Generally Accepted Accounting Principles (GAAP), removing the requirement for auditors to review reconciliation statements in delisted companies’ financial reports, and allowing already commercialized biotech and specialized tech companies to choose to apply for listing under specific chapters of the Main Board Listing Rules.

Finally, the long-rumored expansion of the scope for confidential IPO applications has officially been proposed. The HKEX suggests extending the confidentiality application scope from biotech and specialized tech companies to all new applicants.

Additionally, the HKEX plans to strengthen the return mechanism. Previously, incomplete application materials could be rejected, and the sponsor’s identity would be published on the HKEX website upon rejection. Now, the HKEX recommends that, when an application is rejected, the identities and roles of all professional institutions involved in preparing the application (not just sponsors) be disclosed.

Hong Kong Stock Exchange Listing Chief Wu Jiexuan stated: “Since 2018, we have successfully implemented a series of listing reforms that fundamentally reshaped Hong Kong’s stock market and attracted many innovative companies to list here. These proposals are based on the achievements of those reforms. We welcome public feedback and look forward to continued communication with stakeholders. Let’s work together to strengthen Hong Kong’s position as the preferred fundraising destination for growth companies and the leading global market for capital deployment in Asia.”

The consultation period will last until May 8, 2026. The public can submit written opinions via designated websites or QR codes. The HKEX stated that after the consultation, market feedback will be considered to formulate decisions on next steps and to prepare a summary report, with a phased approach planned for this competitiveness review.