Clifford Chance

The Stock Exchange of Hong Kong Limited (HKSE) has published the consultation conclusions on the proposed new listing regime for Specialist Technology Companies by introducing the new Chapter 18C. These are companies in sectors including, but not limited to, artificial intelligence (AI), robotics and automation, semiconductors, electric and autonomous vehicles, quantum computing, advanced materials, new energy, food and agriculture technologies.

The new Chapter 18C will become effective on 31 March 2023 where companies may submit a formal listing application under this new listing regime.

This article discusses the key changes between the consultation proposal and final rules under the new Chapter.

Listing eligibility threshold relaxed 

The HKSE has adopted a more issuer-friendly approach in setting the eligibility criteria for Chapter 18C. The key modifications to the original consultation proposal include:

Lowering the expected market capitalisation:

• commercial Companies to ≥ HK$6 billion (from ≥ HK$8 billion)
• pre-Commercial Companies ≥ HK$10 billion (from ≥ HK$15 billion).

Allowing greater flexibility in satisfying the requirement of Pathfinder SIIs: As at the A1 date and throughout the prior 12 months:

• up to 5 Pathfinder SIIs in aggregate held ≥ 10% shareholding or invested ≥ HK$1.5 billion
• at least 2 of the Pathfinder SIIs, each held ≥ 3% shareholding or invested ≥ HK$450 million.

Lowering the R&D expenditure % within the total operating expenditure for Pre-Commercial Companies to:

• ≥ 30% (with revenue of the most recent year being ≥ HK$ 150 and ≤ 250 million) 
• or ≥ 50% (with revenue of the most recent year < HK$150 million.

We appreciate the HKSE and SFC's efforts in considering and adopting market's comments in making the final rules for Chapter 18C, which, compared to the consultation proposal, is expected to attract a greater number of specialist technology issuers for listing in Hong Kong. This new listing regime will bring fresh momentum to capital formation for both startups and established companies with truly innovative and promising technology.

We believe this new Chapter 18C, together with the many recent initiatives of the HKSE, will increase the competitiveness and attractiveness of the Hong Kong market to regional and international issuers and investors and demonstrates the continuing efforts of the HKSE to grow market activities and liquidity.

Please see the full PDF (English/Chinese) for a more detailed examination of: 

• Q&A under the new chapter 18c
• What are specialist technology companies?
• What are the eligibility requirements?
• What do we need to include in the listing document?
• Are there any offering related requirements?
• What do we need to do post-listing?