HKEX cuts minimum market cap for dual-class share listings to $20b

Alternative listing threshold also lowered to $6b.

Hong Kong Exchanges and Clearing (HKEX) has lowered listing thresholds for companies with weighted voting rights and expanded confidential IPO filings to all new applicants as part of changes that took effect on 24 July.

Under the revised rules, the minimum market capitalisation for firms seeking to list with weighted voting rights was cut to $20b from $40b.

An alternative eligibility test was also lowered to a market capitalisation of at least $6b and revenue of at least $600m in the most recent audited financial year, from $10b and $1b, respectively.

Moreover, HKEX will allow a weighted voting ratio of up to 20:1 for companies with a market capitalisation of at least $40b, from the previous maximum ratio of 10:1.

The minimum shareholding percentage held by weighted voting rights beneficiaries may meanwhile be reduced to 5% if the stake is worth at least $4b at listing, it added.

The exchange also expanded its non-public filing option to all new listing applicants. 

Previously, confidential filings were mainly available to eligible secondary-listing applicants, biotech companies and specialist technology companies, with waivers considered for other applicants on a case-by-case basis.

The bourse said it received 73 responses to a consultation launched in March, with the proposals receiving strong support. The reforms were adopted with some modifications and clarifications.

Other changes include lowering financial eligibility thresholds for overseas-listed companies seeking a secondary listing in Hong Kong and streamlining the process for secondary-listed issuers converting to a primary listing.

For those without weighted voting rights, the minimum market capitalisation requirement for a secondary listing was reduced from $ 10b to $ 6b. 

The changes followed a separate move on 23 July to deepen Hong Kong’s capital-market links with Malaysia.

The Securities and Futures Commission and Securities Commission Malaysia signed a memorandum of understanding establishing a simplified framework for dual IPO listings and expanding their mutual recognition of funds arrangement.

The expanded scheme covers non-Islamic exchange-traded funds, leveraged and inverse products, and real estate investment trusts.

HKEX also added Bursa Malaysia Securities Berhad to its list of recognised stock exchanges on the same day to facilitate cross-listings of equity securities between the two markets.