Tougher rules afoot for doing an IPO in Hong Kong
Substandard companies have bruised Hong Kong’s financial reputation as the world’s top IPO venue.
The Securities and Futures Commission (SFC), the securities regulator, said will consult the public in the coming weeks over new regulations for listing investment banks and other sponsors that advise on Initial Public Offerings (IPOs).
Hong Kong has remained the world's top venue for new listings since 2009. It raised some US$36 billion from IPOs in 2011.
The SFC move follows mounting investor scrutiny of the quality of some firms listed in Hong Kong in recent years. SFC has been urging banks and brokerages that underwrite IPOs to take greater responsibility for keeping substandard companies in check.
An inspection of 17 IPO underwriters by the SFC in 2011 uncovered various problems that included lax due diligence and scanty internal controls over sponsor work.
SFC is considering making underwriters legally liable for the accuracy and completeness of listing prospectuses. Being considered are revisions to the Securities and Futures Ordinance, the law that combats market misconduct, and other company laws.
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