Hong Kong Modifies Listing Rules of Specialist Technology Companies and De-SPAC Transactions

In a move to enhance market competitiveness and support innovation, the Stock Exchange of Hong Kong Limited (HKEx) and the Securities and Futures Commission (SFC) announced temporary amendments to the Hong Kong Listing Rules in late 2024.

Key Amendments

• Minimum Initial Market Capitalization for Specialist Technology Companies: The threshold has been temporarily lowered to facilitate more listings from emerging technology firms, enabling earlier access to public capital markets.
• Independent Third-Party Investment Requirements for De-SPAC Transactions: The amendments relax the requirements for independent third-party investments in de-SPAC (Special Purpose Acquisition Company) transactions, aiming to streamline the process and attract more SPAC sponsors and investors.

Background and Rationale

These changes respond to evolving market dynamics and investor demand for greater flexibility in listing innovative companies and executing de-SPAC transactions. The adjustments are designed to maintain Hong Kong's position as a leading international financial center and to foster a vibrant capital market ecosystem.

Implications for Market Participants

• Specialist Technology Companies: Can benefit from reduced entry barriers, accelerating their growth and innovation funding.
• SPAC Sponsors and Investors: Will experience a more efficient de-SPAC process with fewer constraints on third-party investments.
• Regulators and Compliance Teams: Need to monitor ongoing developments and ensure adherence to updated rules and disclosure requirements.

Next Steps

Market participants should review the detailed amendments published by HKEx and SFC and consider the impact on their listing or investment strategies. The temporary measures are subject to review and may be adjusted based on market feedback and regulatory assessments.

Sources:

• HKEx and SFC Joint Announcement on Listing Rule Amendments
• SFC Listing Rules Updates