According to the introduction, the Securities and Futures Commission of Hong Kong and the Hong Kong Exchanges and Clearing Limited (HKEX) have been committed to optimizing the processing of new listing applications and providing relevant guidance to the market to make the entire process more clear and transparent. Starting from 2023, the two regulatory institutions will release more statistical data related to new listing approvals to increase the transparency of their workflow. In addition, HKEX will publish all guidance materials in the 'New Listing Applicant's Guide' to facilitate the preparation of new listing applications and the disclosure of listing documents by the market.

The joint statement pointed out that optimizing the approval process timeline is one of the measures to implement the long-standing commitment of the two regulatory institutions to assist high-quality companies in listing in Hong Kong and at the same time safeguard public interests.

It is understood that under the current framework for approving new listing applications, the Securities and Futures Commission of Hong Kong, as the statutory regulatory institution, is responsible for implementing the Securities and Futures (Stock Market Listing) Rules and the Securities and Futures Ordinance. The Securities and Futures Commission of Hong Kong reviews all new listing applications and takes targeted intervention actions on matters subject to the Securities and Futures (Stock Market Listing) Rules and the Securities and Futures Ordinance that are more serious in nature.

As the front-line regulatory institution, HKEX is responsible for implementing the Listing Rules and making judgments on matters such as the suitability for listing based on the Listing Rules. The Listing Committee is responsible for considering whether to approve new listing applications and making decisions accordingly, and timely providing opinions on the listing eligibility and suitability of the applicant, as well as significant disclosures in the listing documents.

In response, the joint statement mentions that optimizing the approval process timeline will make the process timeline for approving new listing applications by the Securities and Futures Commission of Hong Kong and HKEX clearer and more definite.

Divided into three scenarios

In terms of specific optimization measures, the joint statement outlines three scenarios:

1. Applications that fully comply with the regulations

HKEX and the Securities and Futures Commission cooperate closely in processing new listing applications, and continue to coordinate regulatory actions to optimize the approval process timeline. If the applicant and its sponsor submit a new listing application and related materials that comply fully with the applicable provisions and guidelines under the Securities and Futures Ordinance, the Securities and Futures (Stock Market Listing) Rules, and/or the Listing Rules (applications that fully comply with the regulations), the Securities and Futures Commission and HKEX will communicate closely to avoid redundant inquiries. After issuing up to two rounds of regulatory comments respectively, each will evaluate and indicate whether there are any significant regulatory concerns regarding the application (regulatory assessment).

In this case, HKEX and the Securities and Futures Commission will confirm within no more than 40 business days whether the relevant applications have significant regulatory concerns. After confirming the absence of significant regulatory concerns, HKEX will work together with the applicant and its sponsor to implement the listing document disclosure, and the relevant application can then proceed to the Listing Committee hearing.

Applicants and their sponsors are expected to provide satisfactory responses to comments from regulatory authorities within a total of approximately 60 business days. Once approval is obtained from the Listing Committee and other relevant departments or regulatory authorities, the application process is expected to be completed within the six-month validity period of the application.

2. Fast approval timeline for Qualified A-share companies

Companies listed on the A-share market in Hong Kong submitting new listing applications are eligible for the Fast Approval Timeline for Qualified A-Share Companies if they meet the following conditions: (1) Expected market capitalization of at least HK$10 billion; and (2) On the basis of legal opinion support, confirming that the company has complied with all significant aspects of the laws and regulations related to the A-share market for the two complete financial years before submitting the new listing application. Their new listing applications can be processed according to the following Fast Approval Timeline for Qualified A-Share Companies.

Under the Fast Approval Timeline for Qualified A-Share Companies, if a qualified A-share listed company submits an application that fully complies with the regulations, the Securities and Futures Commission and HKEX will only issue one round of regulatory comments respectively. In this case, the regulatory assessment by the two regulatory bodies will be completed within no more than 30 business days (instead of the 40 business days applicable to 'applications that fully comply with the regulations').

If the Securities and Futures Commission and/or HKEX point out significant regulatory concerns after the regulatory assessment regarding the new listing application of a Qualified A-share listed company, the Fast Approval Timeline for Qualified A-Share Companies will no longer apply; and the application will be handled according to the process listed in the 'Applications Requiring Longer Processing Time'.

3. Applications that require a longer processing time.

If the Securities and Futures Commission and/or HKEX believe that there are significant regulatory concerns in the listing application, such as the applicant not complying with the Securities and Futures Ordinance, the Rules Governing the Listing of Securities on the Stock Exchange, and/or the Listing Rules; and/or the quality of the listing documents is poor; or if there are any significant new developments by the applicant, or if the regulatory authorities' opinions have not been adequately addressed, the Securities and Futures Commission and HKEX will actively communicate with the applicant and its sponsor to help them understand the relevant regulatory concerns.

Among them:

If necessary, after issuing the first comment letter, the Securities and Futures Commission and/or HKEX will communicate with the applicant, its sponsor, and other advisors' main representatives to assist in understanding significant regulatory concerns and outline the requirements for their subsequent responses to the regulatory authorities.

If the applicant subsequently fails to address any substantial omissions in response to regulatory opinions, the Securities and Futures Commission and/or HKEX will inform the applicant and its sponsor of the deficiencies and suspend the approval process until satisfactory responses are received.

If the applicant and its sponsor have not been able to satisfactorily address the significant regulatory concerns raised by the Securities and Futures Commission and/or HKEX after two rounds of regulatory opinions (or after one round of regulatory opinions according to the timetable for approval of Qualifying A-share companies), the Securities and Futures Commission and/or HKEX will make requests for data directly and/or issue a significant question letter as appropriate under the Rules Governing the Listing of Securities on the Stock Exchange. Subsequently, the progress of the application will depend on whether the applicant and its sponsor can fully provide the requested information and/or address the significant regulatory concerns described in the significant question letter.

In this situation, the application process may take longer.

Applicable only to new listing applications.

The joint statement points out that the Hong Kong Securities and Futures Commission and the Hong Kong Exchanges and Clearing Limited believe that optimizing the approval process timetable will make the time and frequency of opinions issued by the two regulatory institutions clearer and more definite, improving the overall transparency of the new listing application approval process, facilitating prospective issuers to list in Hong Kong. If applicants and their sponsors have any questions about the opinions expressed by the regulatory institutions, they should communicate with the regulatory institutions.

In response, Dai Lin, Executive Director of the Corporate Finance Division of the Hong Kong Securities and Futures Commission, stated: "The Hong Kong Securities and Futures Commission has been committed to enhancing the transparency, accountability, and efficiency of listing supervision. We fully support the optimization of the approval process timetable, which aligns with our strategic focus and helps enhance the global competitiveness and attractiveness of the Hong Kong capital markets."

Wu Jiehuan, Listing Director of the Hong Kong Exchange, stated: "The Hong Kong Exchange is committed to fulfilling the frontline regulatory responsibilities, prudently and efficiently approving new listing applications. We believe that optimizing the approval process timetable (including implementing a fast-track timetable for eligible A-share companies) will help enhance the clarity and certainty of the new listing application approval process, assisting applicants and their advisors in formulating listing plans, further enhancing Hong Kong's attractiveness as an international financial center. We look forward to continuing to work closely with potential issuers and their advisors, and with the support and cooperation of all parties, efficiently and promptly process listing approvals."

The Hong Kong Securities and Futures Commission and the Hong Kong Exchanges and Clearing Limited welcome market participants to continue providing feedback, and look forward to applicants and their advisors dedicating themselves to preparing new listing applications to a high standard to realize the benefits of optimizing the approval process timetable.

It should be noted that the optimized approval process timetable will apply to new listing applications submitted after the date of publication of the joint statement.

Editor/ping