Apr. 25 (NBD) -- The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEX), unveiled on Tuesday new rules to broaden Hong Kong's listing regime, a move to allow enterprises with dual-class shareholding structures to apply for listing on the main board.

The new rules are scheduled to come into effect on 30 April this year and the first batch of companies is expected to get listed as early as June or July. 

The new move is regarded as the biggest reform which ever took place in the capital market of the special administrative region over the past 25 years.

Charles Li, chief executive of HKEX, noted that Hong Kong capital market will advance with the times and become more competitive. The new reform will also help Hong Kong incubate innovative companies, added Li.

As a part of the listing reform, the Exchange will add three new chapters in the Main Board Listing Rules and made amendments to the current rules.

Apart from those companies with weighted voting right (WVR) structures, the Exchange will accept listings of biotech enterprises that cannot meet the Main Board financial eligibility tests.

The Exchange will also provide listing channels for issuers that seek for a secondary listing in Hong Kong.

In addition, to reduce potential risks of listing for those enterprises with WVR structures or no profits and to protect investors, the Exchange will add new rules including setting specific qualifications for applicants, lifting up market capitalization requirement and requesting more disclosure. 

It is noted that the Exchange will first accept applications from issuers with dual-class shareholding structures and an estimated value of no less than HK$10 billion (1.3 billion U.S. dollars) to be listed in Hong Kong. It also suggested that for companies with an estimated value of less than HK$40 billion (5.1 billion U.S. dollars), they are advised to post a revenue of no less than $HK1 billion (127.4 million U.S. dollars) in the latest audited annual financial results.

The market has already seen the sign of the new reform, as the Exchange launched a consultation seeking for opinions from the market concerning the listing regime for start-ups and innovative companies on 23 February this year.

The Exchange received a total of 283 responses to the consultation paper from a broad range of market players.

The consultation document outlined the reform directions the Exchange regarded as the most appropriate plans for the market and those plans won widespread support, said Dai Linhan, director of regulatory affairs and head of listing at HKEX.

The new rules will encourage more enterprises to make a listing in Hong Kong, said Ye Shangzhi, chief strategist at First Shanghai Group, adding that in the long run, the move can increase the capital flow of Hong Kong stock market and help to raise market valuation.

Email: zhanglingxiao@nbd.com.cn