Introduction

The Stock Exchange of Hong Kong Limited (the Exchange) has issued guidance on the vetting practices it has adopted to facilitate the listing of overseas companies on the Exchange in the form of its HKEx Guidance Letter HKEx-GL12-09. 

Attracting companies from more overseas jurisdictions to list on the Exchange was one of the Exchange’s key initiatives included in its Strategic Plan for 2007-2009.  A significant first step in realising this objective was the joint publication by the Exchange and the SFC of a policy statement regarding the listing of overseas companies in March 2007 (Joint Policy Statement).  This set out under five key headings the areas of shareholder protection as to which an overseas issuer needs to demonstrate equivalence in its home jurisdiction with the Hong Kong standards in order to meet the Listing Rules’ requirement that the overseas issuer’s jurisdiction of incorporation (and, in the case of a secondary listing on the Main Board, the exchange of the issuer’s primary listing) provides equivalent standards of shareholder protection to those provided in Hong Kong.

9 New Accepted Jurisdictions of Incorporation

The Exchange has accepted nine overseas jurisdictions of incorporation for overseas listing applicants in addition to the four jurisdictions already recognised under the Listing Rules (Hong Kong, the People’s Republic of China, Bermuda and the Cayman Islands).  The newly accepted jurisdictions are Australia, Canada (British Columbia), Canada (Ontario), Cyprus, Germany, Jersey, Luxembourg, Singapore and the United Kingdom. 

The Exchange is apparently also considering the jurisdictions of the British Virgin Islands, Israel and Russia.

A List of Acceptable Overseas Jurisdictions is now available on the Exchange’s website at http://www.hkex.com.hk/listing/suppmat/list_of_aoj.htm which will be updated from time to time.

The latest available figures from the Exchange show some success in attracting overseas companies to Hong Kong.  As at 30 September 2009, a total of 118 overseas companies were listed on the Exchange, accounting for 9% of listed companies by  number and 18% of the total market capitalisation .  A breakdown by jurisdiction is set out in Annex 1.  It is worth noting that these jurisdictions do not match exactly the newly approved jurisdictions of incorporation.  This disparity is due to the fact that the assets to be listed are often carved out of the overseas entity and held, directly or indirectly, by a Bermuda or Cayman Islands company which becomes the listed entity.  For example, the Hong Kong IPOs of the Macau assets of U.S. casino companies Wynn Resorts and Las Vegas Sands Corporations were IPOs of shares in Cayman Islands incorporated companies Wynn Macau Limited and Sands China Ltd.

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