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Hong Kong looks to tighten IPO rules for banking sponsors

12 Dec 2012

Investment banks sponsoring IPOs in Hong Kong will have criminal and civil liability for defective prospectuses under new recommendations from the city’s Securities and Futures Commission.

The SFC has suggested reforms to ensure IPO sponsors thoroughly understand companies aspiring to access the public markets before the listing application is made, with an emphasis on early, comprehensive due-diligence and a properly-drafted prospectus.

SFC chief executive officer Ashley Alder said, “The changes, along with a streamlined regulatory process, will incentivise sponsors to raise standards, pick the right deals and manage them well which should in turn reduce risks for investors and all those involved in IPOs.

“Although we are now experiencing lower IPO volumes these reforms will underpin market confidence during all market cycles.”

He added that “a high-quality application should mean that the regulatory commenting process is shorter and less intensive.”

The new requirements, which will require approval from the city’s legislature before they become law, will apply to listing applications submitted on or after 1 October 2013.

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