SFC agrees to allow price-stabilising actions for 30 days on $100m offers
Companies staging share offerings worth more than HK$100 million will be allowed to support the price in the first month after listing, under new rules to be introduced by the Securities and Futures Commission.
The rules are aimed at making initial public offerings more attractive, and draw companies to list.
The commission yesterday said a market consultation had shown the investing public supported a company being allowed to stabilise its share price after listing.
'The rules will put Hong Kong on a par with other international markets in allowing underwriters of securities offerings to take price-stabilising actions to reduce short-term price fluctuations . . . thereby promoting the orderliness and efficiency of the Hong Kong market,' the commission said.
'However, investors must be aware that there is no guarantee that there will be price stabilisation or that any stabilising actions, once taken, will continue,' it said.
At present, Hong Kong companies are banned from supporting their share prices after listing as it is regarded as market manipulation.
However, overseas markets have rules to prevent new listings dropping below their initial public offering price.
The commission has made two changes to its original proposals following suggestions received during the consultation period.
The first is to lower the offering threshold from HK$200 million to HK$100 million to allow smaller companies to stabilise their share prices as well.
The scope has also been expanded to cover listed companies offering new shares.
The rules require the companies to disclose to the public their intention to stabilise the share price. They will also need to appoint a stabilising manager to oversee the actions, keep records of such transactions and make them available for inspection by the issuer and the commission.
Stabilising bids for shares should not be higher than the public offer price.
The stabilising period will run from the start of trading for 30 days. After that, disclosure of certain information on the stabilising transactions undertaken must be made.
The new rules are subject to negative vetting by the Legislative Council and will become effective on the same day the Securities and Futures Ordinance comes into operation, which is expected within a few months.