New committee told to speed up listing approval
Speeding up the listing process to attract more mainland and regional companies to the SAR will be the top priority of Hong Kong Exchanges and Clearing's (HKEx) revamped listing committee.
Moses Cheng Mo-chi, vice-chairman of the committee, said that unless listing procedures and costs were reduced Hong Kong risked losing blockbuster listings to other exchanges.
'Many listing applicants complain that it is too expensive to apply for a listing in Hong Kong. If this problem is not addressed, Hong Kong could soon lose its competitive edge to the other markets.'
The establishment of a new listing committee was a core part of a government package to bolster Hong Kong's position as a regional fund-raising centre.
The new committee will replace main board and Growth Enterprise Market listing committees.
It will have about 30 members. The existing committees each have about 24 members.
Mr Cheng said it was not the listing fees that made Hong Kong expensive, it was the protracted and complicated approval process forcing companies to pay more in lawyers, accountants and sponsors' fees.
To speed up the process, the exchange would streamline administrative procedures and the listing committee would meet more to approve listings.
At present, the committee meets only once a week.
Mr Cheng said the new committee could be divided into groups which met several times a week.
'This will speed up the process of listing and would save time and money for the listing applicants,' he said.
The committee will also decide to delist companies under proposed new rules.
The exchange has already proposed the introduction of 11 new conditions for delisting.
But a consultation paper on these proposals has been put on hold as one of the suggestions, to delist companies trading below 50 HK cents, was thought to be too radical and could encourage investors to ditch penny stocks. The exchange will reissue the paper in October.
'A major problem with the last delisting proposal was that it affected too many companies. When the HKEx reissues the paper, it must make sure only a few companies would be delisted,' Mr Cheng said.
More than 360 companies - or 48 per cent of those listed on the local exchange - would face the risk of a delisting if the exchange pressed ahead with the 50 cent threshold.
'The exchange should only delist companies which fail to meet a basket of requirements. The exchange should also make sure only a few companies - not half of all listed companies - are delisted,' Mr Cheng said.
He said the HKEx in the October paper should also suggest ways for investors to trade the stocks after they were delisted.
'This will avoid investors panic selling when it issues the delisting proposal again,' he said.
'Amid weak stock market sentiment, the exchange must give a more modest reform plan to investors.'