Hong Kong regulators to use existing rules to combat rogue sponsors

The Securities and Futures Commission will use criminal liability provisions against fraudulent sponsors of initial public offerings, after a slew of profit warnings from newly listed companies and one scandal in which a top executive disappeared shortly after his company listed on the exchange.

In a follow-up of a conclusion the SFC issued in late 2012, the regulator yesterday said "no amendment was required to specify sponsors as a separate category of persons who authorise the issue of a prospectus" as it held that listing sponsors were already clearly covered by existing regulations.

But the SFC also noted it would have "no hesitation" in using criminal liability provisions against anyone who authorised a listing prospectus containing false information.

Under the new rules issued in October last year, a sponsor must be appointed at least two months before an application is made.

It also requires sponsors to notify regulators of any instances of non-compliance and give reasons if and when they cease to act for a listing applicant.

Yesterday's supplementary conclusion follows a spate of poor performance at newly listed companies.