The SFC said yesterday that certain sponsors might not have 'sufficient resources to fulfil the professional and regulatory obligations required of them'.

An SFC source said disciplinary action could include a reprimand, suspension or revocation of licence, or a fine.

The source said two companies had produced poorly written prospectuses and had copied each other's work - including the mistakes.

The investigations were in part motivated by financial irregularities at the sponsored companies, the source said.

The SFC statement implied that some sponsors had aggressively solicited business without considering their own capabilities.

In one case, a sponsor applied to list 12 companies, but had only 11 licensed professional staff. Just two of its applications succeeded.

Under the dual filing system which began on April 1 last year, companies wishing to list on the market must file listing documents with both the Hong Kong Exchanges and Clearing and the SFC for vetting.

Since then, the SFC and the HKEx have vetted 117 applications, of which 29 were delayed pending responses to SFC comments. Of these, 15 did not proceed to listing and 11 listed after adequately addressing the SFC's concerns. Three cases are outstanding.

The role of listing sponsors has been under the spotlight after a number of corporate scandals in recent years, including the collapse of Euro-Asia Agricultural (Holdings) in September 2002. The company had been sponsored for listing by ICEA Finance Holdings, which is under investigation by the SFC. Euro-Asia was delisted last month.

Poor performance

Two of the firms had not had any listings approved in 13 months

Two sponsors had simply poached each other's work

One sought 12 listings but had just 11 licensed staff