THE stock exchange has proposed changes to its listing requirements which, if approved, will effectively prevent many small companies from going public. The exchange said yesterday new listing applicants which did not have an initial market capitalisation of $400 million would have to meet tougher profits guidelines. If the proposal was approved, a small company would have to have attributable profit of $25 million in its most recent financial year and an aggregate of $35 million in the two previous years. It must also be profitable in all three years. Herbert Hui Ho-ming, head of listings at the exchange, said: ''We are constantly looking at the requirements for listing. One of the things we are doing is consulting with the market to get the feel of whether they want companies with bigger market capitalisation.'' The proposal was aimed at showing investors that a company was growing gradually, based on a concept borrowed from the United States that it should have a profit of more than $55 million over a three-year period, he said. Mr Hui said the consultation, which would be carried out with experts, would be until the end of next month. The exchange said it was considering the amendments to give ''more meaningful definition to the 'adequate' trading record requirement''. If the proposed changes were now in effect, three recent listing applicants - Rich City Packaging Holdings, Ngai Hing Hong Co and All Pantronic Holdings - would be turned away because they do not meet the profit requirements and have market capitalisations of less than $400 million. For the year ended March 31, 1993, Rich City had profits of $16.9 million and aggregate profit of $12.6 million in the previous two years. Ngai Hing Hong posted profits of $25.1 million for the year ended June 30, 1993, and had aggregate profits of $25.3 million in the previous two years. All Pantronic had profits of $34.2 million for the year ended March 31, 1993, with aggregate profits of just $30.7 million in the previous two years. The stock exchange said it was concerned that some companies applying for listing recently were only able to meet the market capitalisation requirement on the basis of a forecast profit, which represented a large increase from the profits recorded in earlier years. In some cases, it said some newly listed companies were unable to sustain their profits or even suffered losses in the year or years after the period a profit forecast was given. While the profit requirement proposal was significant, an even more important development was the $400 million initial market capitalisation requirement. Presently, a listing candidate must have a minimum public float of 25 per cent with a value of $50 million, giving it a market capitalisation of at least $200 million. While the stock exchange had made it clear about its efforts to attract larger companies, the new profit and market capitalisation rules would cause the number of listings to tumble and force business to other markets. The most obvious beneficiaries would be the Vancouver Stock Exchange and NASDAQ Market, which have far less stringent listing requirement and have actively campaigned to increase the number of Asian listings. The Vancouver exchange introduced an Asian Board earlier this year. Asian Board listing applicants must have an operating history, pre-tax profits in two of the three fiscal years immediately preceding the date of application, pre-tax income of at least C$400,000 (about HK$2.22 million) in the most recent fiscal year and net tangible assets of at least $5 million, or net tangible assets of $12 million without having net income. There must also be a public float of 25 per cent, an offering of $2.5 million and at least 300 shareholders. NASDAQ requires listing applicants to have net tangible assets of US$4 million (about HK$30.9 million), net income of $400,000 in the latest fiscal year or two of the three previous fiscal years and a $3 million market value for the public float. The NASDAQ listing requirements are even more flexible with a market value of the float of $1 million and total assets of $4 million. Senior officials from NASDAQ, including president Joseph Hardiman, recently visited Hong Kong, China and Australia to promote the exchange. Before introducing any changes to the listing rules, Hong Kong's listing division said it would consult market practitioners to solicit their views on the proposals.