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Mainland tech firms that plan to shift US listing to Hong Kong face uphill battle due to tougher rules
- US has a disclosure based procedure for listing candidates while in Hong Kong regulators vet a company to decide if it is fit for listing
- The time taken to list will probably be extended by at least two to three months if Chinese firms decide to shift from the US to Hong Kong
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Hong Kong may be the obvious listing destination for Chinese tech companies after Beijing tightened rules on overseas listings. Stringent accounting and disclosure hurdles as well as tougher regulatory vetting suggest not all will make the cut, accountants and lawyers warned.
Companies that want to shift their listing from the US to Hong Kong may have to rework their accounts and application documents to comply with the tougher standards imposed by the Hong Kong bourse operator than US exchanges, they added.
Some of the biggest differences include accounting principles and reporting standards, offshore ownership structures and classes of shares with variable voting rights.
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“Listing requirements in Hong Kong are stricter,” said Wang Hang, a partner at legal firm Baker McKenzie in Beijing. “The key is to evaluate whether the issuer can fulfil the listing conditions. That is to say, not all of these companies are capable of shifting [their choice of venue] to Hong Kong.”
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Heightened scrutiny of China’s tech giants has unnerved investors and caused a number of mainland and Hong Kong companies to pause their US listing plans or opt for Hong Kong to raise capital from investors. They included lifestyle platform Xiaohongshu or Little Red Book, vegetable-delivery firm Meicai and logistics start-up Lalamove.
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