Hong Kong Modifies Listing Rules of Specialist Technology Companies and De-SPAC Transactions
The Stock Exchange of Hong Kong Limited ("HKEx") and the Securities and Futures Commission ("SFC") have announced temporary changes to the Hong Kong Listing Rules regarding the minimum initial market capitalization of specialist technology companies and independent third-party investment requirements for de-SPAC transactions.
On August 23, 2024, the HKEx and the SFC jointly announced temporary modifications to the Hong Kong Listing Rules. These modifications, effective from September 1, 2024, will remain in place for three years, until August 31, 2027, and are aimed at enhancing the listing environment for specialist technology companies ("STCs") and special purpose acquisition companies ("SPACs").
STCs
STCs are companies primarily engaged in the research and development, and the commercialization and/or sales, of products and/or services that apply science and/or technology in specialist technology industries recognized by the HKEx.
For STCs with at least HK$250 million in revenue for their most recent audited financial year, the minimum initial market capitalization at listing will be reduced from HK$6 billion to HK$4 billion. For those not meeting this revenue threshold, the minimum will be reduced from HK$10 billion to HK$8 billion.
These modifications apply to STCs expected to list on or after September 1, 2024, with listing applications submitted by August 31, 2027.
SPACs
A SPAC is a shell company that raises funds through its listing to acquire a business within a predefined timeframe (known as a de-SPAC transaction).
The key modifications concerning de-SPAC transactions include:
- The minimum independent third-party investment for de-SPAC transactions will be the lower of: (i) the value calculated in accordance with Listing Rule 18B.41 or (ii) HK$500 million.
- The independence test for third-party investors in a de-SPAC transaction will be aligned with that in STCs, such that：
- Independence of third-party investors will be determined at the signing of the definitive agreement for the investment and up to the listing of the successor company;
- Certain persons, such as core connected persons and controlling shareholders of the SPAC or de-SPAC target, and the founders of the de-SPAC target and their close associates, will not be considered independent; and
- The HKEx retains the discretion to deem others as not independent on a case-by-case basis.
All de-SPAC transactions expected to be announced during the three-year implementation period must adhere to the modified rules.
