Corporate News Alert: Proposed Introduction of a Listing Regime for Specialist Technology Companies – Consultation Paper



Since 2018, The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) has introduced and refined its regulatory regime through major listing reforms permitting the listing of biotech companies and weighted voting rights (“WVR”) issuers, and implemented a concessionary secondary listing route for overseas issuers primarily listed on certain qualifying stock exchanges in other jurisdictions. Around 11% of the total number of listings on the Stock Exchange are companies listed under such reforms since first taking effect over four years ago. It has also resulted in a diversification of listed companies in Hong Kong, the information technology industry being by far the largest on the Stock Exchange’s market, having since doubled to 30% as at 31 December 2021 in terms of market capitalisation from 15% prior to 2018, while the market capitalisation of companies in the healthcare industry has now risen steadily to 7% from an insignificant contribution before 2018.


Nevertheless, Hong Kong still lags behind the U.S. and the PRC in terms of the number and market capitalisation of companies in five specialist technology industries, namely (i) next-generation information technology, (ii) advanced hardware, (iii) advanced materials, (iv) new energy and environmental protection and (v) new food and agriculture technologies (the “Specialist Technology Industry(ies)”), as such companies often are not able to meet the financial eligibility (being profit, revenue or cash flow) requirements of the Main Board of the Stock Exchange, despite some having valuations well exceeding the minimum market capitalisation threshold for a Hong Kong listing as well as high growth potential.


In light of this gap in the Hong Kong market, on 19 October 2022, the Stock Exchange published a Consultation Paper – Listing Regime for Specialist Technology Companies (the “Consultation Paper”) to invite feedback from the public on its proposals to expand the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Rule(s)”) to enable the listing of “Specialist Technology Company(ies)” (i.e. a company primarily engaged (whether directly or through its subsidiaries) in the research and development (“R&D”) of, and the commercialisation and/ or sales of product and/ or service within an acceptable sector of a Specialist Technology Industry) on the Main Board. The Stock Exchange encourages interested parties to respond to the Consultation Paper by way of a questionnaire available on by 18 December 2022.


The key proposals regarding the introduction of a listing regime for Specialist Technology Companies are summarised as follows:




  1. Categorisation

The Stock Exchange proposes to divide Specialist Technology Companies into two categories, namely:


  1. those that have achieved meaningful commercialisation of their product and/or service (alone or together with other products or services) (“Specialist Technology Product(s)”) that applies science and/or technology within an acceptable sector of a Specialist Technology Industry (“Specialist Technology”), by achieving the “Commercialisation Revenue Threshold”, being HK$250 million for the most recent audited financial year deriving from the company’s Specialist Technology business segment (the “Commercial Company(ies)”); and


  1. those that are primarily engaged in R&D to bring their Specialist Technology Products to commercialisation or have not yet achieved the Commercialisation Revenue Threshold (the “Pre-Commercial Company(ies)”).


Pre-Commercial Companies will entail more stringent requirements for listing owing to heightened risks, including (1) the risk of inability to successfully commercialise their Specialist Technology Products to achieve the Commercialisation Revenue Threshold; (2) risk of corporate failure due to insufficient funding for its operations; and (3) risk of share price volatility and trading illiquidity.


Due to the evolving nature of technology, the Stock Exchange proposes to adopt a broad definition of “Specialist Technology” within the Rules and set out, among others, a non-exhaustive list of acceptable industries and sectors within the definition in a guidance letter (see Appendix V to the Consultation Paper) which will be updated from time to time after consultation with the SFC, taking into account the following principles:


  1. participants in the relevant sector must have high growth potential;


  1. success of participants in the sector can be demonstrated to be attributable to the application, their core business, new technologies and/or the application of the relevant science and/or technology within that same sector to a new business model, which also serves to differentiate the participant from traditional market participants serving similar consumers or end users; and


  1. R&D significantly contributes to the expected value and constitutes a major activity and expense of participants in the sector.


The proposed list of Specialist Technology Industries and acceptable sectors includes:


  • Next-generation information technology (e.g. cloud-based services and artificial intelligence);
  • Advanced hardware (e.g. robotics and automation, semiconductors, advanced communication and transportation technology, aerospace technology, advanced manufacturing, electric and autonomous vehicles, quantum computing and metaverse technology);
  • Advanced materials (e.g. synthetic biological materials, smart glass and nanomaterials);
  • New energy and environmental protection (e.g. new energy generation, storage and transmission technology and new green technology); and
  • New food and agriculture technologies – (e.g. artificial meat, sustainable protein technology, synthetic biology in food technology, good waste reduction, agricultural biotechnology and crop efficiency technology, agricultural synthetic biology and farming technology).


  1. Requirements

The table below summarises the key requirements that the Stock Exchange proposes to introduce for the two categories of Specialist Technology Companies:



Key requirements

Commercial Company

Pre-Commercial Company

  1. Qualifications for listing

Minimum expected market capitalisation upon listing


HK$8 billion (“bn”)

HK$15 bn


Commercialisation Revenue Threshold


No requirement


Engaged in R&D

for at least three financial years prior to listing

R&D investment constitutes at least 15% of the total operating expenditure for each of the three financial years prior to listing

R&D investment constitutes at least 50% of the total operating expenditure for each of the three financial years prior to listing

Track record, management and ownership continuity


Operation in its current line of business under substantially the same management for at least three financial years prior to listing (a shorter trading record period may be accepted in exceptional circumstances) with ownership continuity for at least 12 months before listing

Third-party investment

Sophisticated Independent Investors:

  1. must not be its core connected person (including a controlling shareholder but excluding a substantial shareholder connected only by virtue of its shareholding size in the company, however any shares subscribed by existing shareholders at IPO will not be counted); and
  2. must be a sophisticated investor who meets any of the indicative size thresholds or qualification requirement (see examples below).


Examples of those generally considered by the Stock Exchange as Sophisticated Independent Investors include:

  • an asset management firm with assets under management (“AUM”) or a fund with a fund size of at least HK$15 bn
  • a company having a “diverse” investment portfolio size of at least HK$15 bn
  • an investor of any type above with an AUM, fund size or investment portfolio size (as applicable) of at least HK$5 bn derived primarily from Specialist Technology investments
  • a key participant in the relevant upstream or downstream industry with substantial market share and size, as supported by appropriate independent market or operational data


Minimum investment requirements:

It must have received meaningful investment from Sophisticated Independent Investors. The following will generally be considered as “meaningful investment”:

  • investments from at least two Sophisticated Independent Investors for at least 12 months prior to the listing application date, each holding such amount of shares or securities convertible into shares equivalent to 5% or more of its issued share capital as at the listing application date and throughout the prior 12-month period (“Pathfinder Sophisticated Independent Investors”); and
  • at least the following aggregate investment from all Sophisticated Independent Investors upon listing of:


Expected market capitalisation upon listing (HK$)

Minimum total investment (as % of issued share capital) upon listing

≥ 8bn to <



≥ 20bn to <



≥ 40bn






Expected market capitalisation upon listing (HK$)

Minimum total investment (as % of issued share capital) upon listing

≥ 15bn to <



≥ 20bn to < 40bn


≥ 40bn






Additional conditions for listing

Not applicable

  • demonstrate a credible path in commercialisation of its Specialist Technology Product(s) to achieve the Commercialisation Revenue Threshold, including any potential funding gap and plans for further financing
  • have sufficient working capital available (including the expected IPO proceeds) to cover at least 125% of its group’s costs (which must substantially consist of general, administrative and operating costs, and R&D costs) for at least 12 months from the listing document date

and disclose the above in its listing document


  1. IPO requirements

More robust price discovery process

  • allocate at least 50% of the total number of shares offered in the IPO (excluding any shares to be issued pursuant to the exercise of any over-allotment option) to independent Institutional Professional Investors (namely, those within paragraphs (a) to (i) of the definition of “professional investor” in section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance but excluding existing shareholders and any of their close associates, and core connected persons of the company) in the placing tranche
  • amended initial allocation and clawback mechanism as follows:



Initial allocation

Number of times (x) of over-subscription in the public subscription tranche

≥ 10x to <


≥ 50x

Minimum allocation to retail investors as % of total shares offered in the IPO









Free float and offer size

  • minimum free float (i.e. shares not subject to any disposal restrictions): HK$600 million upon listing;
  • offer size: the listing should be accompanied by an offer of a “meaningful” size (including both the placing tranche and the public subscription tranche), subject to approval by the Stock Exchange


Disclosure(s) in the listing document

  • pre-IPO investments, reasons for any material fluctuation in valuation, and cash flows
  • key aspects of its business model and details of the Specialist Technology Product(s), such as technical capabilities, commercialisation status and prospects
  • R&D and expertise
  • industry-specific information
  • intellectual property
  • warning statement that it is a Specialist Technology Company and any investment in its securities may give rise to further risks (compared with companies in traditional industries)


Not applicable

Additional disclosure requirements:

  • the R&D stage for each Specialist Technology Product
  • key stages and milestones for its Specialist Technology Product(s) to achieve the Commercialisation Revenue Threshold
  • all relevant risks as regards commercialisation of each Specialist Technology Product
  • warning statement drawing investors’ attention to the risks that:
  1. its Specialist Technology Product(s) may not commercialise;
  2. it may not generate sufficient revenue to sustain its operations after listing; and
  3. it may fail due to a lack of available funds.


  1. Post-IPO requirements

Lock-up period

Ranging from 6 to 12 months

Ranging from 12 to 24 months

Such lock-up period shall continue irrespective of whether such persons cease to hold their position:

  • a lock-up period of 12 months (for a Commercial Company) or 24 months (for a Pre-Commercial Company) shall be imposed on:
  1. controlling shareholders; and
  2. key persons (including founders, beneficiaries of WVR, executive directors and senior management, and key personnel responsible for its technical operations and/or R&D of its Specialist Technology Product(s) and lead developers of the core technologies of its Specialist Technology Product(s)) and their close associates;
  • a lock-up period of 6 months (for a Commercial Company) or 12 months (for a Pre-Commercial Company) shall be imposed on Pathfinder Sophisticated Independent Investors.


Securities subject to lock-up are those beneficially owned by such shareholder subject to the lock-up restriction as disclosed in the listing document (excluding those sold under an offer for sale contained in the listing document). An existing shareholder holding 10% or more of shares in the company should subscribe for shares in the IPO as a cornerstone investor, in which case the usual lock-up period (generally at least six months) would apply to such cornerstone investment.


Taking into account the significant funding needs of a Specialist Technology Company, the Stock Exchange proposes that any deemed disposal of securities by any of the persons named above during their respective lock-up period as a result of an allotment, grant or issue of new securities shall not be regarded as a breach of the lock-up restrictions, subject to the 6-month restriction period which applies to listed companies under Rule 10.08.


Continuing obligations

Not applicable

Until the Commercialisation Revenue Threshold is achieved:

  • disclosure in its interim and annual reports including:
  1. development progress of its Specialist Technology Product(s), if applicable
  2. the timeframe for, impediments to and any progress made towards achieving the Commercialisation Revenue Threshold;
  3. updates on any revenue, profit and other business and financial estimates as disclosed in its listing document, and any subsequent updates;
  4. summary of its R&D investment; and
  5. an appropriate warning statement that it may not achieve the Commercialisation Revenue Threshold.
  • shortened remedial period of up to 12 months for re-compliance with the sufficiency of operations requirement before delisting
  • restriction on effecting a transaction that would constitute a material change of business without prior consent of the Stock Exchange
  • identified with the stock marker “PC”



As with the existing listing regime for biotech companies, the Stock Exchange proposes to allow existing shareholders (including controlling shareholders) of a Specialist Technology Company to participate in its IPO, provided that the requirements for a minimum public float, minimum free float and minimum allocation to independent Institutional Professional Investors be complied with. As such, “Existing Shareholder Conditions” referred to in paragraph 4.20 of the Guidance Letter HKEX-GL85-16 would not apply to a Specialist Technology Company, and any allocations made to core connected persons will typically be granted by the Stock Exchange, subject to a Rule 9.09 waiver having been applied for by the company.


The existing requirements for listing of a company with a WVR structure shall remain unchanged, and Specialist Technology Companies applying to list with a WVR structure shall also comply with the requirements under the Rules relating to WVR.


No change is currently proposed to the scope of sponsors’ duties in the context of the listing of Specialist Technology Companies. Sponsors are required to adhere to the standard of conduct as set out in Practice Note 21 of the Rules and paragraph 17 of the Code of Conduct for Persons Licensed by or Registered with the SFC when carrying out its due diligence.


For further details, please refer to the Consultation Paper published by the Stock Exchange on



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Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice. Please contact [email protected] if you have any questions about the article.