Procedures for buying a shell for listing
1. The acquirer acquires the controlling stake of the listed company (that is, more than 30% of the shares, or less than 35% of the shares that can give the acquirer the right to operate the listed company);
2. The acquirer injects new assets into the listed company and sells some assets that the acquirer has no intention to operate from the listed company to the original controlling shareholder;
3. After the purchaser acquires more than 30% of the equity of a listed company, it shall conduct a comprehensive acquisition of other shareholders of the listed company in accordance with the Acquisition and Merger Law of China Securities Regulatory Commission.
The first stage-transfer of controlling interest
Phase II-Asset Injection and/or Sale
Main benefits of shell listing
1. More flexible requirements for listed assets.
Some companies interested in listing have not fully met the new listing requirements in the listing rules for the time being, such as operating under almost the same management for three years, and their three-year profit level has not reached the level of HK$ 20 million in the latest year and HK$ 30 million in the previous two years; In this case, companies interested in listing can meet the requirements of the listing rules of the Stock Exchange without waiting for a long time, but can achieve the purpose of listing in a short time by acquiring a listed company.
2. Save preparation work and time.
If buying a shell for listing does not involve changing the company's main business or injecting or withdrawing a large amount of assets from the listed company, the acquirer can avoid doing a lot of work related to applying for listing, including three-year accounting report, evaluation report, reorganization, preparation of prospectus and profit forecast. Compared with direct application for listing, acquisition and listing can save several months of preparation and execution time.
3. Reduce the cost of intermediaries.
Because the workload and time involved in the acquisition and listing are less than those involved in the direct application for listing, the fees generally paid to intermediaries are relatively small. However, it should be noted that the holding premium of listed companies is relatively low when the stock market is in a downturn, but if the stock market is at its peak, the controlling shareholders of listed companies will often demand a higher holding premium, and the acquirer needs to consider whether this premium is reasonable and weigh the time and cost before making a decision.