The Hong Kong Securities Regulatory Commission is the source of regulatory power for issuance review.
Hong Kong's listing supervision has a three-tier structure. The Hong Kong Government, including the Financial Secretary and the Financial Services and the Treasury Bureau, is responsible for formulating the overall development direction and policies. As a statutory regulatory body, the Hong Kong Securities Regulatory Commission is responsible for implementing the Securities and Futures Markets Ordinance, promoting and encouraging the development of the securities and futures markets, and supervising and inspecting the performance of its functions and duties related to listing matters by the Stock Exchange. As the front-line regulator, the Stock Exchange is the main contact platform for listing applicants, and is responsible for examining and approving listing documents to ensure that the Hong Kong market is fair, orderly and transparent.
According to the Memorandum of Understanding on Listing signed between SEHK and CSRC, CSRC is the power source of issuance, examination and supervision, and the power of SEHK comes from the authorization of CSRC. The CSRC indirectly performs the supervision function of securities issuance and listing by supervising whether the stock exchange exercises its audit power according to law. At the same time, it has legal investigation power and law enforcement power, and reserves the final veto power to approve the decision. The purpose of the CSRC's delegation of part of the audit power to the stock exchange is to avoid the possible conflicts of interest arising from its dual roles as plaintiff and judge, and to ensure the fairness and independence of administrative decision-making.
The audit implements the double filing system.
In Hong Kong, stock issuance and listing are integrated, and enterprises that issue shares in Hong Kong must be listed on the Stock Exchange. In the audit of issuance and listing, the dual filing system is implemented, the stock exchange plays a leading role, and the CSRC only conducts a principled formal audit of company information disclosure.
Double filing system. According to the Securities and Futures Ordinance and its supporting rules, the so-called "double filing system" means that after submitting an application to the stock exchange, the applicant for securities issuance and listing must submit a copy to the CSRC for filing within one working day. Mainly applicable to the initial public offering (IPO) stage, there are almost no cases in which the double filing system is applied to the refinancing of listed companies. At the same time, according to the Code of Takeovers and Mergers of Companies, the takeover and merger of companies with changed control rights must be approved by the CSRC, and the Stock Exchange has no right to review. SEHK is a front-line regulator, directly facing issuers and intermediaries. The issuer forwards the application materials to the CSRC through the stock exchange, and the CSRC feeds back to the issuer through the stock exchange, asking the issuer to supplement the materials, and has the veto power over the issuance and listing.
Conduct a substantive review of the exchange. SEHK's audit focuses on whether the application materials comply with the provisions of the Listing Rules and the Companies Ordinance, aiming at ensuring investors' confidence in the market, and the core idea behind it is to protect the legitimate rights and interests of all shareholders. The IPO department under the listing section of the Stock Exchange actually undertakes the pre-trial function; Establish a listing Committee to exercise decision-making power on listing applications. The Listing Committee of the Stock Exchange consists of 28 members, of which 8 are representatives of investors' interests, 65,438+09 are representatives of various market entities (including internal representatives of the Stock Exchange), and the Chief Executive of the Stock Exchange is an ex officio member.
Judging from the auditing practice, the auditing standards of the Stock Exchange can be divided into two parts: the first part is the relatively objective listing conditions, which are mainly audited by the IPO department of the listing section. Its main board market can be divided into three types of listing indicators: first, pure profit indicators; The second is the market value plus income index; The third is the market value, income and cash flow indicators. As long as the issuer meets one of the indicators, it can apply for listing. Generally speaking, the three indicators reflect the requirements of the stock exchange for the sustainable operation ability and business scale of listed companies. In addition, the stock exchange also has certain standards for the issuer's corporate governance and shareholding structure. The second part is a subjective listing suitability requirement, which is mainly judged by the listing Committee. The listing rules of the stock exchange do not clearly stipulate the appropriateness of listing, but give policy guidance by publishing common problems and listing decisions. Among them, it is worth paying attention to the "Guidelines on Returning Some Listing Applications" issued regularly, summarizing the reasons for returning listing applications, which are generally mainly due to insufficient disclosure. In addition, the annual report of the Shanghai Municipal Committee will also give principled opinions on the appropriateness of listing, mainly involving substantive judgments on the appropriateness of listing, such as the continuous decline in performance, the large proportion of related party transactions, and the high proportion of single customer income.
Formal audit of Hong Kong Securities Regulatory Commission. The focus of the CSRC's audit is whether the application materials comply with the provisions of the Securities and Futures Ordinance and its supporting rules, whether the overall disclosure quality of the prospectus and the issuance and listing of securities are in line with the public interest.
The audit of the Hong Kong Securities Regulatory Commission mainly focuses on whether the information disclosure is complete and whether there are illegal acts such as fraud and illegal related party transactions. China Securities Regulatory Commission may reject the listing application if it considers that there is false or misleading information in the disclosure of relevant listing information. However, in practice, the CSRC and the Stock Exchange will fully communicate and coordinate, and it is rare for the CSRC to deny the decision of the Stock Exchange.
Balance between supply and demand is the basis of market-oriented operation
The characteristics of the stock issuance and listing system in Hong Kong can be summarized as follows:
Double filing system based on exchange. Under the dual filing system, SEHK, as a front-line supervisor, undertakes the main audit responsibility, while the CSRC is relatively detached, but reserves the final decision and has supervision authority over SEHK.
There is a certain substantive judgment in the audit of stock exchange's issuance and listing. As a market organizer, the stock exchange is highly concerned about maintaining its market position, so it also sets certain conditions for the issuer, and has a certain substantive judgment on the issuer's ability to continue to operate, which provides a moderate guarantee for the quality of listed companies.
The balance between supply and demand is the basis for the Hong Kong market to operate according to the principle of marketization. There is no queue for listing in Hong Kong market. The Hong Kong market is dominated by institutions, with retail investors accounting for about 25%. Generally speaking, the issue price and the issue rhythm are mainly determined by the game between investors and market players, and are determined by the relationship between market supply and demand, and the regulatory agencies do not interfere.