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Conclusions to IPO price discovery and open market reform proposals
Having considered the consultation responses with 1,253 respondents from all sectors, the Exchange will adopt the following key changes to the listing requirements:
- IPO offering and pricing mechanisms:
- Minimum bookbuilding placing tranche:
Require an issuer to allocate at least 40% of its shares initially on offer in an IPO to its bookbuilding placing tranche.
- Allocation to public subscription tranche:
Allow a new listing applicant to choose either Mechanism A or Mechanism B as its IPO offering mechanism:
- Mechanism A: Replace the current allocation and clawback mechanism with prescribed allocations to the public subscription tranche as follows:
| Initial allocation | Demand for shares in the public subscription tranche in number of times (x) the initial allocation | |||
| ≥15x to <50x | ≥50x to <100x | ≥100x | ||
| Percentage of offer shares allocated to the public subscription tranche | 5% | 15% | 25% | 35% |
- Mechanism B: Introduce an alternative mechanism that requires a minimum 10% initial allocation (and a maximum of up to 60%) of offer shares to the public subscription tranche with no clawback mechanism.
- Open market requirements:
- Initial public float and free float:
Require issuers to meet the following minimum public float and free float requirements at the time of listing:
| Initial public float thresholds | Initial free float thresholds | |
| Issuers (not incorporated in Mainland China) with a single class of shares | Tiered percentage thresholds ranging between 10% and 25% depending on the market value of the relevant class of shares at listing | 10%, with a market value of HK$50 million (GEM: HK$15 million); OR HK$600 million in market value |
| H-share issuers with no other listed shares | ||
| A+H issuers | 10%; OR
HK$3 billion in market value |
5% with a market value of HK$50 million (GEM: HK$15 million); OR HK$600 million in market value |
The new requirements will come into effect on 4 August 2025 and apply to all issuers and all new applicants with listing documents published on or after that date.
Further consultation on ongoing public float proposals
In response to market feedback on the appropriate ongoing public float requirements, the Exchange is also launching a further consultation on detailed proposals on those requirements.
| Current requirement |
Proposed requirement | |
| Ongoing public float thresholds | ||
| · Issuers (not incorporated in Mainland China) with a single class of shares | Maintain at all times the percentage of public float prescribed at listing, i.e. 25% or any lower percentage prescribed at listing (the Initial Prescribed Threshold) | Maintain at all times: 1. The Initial Prescribed Threshold; OR 2. the Alternative Threshold of HK$1 billion in value and 10% public float |
| · H-share issuers with no other listed shares | ||
| · A+H issuers | H shares in public hands must have HK$1 billion in value OR 5% public float | |
| Public float shortfall | Breach of Listing Rules if public float falls below the applicable ongoing public float thresholds | |
| Consequence of public float shortfall | ||
| · Obligations upon breach | Obliged to restore public float and publish announcement | Obliged to restore public float and publish announcement; AND Restricted from taking actions that may further lower public float percentage |
| · Trading suspension | Exchange reserves right to direct trading suspension in case of a public float shortfall | No suspension solely due to a public float shortfall |
| · Delisting mechanism | Delisting if trading is suspended for 18 months (GEM: 12 months) | Impose stock marker if issuer has a significant public float shortfall; AND
Delisting if issuer fails to restore public float within 18 months (GEM: 12 months) |
| Public float reporting | Confirm public float sufficiency in annual reports | Confirm public float sufficiency in monthly returns and annual reports, with additional actual public float disclosure requirements |
The public comment period ends on 1 October 2025.
Please contact our Partner Mr. Rodney Teoh for any enquiries or further information.
This news update is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.