HKEX Launches Listing Mechanism Reforms: Proposes to Relax Weighted Voting Rights Listing Thresholds and Expand IPO Confidential Application Scope

Hong Kong Exchanges and Clearing (HKEX) plans significant reforms to the Listing Rules.

On March 13, HKEX released a consultation document seeking market opinions on a series of proposals aimed at enhancing the competitiveness of the Hong Kong stock market listing mechanism. The consultation period ends on May 8.

HKEX stated that this is the first phase of a review of listing mechanism competitiveness. The targeted reform suggestions aim to diversify the types of companies listed in Hong Kong, provide investors with more choices, and maintain sound investor protections.

The proposed reforms mainly focus on three core areas: optimizing different voting rights listing regulations, facilitating overseas issuers’ return to Hong Kong, and improving initial listing rules and arrangements. A total of ten specific measures have been proposed.

Voting Rights Ratio Can Be Increased to 20:1

This reform comprehensively optimizes HKEX’s criteria from three aspects: financial qualifications, voting rights ratios, and recognition of innovative attributes. It significantly lowers listing thresholds and broadens the scope of the制度, allowing more innovative companies to benefit.

Specifically, HKEX is relaxing restrictions on “dual-class share structures” (different voting rights). Previously, companies with different voting rights had strict financial requirements. Now, the financial thresholds are planned to be lowered. Additionally, HKEX intends to raise the maximum voting rights ratio from the current 10:1 to 20:1 (meaning management shares can have 20 times the voting rights of ordinary shares).

HKEX Listing Department Head Wu Jiexuan stated at a media briefing on March 13 that increasing the voting ratio from 10:1 to 20:1 will not harm minority shareholders’ interests. The 20:1 ratio applies only if the company’s market value is at least HKD 40 billion, and shareholders at listing hold at least 10% of shares with a market value of at least HKD 600 million. Additional checks are in place to ensure alignment with minority shareholders’ interests. Currently, companies with dual-class shares account for only 1.2% by the end of 2025, and these companies are subject to extra investor protection requirements.

Simplifying Overseas Issuers’ Secondary Listing Rules

For overseas-listed issuers, the reform focuses on optimizing eligibility for secondary listings and clarifying rules for converting to a main listing, significantly lowering the barriers for Chinese concept stocks and other overseas companies to return to Hong Kong.

Regarding secondary listings and conversions, HKEX suggests aligning the financial thresholds for companies with dual-class shares to those for main listings, and reducing the market cap threshold for dual-class secondary listings to HKD 6 billion. It also proposes revising the rules for converting to a main listing and providing clearer guidance, while seeking market feedback on further facilitation measures.

Improving Initial Listing Rules

In the area of initial listings, the reforms involve adjustments across multiple aspects, including company control, financial reporting, pathways for tech companies, and application procedures.

HKEX proposes expanding the scope of confidential submission of listing applications from only biotech, special tech companies, qualified secondary applicants, and certain exempted companies to all new applicants.

When HKEX and the Hong Kong Securities and Futures Commission (SFC) launched the “Tech Company Special Line” in May 2025, confidential submission was introduced as a supporting measure, initially limited to companies applying under Main Board Rules Chapter 18C (special tech companies) and Chapter 18A (biotech). These materials are only disclosed after passing the listing hearing, reducing risks of business secrets leaking and market interference.

Wu Jiexuan explained that this move treats all companies equally and aligns with practices in major exchanges like the US, UK, and Singapore. “Our experience over the past few years shows that confidential submissions do not compromise the quality of listing documents. Applicants must disclose their materials promptly after passing the hearing, giving investors ample time to understand the company before listing,” she said. Major international exchanges have similar practices, and HKEX aims for equal treatment, allowing all companies this option.

Wu also emphasized that HKEX recommends strengthening the rejection mechanism by publicly disclosing the sponsor’s name and all professional institutions involved in preparing the application, including lawyers, accountants, and auditors, to enhance deterrence and ensure the quality of listing documents.

She stated that HKEX reviews each application carefully and communicates thoroughly with sponsors. If documents do not meet standards, HKEX and the SFC have the authority to suspend approval or return the application. They will not approve substandard submissions.

Wu pointed out that the focus of regulators like the SFC is on the quality of sponsor applications, not the listed companies themselves. The quality of listed companies is fundamental to market prosperity. HKEX’s reforms and diversification of listing systems do not conflict with high-quality sponsor markets; past experiences show both goals can be achieved simultaneously.

(Source: The Paper)