Hong Kong Stock Exchange to increase the profit requirement for listing eligibility to HK$80 million
and heighten scrutiny of suspicious IPO related practices
On 20 May 2021, the Hong Kong Stock Exchange published its conclusions to the Main Board Profit Requirement consultation paper. The originally proposed increase of 1.5 to 2 times the current profit requirement for listing eligibility faced strong opposition from market participants, which resulted in the SEHK settling for a gentler increase to HK$80 million, comprising HK$35 million for the most recent financial year and HK$45 million in total for the two preceding financial years. The change will take effect from 1 January 2022. This will be the first increase to the profit requirement since it was introduced in 1994.
In addition to lifting the threshold of the profit requirement, the Securities and Futures Commission and the SEHK said in a joint statement also published on 20 May 2021 that they will step up efforts to combat IPO-related malpractice seen in some recent new listings.