Hong Kong: Changes to listing rules may see flurry of resources IPOs
By ALB
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Tuesday, 25 May 2010
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New listing rules – the criteria in a nutshell
- To establish eligibility for initial listing under the new Chapter 18 rules, a company's main activity must be the exploration for and/or extraction of natural resources (including minerals and petroleum) and this must represent 25% or more of the total assets, revenue or operating expenses of the company and its subsidiaries
- The company must also have a portfolio of resources identifiable under the applicable international reporting standard, the JORC Code, NI 43-101 or the SAMREC Code (Minerals) or PRMS (Petroleum). Companies that have only inferred or prospective resources will not qualify
- The HKSE has also expanded its approved list of acceptable jurisdictions for listing applicants, and Australia and Canada (British Columbia and Ontario) are now included
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Changes to listing rules for mining and petroleum companies may pave the way for a flurry of IPOs in Hong Kong and provide a lucrative avenue through which these companies can raise capital in Asia.
"The new rules, which take effect on 3 June [2010], ensure that investors are provided with material, relevant and reliable information that meets globally recognised standards," said Fred Kinmonth, a partner with Minter Ellison in Hong Kong who advised the HKSE on the amendments. "Eligible companies may now apply for a primary or secondary listing on the HKSE under rules that are clear and comprehensive.”
The new rules set out disclosure obligations and standards for reporting resources and reserves, for valuing mineral and petroleum assets, and for the qualifications and experience of technical experts. The changes are expected to reinforce Hong Kong’s attractiveness as a listing location, and Kinmonth said that a number of mining and petroleum companies from resource-rich countries like Australia and Canada are already expressing interest in launching Hong Kong offerings.
"Given the capital-intensive nature of mining, mineral and petroleum companies seeking capital to grow are increasingly looking to the HKSE and the HKSE now has a solid set of rules to encourage that interest," said Kinmonth.
Despite the financial crisis, 2009 was something of a bull year for the HKSE: it led the world in terms of IPO funds raised (US$32bn) and ranked fourth in total funds raised behind the New York, Euronext, London and Australian stock exchanges.
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