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Hong Kong SFC Found Serious Deficiencies in IPO Sponsors Work

Hong Kong’s Securities and Futures Commission (SFC) have uncovered serious deficiencies and instances of non-compliance in the sponsors’ work done for initial public offering (IPO) transactions.  A review of work was done from 2013 to 2017 on 31 licensed corporations (LC), with some sponsors failing to take reasonable steps to follow up on their due diligence despite obvious red flags, indicating poor professional judgement and a lack of professional scepticism.

” Hong Kong SFC found serious deficiencies in IPO sponsors Work “

SFC highlighted some sponsors had failed to maintain effective Chinese walls to prevent the flow of confidential information between the sponsors and related LCs. In some cases, information (not publicly available) relating to the listing applications was passed from the transaction teams to staff from related LCs, before approvals were obtained.

Since 2013, 44 listing applications were returned or rejected.  SFC will be conducting more frequent inspections and supervisory actions on sponsors with a of history of returned or rejected listing applications.  Between 2009 and 2016, Hong Kong is the world’s largest IPO market (funds’ raised) in 5 of the 8 years.  In 2016 alone, HK$195.3 billion ($24.88 billion ; XR: 7.85) was raised.

Learn more: Report on the Thematic Review of Licensed Corporations Engaged in Sponsor Business


Ashley Alder, SFC’s Chief Executive Officer:

“Sponsors and their senior executives are reminded to comply with the expected standards and the relevant codes, rules and regulations in carrying out their work.  The SFC will not hesitate to take enforcement action against those responsible for failing to do so.”

Source: Securities and Futures Commission | The leading financial website for financial professionals, professional investors and HNW investors. Covering capital markets, investments and private wealth in Asia. How do you invest $3 million to $300 million? How do you manage $20 million to $3 billion of assets? Quicklinks: Caproasia Access | TFC | Caproasia | Jobs

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