Subject

Key requirements

Commercial Company

Pre-Commercial Company

1. Qualifications for listing

Minimum expected market capitalisation upon listing

HK$8 billion (“bn”)

HK$15 bn

Revenue

Commercialisation Revenue Threshold

No requirement

R&D

Engaged in R&D

for at least three financial years prior to listing

R&D investment constitutes at least 15% of the total operating expenditure for each of the three financial years prior to listing

R&D investment constitutes at least 50% of the total operating expenditure for each of the three financial years prior to listing

Track record, management and ownership continuity

Operation in its current line of business under substantially the same management for at least three financial years prior to listing (a shorter trading record period may be accepted in exceptional circumstances) with ownership continuity for at least 12 months before listing

Third-party investment

Sophisticated Independent Investors:

1. must not be its core connected person (including a controlling shareholder but excluding a substantial shareholder connected only by virtue of its shareholding size in the company, however any shares subscribed by existing shareholders at IPO will not be counted); and
2. must be a sophisticated investor who meets any of the indicative size thresholds or qualification requirement (see examples below).

Examples of those generally considered by the Stock Exchange as Sophisticated Independent Investors include:

• an asset management firm with assets under management (“AUM”) or a fund with a fund size of at least HK$15 bn
• a company having a “diverse” investment portfolio size of at least HK$15 bn
• an investor of any type above with an AUM, fund size or investment portfolio size (as applicable) of at least HK$5 bn derived primarily from Specialist Technology investments
• a key participant in the relevant upstream or downstream industry with substantial market share and size, as supported by appropriate independent market or operational data

Minimum investment requirements:

It must have received meaningful investment from Sophisticated Independent Investors. The following will generally be considered as “meaningful investment”:

• investments from at least two Sophisticated Independent Investors for at least 12 months prior to the listing application date, each holding such amount of shares or securities convertible into shares equivalent to 5% or more of its issued share capital as at the listing application date and throughout the prior 12-month period (“Pathfinder Sophisticated Independent Investors”); and
• at least the following aggregate investment from all Sophisticated Independent Investors upon listing of:

Additional conditions for listing

Not applicable

• demonstrate a credible path in commercialisation of its Specialist Technology Product(s) to achieve the Commercialisation Revenue Threshold, including any potential funding gap and plans for further financing
• have sufficient working capital available (including the expected IPO proceeds) to cover at least 125% of its group’s costs (which must substantially consist of general, administrative and operating costs, and R&D costs) for at least 12 months from the listing document date

and disclose the above in its listing document

2. IPO requirements

More robust price discovery process

• allocate at least 50% of the total number of shares offered in the IPO (excluding any shares to be issued pursuant to the exercise of any over-allotment option) to independent Institutional Professional Investors (namely, those within paragraphs (a) to (i) of the definition of “professional investor” in section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance but excluding existing shareholders and any of their close associates, and core connected persons of the company) in the placing tranche
• amended initial allocation and clawback mechanism as follows:

Free float and offer size

• minimum free float (i.e. shares not subject to any disposal restrictions): HK$600 million upon listing;
• offer size: the listing should be accompanied by an offer of a “meaningful” size (including both the placing tranche and the public subscription tranche), subject to approval by the Stock Exchange

Disclosure(s) in the listing document

• pre-IPO investments, reasons for any material fluctuation in valuation, and cash flows
• key aspects of its business model and details of the Specialist Technology Product(s), such as technical capabilities, commercialisation status and prospects
• R&D and expertise
• industry-specific information
• intellectual property
• warning statement that it is a Specialist Technology Company and any investment in its securities may give rise to further risks (compared with companies in traditional industries)

Not applicable

Additional disclosure requirements:

• the R&D stage for each Specialist Technology Product
• key stages and milestones for its Specialist Technology Product(s) to achieve the Commercialisation Revenue Threshold
• all relevant risks as regards commercialisation of each Specialist Technology Product
• warning statement drawing investors’ attention to the risks that:

1. its Specialist Technology Product(s) may not commercialise;
2. it may not generate sufficient revenue to sustain its operations after listing; and
3. it may fail due to a lack of available funds.

3. Post-IPO requirements

Lock-up period

Ranging from 6 to 12 months

Ranging from 12 to 24 months

Such lock-up period shall continue irrespective of whether such persons cease to hold their position:

• a lock-up period of 12 months (for a Commercial Company) or 24 months (for a Pre-Commercial Company) shall be imposed on:

1. controlling shareholders; and
2. key persons (including founders, beneficiaries of WVR, executive directors and senior management, and key personnel responsible for its technical operations and/or R&D of its Specialist Technology Product(s) and lead developers of the core technologies of its Specialist Technology Product(s)) and their close associates;

• a lock-up period of 6 months (for a Commercial Company) or 12 months (for a Pre-Commercial Company) shall be imposed on Pathfinder Sophisticated Independent Investors.

Securities subject to lock-up are those beneficially owned by such shareholder subject to the lock-up restriction as disclosed in the listing document (excluding those sold under an offer for sale contained in the listing document). An existing shareholder holding 10% or more of shares in the company should subscribe for shares in the IPO as a cornerstone investor, in which case the usual lock-up period (generally at least six months) would apply to such cornerstone investment.

Taking into account the significant funding needs of a Specialist Technology Company, the Stock Exchange proposes that any deemed disposal of securities by any of the persons named above during their respective lock-up period as a result of an allotment, grant or issue of new securities shall not be regarded as a breach of the lock-up restrictions, subject to the 6-month restriction period which applies to listed companies under Rule 10.08.

Continuing obligations

Not applicable

Until the Commercialisation Revenue Threshold is achieved:

• disclosure in its interim and annual reports including:

1. development progress of its Specialist Technology Product(s), if applicable
2. the timeframe for, impediments to and any progress made towards achieving the Commercialisation Revenue Threshold;
3. updates on any revenue, profit and other business and financial estimates as disclosed in its listing document, and any subsequent updates;
4. summary of its R&D investment; and
5. an appropriate warning statement that it may not achieve the Commercialisation Revenue Threshold.

• shortened remedial period of up to 12 months for re-compliance with the sufficiency of operations requirement before delisting
• restriction on effecting a transaction that would constitute a material change of business without prior consent of the Stock Exchange
• identified with the stock marker “PC”