Jurisdiction - Hong Kong
Hong Kong – HKEx’s Guidance Letter On Placing Shares To “Connected Clients”.

16 December, 2014



Currently, the “placing guidelines” in Appendix 6 to the Hong Kong Listing Rules prevent IPO underwriters from placing shares to “connected clients” without the consent of the HKEx. HKEx guidance letter HKEx-GL75-14 clarifies that the HKEx will ordinarily give its written consent for allocation of shares to connected clients of the lead broker or any distributors subject to the conditions below, which may be modified if required:


  • The shares are held by the connected client on behalf of independent third parties.
  • The sponsor(s) and the bookrunner(s) confirm that the shares will not be offered to the connected clients on a preferential basis or, for connected clients who will hold shares on behalf of a cornerstone investor, that material terms of the agreement with the relevant investor are substantially the same as other cornerstone investors participating in the offering.
  • Details of the allocation to the connected clients, including the name of the connected clients and their relationship with the lead broker or distributor(s), and number and percentage of shares allocated to each connected client and lock-up arrangement (if any), will be disclosed in the allotment result announcement.


The HKEx has made it clear that no consent will be given for an allocation of shares to a
connected client for its proprietary account other than in exceptional circumstances that will be considered on a case-by-case basis.



For further information, please contact:


Christopher Betts, Partner, Skadden
[email protected]om

Edward Lam, Partner, Skadden
[email protected]

Alec Tracy, Partner, Skadden
[email protected]

Will Cai, Partner, Skadden
[email protected]


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