1 To see SFC’s Consultation Conclusions on the Consultation Paper on Possible Reforms to the Prospectus Regime in the Companies Ordinance issued in September 2006, please click here. 

 

2 Under the proposal, public investors would be able to take legal action against sponsors (among others) in connection with untrue statements in a prospectus. It would also enable prosecutions of sponsors in serious cases. 

 

3 In the consultation paper, the SFC noted that it has been argued that sponsors may already be subject to civil and criminal liability under the Companies Ordinance for untrue statements in prospectuses, as they may fall under the definition of “promoters” (who are subject to civil liability) or a person “who has authorized the issue of the prospectus” (who are subject to civil and criminal liability).  However, there is currently no case law in Hong Kong addressing whether sponsors are subject to these provisions.

 

4 The current requirement under the Listing Rules of the Hong Kong Stock Exchange (Listing Rules) is for at least one sponsor to be independent of the 

applicant.

 

5 To qualify as a Principal, an individual must, inter alia, demonstrate that in the five years immediately preceding his appointment as a Principal, he has played a “substantial role” in advising listing applicants, in the capacity of a sponsor, in at least two completed IPO transactions on the Main Board or the GEM Board of the Stock Exchange.  

 

6 To demonstrate reasonable reliance on the experts, including accountants and valuers, the proposed paragraph 17.6(g) of Code of Conduct sets out certain typical steps a sponsor should perform.