Traditionally A1 filings mark the first formal step in the Hong
Kong listing process and are
thereby submitted at the beginning of the IPO
It is feared that the move might delay A1 filings to later
in the IPO process and that criminal liability may be
applicable in the filing.
Speaking at IFLRs Asia Capital
Markets Forum, Morrison & Foersters Venantius Tan
explained that the new rules required the sponsor to ensure
that directors understood their responsibilities under the
listing rules, that the issuer met the requirements under the
listing rules and that the prospectus did not contain
Moreover they also suggest that sponsors have criminal
liability for any untrue statements in the prospectus, Tan
Another panelist said that the A1 filing was considered a
big milestone for the issuer, but that under these proposed
regulations all sorts of things would need to be done. He
predicted that the A1 filing was going to happen much later
in the process, and it would take some time.
Tan commented that publicly releasing the A1 filing
front-loads all the work for deal execution. The proposals
suggest that the prospectus must be substantially complete
when its submitted to the Hong Kong stock exchange
(HKEx), rather than an advanced draft that may be subject to
Its how you would file a registration
statement in the US: as a done deal ready to go
effective, he said.
Aside from adding criminal liability for statements in the
A1 filing, the SFCs proposed sponsor regulations say
that a sponsor that steps out of a deal must act as a
whistleblower and explain to the HKEx why they stepped
Sponsors will be in a very difficult position when
they choose not to proceed with a deal, especially since
different banks have different levels of risk appetite,
Tan said. What is acceptable for once sponsor may not
be for another sponsor.
Moreover Tan highlighted some disclosure issues that will
need to be resolved.
Previously some issuers didnt want certain matters
disclosed in the prospectus, so counsel deferred. However
they highlighted the issue in the listing application for the
attention of the HKEx, who they knew would ask that the
matter be disclosed in the prospectus.
That practice of relying on HKEx to force disclosure must
stop after A1 filings are public.
But Mark Dickens, head of listing for HKEx said that he
did not believe that HKEx would publish its comments on the
A1 filing immediately; instead it will probably follow the
SEC and release comments after the deal is complete.
Well be over-commenting until the industry
understands regulatory requirements, and some of these
comments could be embarrassing in the middle of a deal,
However Dickens also warned that the market will take time
to adjust to the regulations. Theres going to be
an adjustment period, he said. Im not an
optimist that this will all work smoothly on day
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