SFC directs IPO sponsors to promptly conduct internal reviews to rectify serious deficiencies in the preparation of new listing documents

The Securities and Futures Commission (SFC) today set forth in a circular highly concerning issues related to serious deficiencies in the preparation of some listing documents, sponsors’ potential misconduct and significant mismanagement of resources amidst a surge in new listing applications in 2025 (Note 1).  

In reviewing recent listing applications, the SFC and The Stock Exchange of Hong Kong Limited (SEHK) identified a number of serious deficiencies in the preparation of listing documents and responses to regulatory comments as well as failure to attend to key regulatory processes at the offer stage. These shortcomings strongly suggest that some sponsors might not have a thorough understanding of the listing applicants, whilst others might have failed to perform reasonable due diligence before submitting listing applications and addressing regulators’ enquiries.

The SFC also noted serious resources issues on the part of some sponsors, including over-reliance on external professional parties to conduct specific tasks without adequate assessments of their competency and resources, insufficient capacity of sponsor principals to properly supervise transaction teams and participate in listing engagements, and a lack of staff with the requisite knowledge, skills and experience in Hong Kong IPOs to undertake sponsor work (Note 2).

The 13 sponsors that received a joint letter from the SFC and SEHK in December 2025 citing specific cases of concerns, as well as sponsors with strained resources, are required to complete comprehensive reviews on the concerns raised and on their resources available to conduct sponsor work, respectively, within three months.

For all sponsors, they are required to report to the SFC the ratio of active listing engagements undertaken to the number of appointed sponsor principals, and any staff engaged in IPO sponsor work who have not passed the required examination within prescribed timeframe. The SFC will also commence a thematic review on sponsors soon.  

For current listing applications, the SFC also warns in the circular that, where sponsors provide materially incomplete or unsatisfactory responses to regulators or where listing documents are considered unreasonably lengthy, the vetting process may be suspended. As at 31 December 2025, vetting of 16 listing applications had been suspended. In this connection, the SFC will notify its regulatory counterparts of the suspension of the vetting process.

Furthermore, sponsors that have designated any sponsor principal to simultaneously supervise or participate in six or more active listing engagements must provide the SFC with a viable rectification and resource plan and demonstrate a responsible approach to managing their resources. Given that certain sponsors have engaged individuals who have not met the eligibility criteria for passing the required examination, all individuals engaging in IPO sponsor work are now subject to tightened examination requirements. For sponsors whose work continues to be unsatisfactory, the SFC may restrict their business scope and the number of active listing engagements that they are permitted to handle.

“The gatekeeping role of sponsors in the listing process is critical to maintaining the quality of Hong Kong’s capital market and sustaining investor confidence in new listings that will hold up through all market cycles. That role may have been eroded in their eager pursuit of deal volume,” said Ms Julia Leung, the SFC’s Chief Executive Officer. “I urge all sponsors and the external professional parties involved in the listing application process to avoid overcommitment, and to discharge their obligations in a manner commensurate with the resources available to uphold the quality of their work as well as that of Hong Kong as a leading international fundraising centre.” 

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Notes:

1. The substandard conduct of sponsor work may constitute non-compliance with sponsors’ obligations under the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, Corporate Finance Adviser Code of Conduct, Sponsor Guidelines and the Listing Rules.  

2. The circular further reminds sponsors of their obligations to provide the regulators with accurate, complete and non-misleading information during the listing application process. Sponsors should also ensure that sufficient experienced staff are assigned to listing engagements, and that transaction teams are properly and adequately supervised by sponsor principals who possess the necessary capacity, capability, and competence.