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Pre-listed companies

Requirements under listing rule 3.A 15 (5) (Main board) / 6A.15 (15) (GEM board)

Are you planning to list on the Hong Kong Stock Exchange?  Other than performing financial audits, are you aware of the need to review internal controls? 

Listing Rule 3.A 15 (5) (Main Board) / 6A.15 (5) (GEM Board) in Hong Kong requires that

"having made reasonable due diligence inquiries, each sponsor must confirm that it has reasonable grounds to believe and does believe that the new applicant has established procedures, systems and controls (including accounting and management systems) ……

sufficient to enable the new applicant’s directors to make a proper assessment of the financial position and prospects of the new applicant and its subsidiaries, both before and after listing.”

Impact to sponsors
Under the listing rule requirements, sponsors are responsible for making internal controls due diligence inquires regarding listing applicants' financial procedures, systems and controls and to declare to the Hong Kong Stock Exchange as to the sufficiency of these processes. Sponsors can make use of information and assistance derived from a third party review in reaching such conclusions. However, third party review does not detract from sponsor’s responsibilities in any way.

 Impact to applicants
In order to comply with the listing rule requirements, both before and after listing, the applicants should establish procedures, systems and controls which are sound and adequate having regard to the obligations of the new applicant and its directors to comply with the listing rules and other relevant legal and regulatory requirements; and which are sufficient to enable the applicant’s directors to make a proper assessment of the financial position and prospects of the applicant and its subsidiaries.

How we can help - Internal controls reviews for pre-listed companies
In order to assist you meeting this challenge, we can provide internal controls review services to help sponsors and applicants establish the relevant corporate governance infrastructure applicants will need as new listed companies. We have developed a pamphlet that is intended to draw your attention to the compliance requirements and offer a solution to you. You are also welcome to contact the professionals identified in this pamphlet to arrange a meeting to discuss further.

For the above listing rule, please refer to the following links:

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