BEN & PARTNERS
Advocates and Solicitors
A BRIEF GUIDE TO CHOOSING YOUR LISTING DESTINATION
(A COMPARISON BETWEEN LISTING ON BURSA MALAYSIA AND HONG KONG STOCK EXCHANGE)
25 February 2015
BEN & PARTNERS
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INTRODUCTION
The business environment is dynamic with opportunities always
available to businessmen who have the adequate level of capital not
only to sustain its daily operational requirements but more
importantly, be able to capitalise on such opportunities to create
value for all stakeholders.
One of the options opened to any business is to tap the capital
markets for funds to support its growth initiatives be it through
organic means or via mergers and acquisitions. An initial public
offering (IPO) is an option to position the business to tap funds from
the capital market, given that cost of funds are cheaper with more
avenues to raise capital compared to sourcing of financing from the
traditional channels where personal guarantee is normally the norm.
A listed company with its inherent benefits such as, perceived to be
more transparent, visible to all stakeholders and acting as a
barometer for the worth of the business can be tapped further to
scale the business higher by exploiting the capital markets for
additional funds or even use the listed securities as an option to
finance mergers and acquisition.
This article is intended to give you an option to consider listing your
business on the Main Market in Malaysia and Hong Kong.
Should you have any query, we would be most pleased to address
them.
1
THE LISTING REQUIREMENTS

A brief comparison on the listing requirements between Malaysia and Hong Kong.

Malaysian IPO (Main Market) (MIPO) Hong Kong IPO (Main Board) (HKIPO)

(A) Financial Requirements (A) Financial Requirements

1. Profit Test (a) Profit after tax 1. Profit Test (a) PAT of at least
(PAT) of at least HK$50 million in the
RM20 million in the last 3 financial
last 3 to 5 financial years; and
years; and
(b) PAT of at least
(b) PAT of at least RM6 HK$20 million for
million for the most the most recent full
recent full financial financial year
year

2. Market (a) Upon listing total 2. Market (a) Upon listing total
Capitalization market capitalization Capitalization market
Test of at least RM500 and Revenue capitalization of at
million; and Test least HK$4 billion;
and
(b) Generated operating
revenue for at least (b) Total revenue of at
1 full financial year least HK$500 million
prior to submission for the most recent
audited financial
year

3. Market (a) Not applicable in 3. Market (a) Total market

Capitalization, Malaysia Capitalization, capitalization of
Revenue and Revenue and HK$200 million
Cashflow Test Cashflow Test upon listing; and
(b) Total revenue of at
least HK$500 million
for the most recent
audited financial
year; and;
(c) Positive cashflow
from operating
activities of at least
HK$100 million in
aggregate for the 3
preceding financial
years

4. Infrastructure (a) Right to build and 4. Infrastructure (a) Right to build and

A Comparison Between Listing on Bursa Malaysia And Hong Kong Stock Exchange 2
 Project operate Project operate
Corporation infrastructure Corporation infrastructure
Test project, with project Test project, with project
costs of not less than costs of not less
RM500 million; and than HKD1 billion;
and
(b) Remaining
concession period of (b) Remaining
at least 15 years concession of at
least 15 years

(B) Operating History and (B) Operating History and

Management Requirement Management Requirement

1. With an identifiable core business which it
has majority ownership and management
control
2. At least 3 full financial years of continuity
of substantially the same management
3. Applicant under the Capitalization Test
must be able to sustain the same
management since the commencement of
operations (if less than 3 full financial
years)
1. Ownership continuity and control for at
least the most recent audited financial
year
2. At least 3 preceding financial years of
management continuity
3. Applicant under the Market Capitalization
and Revenue Test, the Stock Exchange of
Hong Kong Limited (HKEx) will accept a
shorter trading record period if the
directors and management have sufficient
and satisfactory experience of at least 3
years of business and industry of the
applicant and the new applicant has
management continuity for the most
recent audited financial year

(C) Public Float (C) Public Float

1. At least 25% of total listed shares
(excluding treasury shares) must be held
by public
1. At least 25% of the issuers total issued
share capital must at all times be held by
the public
2. Where expected market capitalization is
over HK$10 billion upon listing, HKEx may
accept a lower percentage in between
15% and 25%

(D) Spread of Shareholders (D) Spread of Shareholders

1. Minimum of 1,000 public shareholders 1. Minimum 300 public shareholders

holding not less than 100 shares each
2. Not more than 50% of the securities in
2. On best effort basis allocate to Bumiputera public hands upon listing
investors 50% of the public spread
requirement

A Comparison Between Listing on Bursa Malaysia And Hong Kong Stock Exchange 3
As a summary to the above, the listing requirements for MIPO and HKIPO is relatively similar, save as
disclosed below:-

(A) Financial Requirement

(a) marginally higher PAT requirement for HKIPO and a shorter track record period;

(b) market capitalization, revenue and cashflow test is only applicable to HKIPO.

(B) Operating History and Management Requirement

(a) MIPO requires an identifiable core business which it has majority ownership and
management control, whereas HKIPO requires ownership continuity and control for at
least the most recent audited financial year;

(b) in addition to the management continuity which is applicable to both the MIPO and
HKIPO, for applicants under the Market Capitalization and Revenue Test HKEx will accept
a shorter trading record period if the directors and management have sufficient and
satisfactory experience of at least 3 years of business and industry of the applicant.

(C) Public Float

(a) HKEx may accept a lower percentage in between 15% and 25% if the expected market
capitalization is over HK$10 billion upon listing;

(D) Spread of Shareholders

(a) MIPO requires a minimum of 1,000 public shareholders holding not less than 100 shares
each, whereas HKIPO only requires a minim of 300 public shareholders;

(b) it is on the best effort basis to allocate 50% of the public spread to Bumiputera investors
for MIPO, whereas HKIPO has no such requirement.

Apart from the abovementioned, there are certain flexibility in respect of listing of mineral companies
in HKEx (for further information, please refer to our article LISTING OF MINERAL COMPANIES
IN HKEx).

A Comparison Between Listing on Bursa Malaysia And Hong Kong Stock Exchange 4
 IPO

LISTING PRICE EARNING

REQUIREMENTS RATIO

LIQUIDITY AND
OTHER
CONSIDERATIONS OF
MARKET

Above are the key considerations to be taken into account upon deciding your listing destination.

A Comparison Between Listing on Bursa Malaysia And Hong Kong Stock Exchange 5
CONCLUSION- WHY HONG KONG THE VENUE OF CHOICE?

HKEx is one of the largest stock exchanges in the world, has successfully raised a total equity funds
amounted to approximately HK$936 billion in 2014. As of 31 December 2014, HKEx (including the
Main Board and GEM) has 1,752 listed companies with an aggregate market capitalisation of over
HK$25 trillion.

Hong Kong is strategically placed in a high growth region and providing an ideal platform for issuers
to achieve exposure in the investors pools of the rapidly growing Peoples Republic of China.

Apart from the aforesaid, it is important to highlight on the advanced clearing and settlement
infrastructure in Hong Kong. The Hong Kong Monetary Authoritys US Dollar Clearing System allows
financial institutions in Hong Kong to settle US dollars transactions real time in the Asian time zone
against the delivery of HK dollars and thus reduces the foreign exchange settlement risk caused by
the time gap between the settlement of HK dollars and US dollars.

The development of the new Listing Rules for mineral companies via Chapter 18, together with the
proximity to resource markets, has undoubtedly increased the interest of the mining sector towards
HKEx.

Below are inter alia, companies with Malaysian assets and operations which have been listed in
HKEx:-

1. Media Chinese International Limited (Stock Code 685)

2. Tan Chong International Limited (Stock Code 693)

3. CVM Minerals Limited (Stock Code 705)

4. Genting Hong Kong Limited (Stock Code 678)

5. V.S. International Group Limited (Stock Code 1002)

6. Parkson Retail Group Limited (Stock Code 3368)

7. CAA Resources Limited (Stock Code 2112)

8. Nirvana Asia Limited (Stock Code 1438)

A Comparison Between Listing on Bursa Malaysia And Hong Kong Stock Exchange 6