The Hong Kong Stock Exchange ( HKEX ) has revised guidelines for initial public offerings ( IPO ) in a bid to strengthen the city’s position as a premier hub for IPOs.

The new rules, which took effect on August 4, address areas such as pricing, investor participation, and listing flexibility. It comes after the city witnessed a sevenfold year-on-year increase in IPOs in the first half of 2025, and the market is bound to maintain its strong momentum into the second half as more mainland Chinese companies seek listings in the city.

To enable issuers to mobilize more capital in the market, the new requirement exempts 5% to 10% of public shares from any lock-up restrictions for primary offerings. The six-month cornerstone lock-up period for cornerstone investors remains unchanged to “uphold investor commitment to offerings”, the HKEX says.

Listing costs are eased as fewer public shares are required. For non-mainland and H-share issuers, the requirement has been lowered from 15% to 10%. It’s even lower for companies with both A and H shares: the initial public float requirement has been reduced to 5% or HK$3 billion ( US$382 million ) in market value. This revision provides flexibility for large-cap issuers to manage retail share allocation and the associated costs.

To enhance the listing flexibility of issuers, the exchange has also revised downward the bookbuilding and public subscription tranche. While a 40% allocation threshold is required for bookbuilding, that for public subscription is reduced by half to 5%.

Clawback capped

Meanwhile, the public clawback allocation is capped at 35%. Before the revision, public allocation can reach as much as 50% for oversubscriptions of 100x.

While another public subscription mechanism secures at least 10% of the public tranche, clawback will not be triggered even if oversubscription occurs.

Aside from allowing issuers to gain greater control of their shares, the new rules simplify the listing requirements, facilitating fundraising in the market.

However, while large-cap issuers are likely to benefit from the eased requirements, public investors face tighter share allocations. According to global law firm Deacons, this could open the gate for “price-setting” investors, or a situation where a few cornerstone or bookbuilding investors could set the share price because they hold the bulk of the shares. This could lower the accuracy of the share price in reflecting market sentiment.

Further proposals

The exchange is proposing further changes to public float requirements for listed issuers to align them with a new IPO regime.

“The proposals offer issuers greater flexibility in conducting transactions for better capital management, while also introducing a robust deterrent against prolonged non-compliance – reinforcing shareholder protection,” says HKEX head of listing Katherine Ng.

These include providing more flexibility for large-cap issuers whose public float has a sufficiently high market value.

Instead of requiring suspension when the public float falls below the minimum requirement ( currently 15% or 10% ), the proposals introduce a mechanism to allow investors to identify issuers with significant public float shortfalls, while enhancing disclosure requirements.

The proposed changes also seek to strengthen the ongoing disclosure obligations for all issuers to provide the market with more granular, transparent information about their public float and share capital structure, Linklaters says.  

The exchange is running a two-month consultation to gather market feedback on the proposed revisions. Comments may be submitted until October 1.