Questions about Ant Group’s suspended IPO reach HK Legislative Council
About a month has passed since the planned IPO of Ant Group, the parent company of China’s largest digital payment platform, Alipay, was suspended, but the consequences of this suspension can still be felt. Hence, there is nothing astonishing that questions about the suspended IPO have reached Hong Kong’s Legislative Council.
Today, the Secretary for Financial Services and the Treasury, Mr Christopher Hui, replied to such questions in the Legislative Council.
The Government was asked to inform the Council:
whether it knows the details of the change in the regulatory environment of fintech in which the company operates; whether it has assessed if there were errors and omissions regarding the due diligence performed by the sponsors in respect of the company as well as the work undertaken by the Stock Exchange of Hong Kong Limited for vetting and approving the company’s listing.
The reply by Mr Hui was quite evasive. He noted that listing applicants and listed companies have to comply with the respective regulatory requirements of its place of incorporation, place of business operation and place of listing. If listing applicants or listed companies operate their business and/or list in multiple jurisdictions, they have to comply with the requirements of multiple jurisdictions.
The major principles adopted by the Listing Committee in approving listing applications include considering whether applicants are suitable for listing, their compliance of regulatory requirements, and whether sufficient disclosure of material matters have been made in the listing documents. If listing applicants are Mainland H-share companies, they must also obtain prior approval from the China Securities Regulatory Commission, Mr Hui noted.
Even after a listing applicant’s case has obtained the Listing Committee’s approval, the HKEX and the Listing Committee will still monitor whether it can comply with the requirements of the regulations on an on-going basis. Listing applicants will still be required to be responsible for assessing their businesses and the applicable regulatory requirements in order to ascertain whether there have been material changes in the company’s financial and trading positions as well as the relevant business and regulatory environment warranting notification to investors after the listing documents are published.
If necessary, the HKEX will enquire listing applicants and their sponsors and request the listing applicants to provide supplementary information on its prospectus as appropriate.
“The regulatory authorities in Hong Kong have been, and will continue to maintain effective regulatory communications with regulatory authorities in jurisdictions such as the Mainland”. Mr Hui said, adding that the listing application of Ant Group was also processed in accordance with the above-mentioned mechanism.
He explained that the main concern of the regulatory authorities is on whether the refund of subscription money is conducted in a fair and orderly manner.
“I notice that in refunding the subscription money to investors following Ant Group’s recent suspension of H-share listing, some banks and brokerage firms have decided to waive or reduce the interests payable by clients who had subscribed the shares through loans. We believe that every bank or brokerage firm will decide on the business strategy that best fits its respective circumstances having regard to its own commercial considerations”, Mr Hui said.
In fact, not all large-scale banks or brokerage firms have waived the relevant interest charges in respect of the Ant Group subscription applications. Some large banks have charged their clients on the relevant interests as usual, while some small and medium-sized brokerage firms have waived or reduced the charges. The relevant decision is therefore purely based on commercial considerations and does not necessarily relate to the scale of the banks or the brokerage firms.
“We have not seen any unfair competition so far”, Mr Hui concluded.