Understanding HKEx’s listing rule changes | Hong Kong

Hong Kong’s stock exchange (HKEX) has implemented a series of reforms aimed at optimising IPO price discovery and open market requirements, effective since 4 August 2025.

Amid ongoing listing reforms at the HKEX, this article details the latest listing rule changes and current public consultations over more flexible public float requirements for IPOs.

Major changes

The new listing rule changes apply to all existing listed companies and new applicants with prospectuses published since 4 August 2025.

Rossana Chu
Partner
YYC Legal

Public float. Each Hong Kong listed company and new listing applicant must maintain an “open market” for their listed securities. As such, the HKEX requires a minimum percentage of listed securities to be held by the public (public float) – namely, shares not held by the listed company’s core connected persons (e.g. holders of 10% or more shareholding, directors and their close associates) and not financed by the listed group or any core connected person.

Before the implementation date, the required public float was 25% of the total number of issued shares, or 15-25% if the expected market capitalisation was over HKD10 billion (USD1.28 billion) at listing.

Now, the rule for companies with a single class of shares, or PRC companies without other listed shares, is:

• Public float requirement of 25% if the market value of all listed securities is HKD6 billion or less.
• If the market value is more than HKD6 billion and up to HKD30 billion, the public float must be the higher of (a) the percentage that would result in the market value of listed securities in public hands to be HKD1.5 billion at time of listing; and (b) 15%.
• For market value of above HKD30 billion, the public float must be the higher of (a) the percentage that would result in the market value of listed securities in public hands to be HKD4.5 billion at time of listing; and (b) 10%.
• If the market value significantly exceeds HKD45 billion, the HKEX may permit a lower public float, on a case-by-case basis.

Additionally, for PRC companies with other listed shares – such as A shares listed on a mainland stock exchange – H shares in public float must be 10%, or at least HKD3 billion, in market value at listing.

Free float. To foster the open market requirement, the HKEX also introduces a new concept of “free float” effective from the implementation date. It refers to securities available for trading upon listing, and normally means the securities held by the public and not subject to disposal restrictions.

1. For listed companies with a single class of shares or PRC companies with no other listed shares, the listed shares in free float must: (a) be at least 10% of the total issued shares with market value at listing of at least HKD50 million for the Main Board, and HKD15 million for GEM; or (b) have a market value of not less than HKD600 million at listing.
2. For PRC companies with other listed shares, the H shares in free float must: (a) be at least 5% of total issued shares in the class to which H shares belong (usually meaning H shares and A shares together) with market value at listing of at least HKD50 million for the Main Board, and HKD15 million for GEM; or (b) have a market value of not less than HKD600 million at listing.

IPO offering mechanism. At least 40% of the offered shares must be allocated to investors in the placing tranche (other than cornerstone investors). In respect of the public subscription tranche, the IPO applicant may select:

1. An initial 5% of offered shares allocated to the public subscription tranche, with allocation increasing to: 15% if demand in that tranche reaches 15 times but is less than 50 times; 25% if demand reaches 50 times but is less than 100 times; and 35% if demand hits 100 times or more; or
2. A minimum initial allocation of 10% and maximum of 60% of the offered shares to the public subscription tranche with no clawback mechanism.

Further consultation

The HKEX is now seeking public views on ongoing public float issues; specifically, proposing that all listed companies be subject to a more flexible ongoing public float requirement.

Apart from the new public float percentages now in effect, a potential alternative threshold on public float requirement could be at least HKD1 billion market value in public hands, and at least 10% of public float of issued shares of the same class as Hong Kong listed shares (or, for a PRC company with other listed shares, 5% of the PRC company’s total number of issued shares in the class to which H shares belong).

All listed issuers will have to confirm compliance with their ongoing public float thresholds in their monthly returns and annual reports.

Failure to meet the public float requirement will not require a listed company to suspend trading of its shares, but it must make announcements of the breach and its plan to restore the public float threshold.

A situation will be classified as a “significant public float shortfall” if: (1) the public float falls below 15% or, where a lower initial public float threshold is permitted at listing, below 50% of that threshold; and (2) the market value of public float shares is less than HKD500 million, or represents under 5% of the issuer’s total issued shares in the class of the listed shares.

In such cases, the HKEX will impose a special stock marker on the listed securities, with the issuer required to make additional disclosures.

A company with a significant public float shortfall failing to restore its public float within 18 months on the Main Board (or 12 months for GEM) will be delisted.

Rossana Chu is a partner at YYC Legal

YYC Legal
2803 & 2803A, China Resources Building
26 Harbour Road, Wanchai, Hong Kong
Tel: +852 2816 6888
Fax: +852 3797 3835
E-mail: rossana.chu@east-concord.com.hk
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