Disclosure requirements regarding the application for IPO shares

By Mabel Lui and Esther Leung

As part of its Simplification Series to improve disclosures in IPO cases, the Hong Kong Stock Exchange (SEHK) has issued a new guidance letter (GL64-13) on improving disclosures in (i) the ‘How to Apply for Hong Kong Offer Shares’ (HTA) section in prospectuses and (ii) White and Yellow Application Forms for IPOs. The SEHK considers the guidance to be necessary because, at present, the HTA section in prospectuses tend to be too lengthy and legalistic, which makes it difficult for investors to understand, while the font size in Application Forms is too small for investors to read.

According to the SEHK’s guidance, Application Forms should: be printed on A3-sized paper; be easy to read, i.e. the font size should be at least an equivalent of 12 Times New Roman font; and contain a reminder to investors that they should read the forms in conjunction with the prospectus.

On the other hand, the HTA section in prospectuses should contain more detailed information on the application procedures for the IPO shares. However, according to the guidance letter, any duplication of information between the HTA section and the Application Forms should be avoided unless necessary…

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