Hong Kong exchange amends float rules to strengthen city’s status as global finance hub

Hong Kong Exchanges and Clearing (HKEX) has amended its post-listing public float rules to give companies greater flexibility in managing capital while strengthening market transparency.\nThe bourse operator will allow listed companies to meet an alternative ongoing public float threshold, requiring at least 10 per cent of issued shares in the listed class and a market value above HK$1 billion (US$128.5 million).\nFor mainland China-listed firms, or A shares, their Hong Kong shares must represent at least 5 per cent of total issued shares or have a market value of at least HK$1 billion.\nThe initiatives aimed to provide greater flexibility and efficiency in transactions such as share repurchases, the HKEX said in an announcement on Wednesday after a two-month consultation that received 43 responses. The new requirements would take effect on January 1, 2026.\nCurrently, issuers must ensure at least 25 per cent of their issued shares are held by the public, though HKEX may accept a lower float of 15 per cent to 25 per cent for companies with an expected market capitalisation above HK$10 billion at listing.\n\nThe reforms were expected to boost market liquidity and attract more high-quality companies, reinforcing the overall competitiveness of the capital markets in Hong Kong, which hopes to reclaim the title of world’s largest market for new listings, according to market participants.\n“We applaud these measures for a tiered public float structure, which should help to enhance market liquidity by providing greater flexibility to issuers,” said Lyndon Chao, managing director of the equities and post trade division at the Asia Securities Industry and Financial Markets Association. The reforms should also support more large-cap companies and A+H share listings in Hong Kong, “further cementing the city’s role as a pre-eminent international financial centre”, he added.\nCompanies could adjust their equity structures more efficiently in response to market conditions and strategic priorities, which provided “much-needed flexibility in capital management”, said Edward Au, Deloitte China’s southern region managing partner.\nMeanwhile, HKEX would require all listed companies to regularly report their public float levels and disclose any shortfalls while restricting corporate actions for those that fell below the minimum threshold, according to its announcement.\nIssuers with significant shortfalls will be flagged with a “-PF” stock marker instead of facing immediate suspension, and would be delisted if they failed to restore sufficient public float within 18 months, or 12 months for GEM-listed firms. GEM is the exchange’s second board formerly known as Growth Enterprise Market.\n“The amended public float requirements provide greater flexibility for issuers to ensure an orderly process and also greater market transparency,” said John Lee Chen-kwok, vice-chairman and co-head of Asia coverage at UBS in Hong Kong. “This would further enhance the overall competitiveness for the Hong Kong market.”\n“The initiative strikes an appropriate balance – easing certain compliance constraints to stimulate vitality, while safeguarding market quality and investor protection through strengthened disclosure requirements and clearly defined delisting consequences,” Au said.\nHKEX’s head of listing Katherine Ng expected the reforms would complement the exchange’s earlier initiatives, including the treasury share regime and the automatic share buy-back framework.\n