LISTING OF DEPOSITARY RECEIPTS

Advantages to Issuers in listing HDRs

• opportunity to raise funds and access to diversified investor base;

• HDRs are both retail and institutional investors;

• a practicable alternative for listing in Hong Kong where listing of physical shares may not be feasible;

• a convenient means to “resize” the issue in Hong Kong where the issuer’s shares are of a size not customarily used in Hong Kong.

HDRs, Hong Kong Depositary Receipts, are securities issued by a depositary bank representing underlying shares of a corporation.

Key Features of HDRs

• All local or overseas companies fulfilling the Main Board listing requirements can apply to list by way of HDRs, provided that their shares are not already listed on the Stock Exchange of Hong Kong;

• for HDRs, the same listing regime as for the listing of shares on the Exchange’s Main Board applies;

• HDR issuers shall appoint a depositary bank and enter into a depositary agreement;

• HDR issuers have to maintain a register of HDR holders in Hong Kong via an approved share registrar;

• HDRs are in scrip-form, i.e. a paper-based system.

HDRs listing requirements

1. Financial requirements

The companies must fulfill one of the three financial criteria:

Option 1 — Profits test

• Profits of HK$50 mil (US$6.4 mil) in last 3 years (with HK$20 mil (US$2.6 mil) in the most recent year and an aggregate HK$30 mil (US$3.8 mil) in the two preceding years).
• Market capitalization of at least HK$200 mil (US$26 mil) at the time of listing.

Option 2 — Market capitalization/Revenue test

• Market capitalization of at least HK$4 billion (US$513 mil) at the time of listing.
• Revenue of at least HK$500 mil (US$64 mil) for the most recent audited financial year.

Option 3 — Market capitalization/Revenue/Cash flow test

• Market capitalization of at least HK$2 billion (US$256 mil) at the time of listing.
• Revenue of at least HK$500 mil (US$64 mil) for the most recent audited financial year.
• Positive cashflow from operating activities of at least HK$100 mil (US$13 million) in aggregate for the three preceding financial years.

2. Corporate requirements

• 3 financial years under substantially the same management,
• ownership continuity for the most recent financial year.

3. Procedure requirements

• Minimum public float of at least 25% of the issuer's total issued share capital.
• A new applicant must appoint a sponsor.

Listing Fees

The same scale as in the listing of shares applies to HDR issuers:

Initial listing fees — ranges from US$19000 to US$84000.
Annual listing fees — ranges from US$18000 to US$153000.