The Hong Kong Securities and Futures Commission has instructed the sponsoring agents of listed companies to promptly conduct internal reviews to correct serious deficiencies in the preparation of prospectuses.

On January 30th, the Securities and Futures Commission (SFC) of Hong Kong issued a circular expressing high concern over issues arising during the surge in new listing applications for the year 2025, including serious deficiencies in the preparation of some listing documents, misconduct by sponsors, and severe mismanagement of resources. Upon reviewing recent listing applications, the SFC and the Hong Kong Stock Exchange found serious deficiencies in the sponsor's preparation of listing documents and responses to regulatory comments, as well as failure to properly handle key regulatory processes during the subscription stage. These issues indicate that some sponsors may not have a thorough understanding of the listing applicants, and other sponsors may not have conducted reasonable due diligence before submitting listing applications or responding to regulatory queries. The SFC also noted serious resource issues among some sponsors, including excessive reliance on external professionals to perform certain tasks without fully assessing their competence and resources, lack of sufficient supervision by key personnel of the trading team and involvement in listing engagements, and lack of personnel with the necessary knowledge, skills, and experience in Hong Kong initial public offerings to undertake sponsor duties. Thirteen sponsors, as well as sponsors facing resource constraints, who received a joint letter from the SFC and the Hong Kong Stock Exchange in December 2025 highlighting specific cases of concern, must conduct a comprehensive review of the issues raised and their resources available for sponsor work within three months. All sponsors must report to the SFC the ratio of key personnel responsible for active listing engagements to the total number of sponsors appointed, as well as the status of any personnel involved in initial public offering sponsor work who have not passed the required exams. The SFC will also conduct thematic inspections of sponsors. With regards to existing listing applications, the SFC warned in the circular that if a sponsor's response to regulatory authorities is seriously lacking or not credible, or if the listing documents are unreasonably lengthy, the project review process may be suspended. As of December 31, 2025, the review process for 16 listing applications had been suspended. The SFC will inform its regulatory peers about the suspension of the review process. Furthermore, sponsors who oversee six or more active listing engagements simultaneously must provide the SFC with feasible correction and resource plans, as well as responsible resource management schemes. Given that some individuals hired by sponsors do not meet the qualifications for required exams, individuals involved in initial public offering sponsor work must now comply with stricter exam regulations. For sponsors whose performance falls below standards, the SFC may restrict their business scope and the number of active listing engagements they can handle. Ms. Leung Fung Yee, Chief Executive Officer of the SFC, stated, "The role of sponsors in the listing process is crucial for maintaining the quality of Hong Kong's capital market and investor confidence in new stock listings, enabling the market to remain robust in different cycles. However, some sponsors may have compromised this important role while chasing transaction volume. I urge all sponsors and external professionals involved in the listing application process not to take on excessive responsibilities and to take on responsibilities that match their own resource level to ensure the quality of their work and uphold Hong Kong's reputation as a leading international fundraising center."