Modelos teóricos sobre la resiliencia

Q25. Which, if any, of the proposals in paragraph 103* would achieve the objectives of enlarging the category of individuals qualified to act as Principals whilst not affecting the overall quality of sponsor work? Do you have alternative suggestions to address the issues?

* These proposals were:

(a) that the eligibility criteria for Principals be expanded by the SFC recognising relevant experience acquired overseas in comparable jurisdictions;

(b) that there be greater emphasis on experience in the area of due diligence either in Hong Kong or elsewhere; and

(c) that new examinations be introduced for Principals which test an applicant’s knowledge of sponsor work and the regulatory regime which governs the conduct of sponsors in Hong Kong.

Public comments

231. Respondents largely welcomed SFC’s initiative to consider proposals to expand the eligibility criteria for Principals. Many attributed the problem of a shortage in available Principals to the requirement for a Principal to demonstrate a “substantial role” in the capacity of a sponsor in at least two completed IPO transactions on the Main Board or the Growth Enterprise Market Board of the Stock Exchange in the five years

232. Many respondents considered that the proposal to recognise overseas experience offers the best opportunity to increase the pool of qualified individuals. In this respect, it is important for the SFC to identify jurisdictions which have comparable, relevant legal and regulatory standards to Hong Kong, e.g. the UK, the US, Australia and Singapore. A suggestion was made to select jurisdictions by referring to the Recognized

Jurisdiction Schemes under the Code on Unit Trusts and Mutual Funds.

233. Some respondents however commented that the value of overseas expertise should not take precedence over local experience given the uniqueness of the Hong Kong market and specific local rules and regulations. Furthermore there were concerns that the rules should not be relaxed to admit persons who do not have the appropriate level of experience and expertise as Principals.

234. A number of respondents proposed that the experience requirement should be relaxed and be supplemented by a new stringent examination relating to ethics, knowledge of sponsor work and the regulatory regime governing the conduct of IPO transactions in Hong Kong. That is to say an individual can either take the route of accumulating experience or passing a new regulatory examination in order to qualify as a Principal. They believed that if the new examination can strike an appropriate balance in terms of practicality, content and difficulty, the pool of eligible professionals can be enlarged without compromising industry standards. However a majority of respondents disagreed with the introduction of a new examination as a standalone requirement. 235. Comments were also made about the practical difficulties in meeting the required level

of experience. It has been increasingly difficult to satisfy the experience criterion in the current market climate where many IPO transactions which are close to completion (e.g. after the Listing Committee hearing) do not proceed due to unfavourable market

conditions. It was suggested that the SFC should consider experience gained from transactions that have matured to a certain stage, such as receiving in principle approval from the Listing Committee, in determining whether the individual has acquired the relevant experience.

236. Another problem stems from the limitation placed on the number of applicants that may attribute experience to the same transaction. Different individuals from different teams (e.g. country coverage, sector coverage, corporation finance coverage) may all have played a “substantial role” in the same transactions. Respondents sought clarification on what would be regarded as “substantial” involvement or whether the limit on the number of applicants who may be attributed to the same transaction may be removed.

SFC’s response

237. We note the views expressed by the respondents on expanding the eligibility criteria for Principals. We also agree that the value of overseas expertise should not take

precedence over local experience. With respect to the suggestion to introduce a new regulatory examination as an alternative to IPO experience, we are of the view that this, if implemented, should supplement rather than replace the current IPO experience requirements set out in paragraph 1.4 of the Sponsor Guidelines.

238. We propose to expand the eligibility criteria for Principals by accepting applications from individuals who can satisfy any one of the following three criteria:

(a) The individual has satisfied the requirements set out in the current Sponsor Guidelines;

(b) The individual:

(i) is highly experienced in the area of due diligence as a result of leading IPOs in Australia, the UK or the US;

(ii) is highly experienced in the area of corporate finance in respect of companies listed in Australia, the UK, or the US;

(iii) has completed a refresher course or special examination on ethics, sponsor work, and the legal and regulatory requirements governing the conduct of IPO transactions in Hong Kong within the six months

preceding the appointment by a sponsor as a Principal; and

(iv) is accredited to a sponsor that has at least one other individual who is approved as a Principal pursuant to the criteria (a) above.

or

(c) The individual:

(i) has participated actively and substantially in due diligence work in at least four completed IPO transactions in Hong Kong within the five years preceding the appointment as a Principal;

(ii) has acquired a minimum of five years of corporate finance experience in respect of companies listed on the Main Board and/or GEM Board of the Stock Exchange preceding the appointment as a Principal;

(iii) has passed a special examination on ethics, sponsor work and the legal and regulatory requirements governing the conduct of IPO transactions in Hong Kong within the six months preceding the appointment by a sponsor as a Principal; and

(iv) is accredited to a sponsor firm that has at least one other individual who is approved as a Principal pursuant to criteria (a) above.

239. We do not agree with the suggestion that we should refer to the Recognized

Jurisdiction Schemes under the Code on Unit Trusts and Mutual Funds in determining a list of comparable jurisdictions as this Code serves an entirely different purpose. Given the difficulty in determining which jurisdictions should be recognised as

comparable jurisdictions and to avoid any uncertainty in this respect we have decided to accept due diligence experience gained in the common law jurisdictions of Australia, the UK and the US.

240. We did not receive any negative comments about the proposal for a new regulatory examination for individuals seeking to be licensed as Type 6 representative or registered as a relevant individual and engaging in sponsor work. We therefore consider it appropriate to require licensed representatives or relevant individuals who intend to engage in sponsor work to pass an examination as a means to enhance their competency and to assure a required standard. They are required to pass the

examination not more than three years before and not later than six months after the date of their first engagement in sponsor work.

241. As an one off grandfathering arrangement, individuals who have engaged in sponsor work as a Type 6 licensed representative or relevant individual within the three years preceding the effective date of this amendment to the Sponsor Guidelines in at least one completed IPO transaction are exempted from this examination requirement. Individuals who have passed the examination or are exempted from taking the examination will not be required to take the examination again unless the individuals cease to be licensed or registered for Type 6 regulated activity for more than three years. A sponsor should therefore ensure that its staff who will be engaged in sponsor work should have satisfied or be exempted from the examination requirement and be able to demonstrate this to the SFC upon request.

242. With respect to respondents’ request for clarification of what would be regarded as “substantial role”, we maintain the view that the term should be interpreted according to its ordinary meaning. A person who has not had a leading supervisory role in an IPO transaction is generally not considered to have played a substantial role. This is in line with the SFC’s stance set out in Consultation Conclusions to the Consultation Paper on the Regulation of Sponsors and Compliance Advisers in April 2006 and in question 21 of the Frequently Asked Questions of the Sponsor Regime.

243. Apart from the factors set out in paragraph 1.3.3 of the Sponsor Guidelines the following matters will be taken into account in establishing whether an individual applying to be a Principal has been engaged in a substantial role in an IPO: (a) whether the individual was responsible for leading and supervising due

diligence and participated in due diligence meetings and discussions with the listing applicant and other professional parties appointed;

(b) whether the individual was responsible for making key decisions relating to due diligence work carried out by the transaction team and was fully aware of key risks involved;

(c) whether the individual was responsible for signing off for the sponsor firm that due diligence had been completed;

(d) whether the individual was responsible for certifying the referral of any issues arising from due diligence or issues raising reputational risks or material

changes in circumstances to the appropriate committee or senior management of the sponsor firm;

(e) whether the individual was responsible for determining the scope, review, and sign off of major documentation submitted to the regulators, e.g. the prospectus and formal notice of the IPO, Listing Application Form (Form A1), Sponsors’ Declaration and Sponsor’s Undertaking to the Stock Exchange and any waiver applications;

(f) whether the individual had a supervisory leading role in advising the client on IPO requirements under the Listing Rules including:

 advising the listing applicant on corporate and financial structure and compliance with the Listing Rules;

 formulating the listing timetable and related plans;

244. In light of conflicting information submitted by individuals for the purpose of substantiating their involvement in an IPO transaction and comments from some respondents that different individuals may have played a substantial role in the same IPO transaction, a sponsor should be required to submit to the SFC, within two weeks after the first day of dealing, an IPO team structure chart in respect of that particular listing countersigned by a Principal who supervised the transaction. The chart should show the reporting line of each of the licensed or registered staff within the team together with their respective names, business titles and responsibilities including in advising the listing applicant on the Listing Rules and the performance of due diligence. The SFC may seek further details from intermediaries and individuals to substantiate their submissions. This requirement has been reflected in revised paragraph 17.11(g). 245. With regard to respondents’ requests that we remove the limit on the number of

individuals who may attribute their substantial role to the same IPO transaction we would like to clarify that the leading supervisory role should normally be undertaken by a very limited number of senior management staff.

246. We understand that adverse market conditions may impact on an individual’s ability to meet the required level of IPO experience. We also note that it is common for an IPO transaction to be subject to numerous uncertainties, conditions, risks and issues that need to be addressed and resolved by the sponsor up to the point of listing.

Accordingly our view has been that an IPO should not be deemed to be complete simply because it has been through a hearing of the Listing Committee of the Stock Exchange or obtained an in-principle approval from the Listing Committee. An IPO would only be regarded as having been completed if the issuer has successfully been listed on the Stock Exchange.