The Float Guide - Deacons

1 The Float GuideHow to Float a company on the Hong Kong Stock ExchangeWhile every effort has been made to ensure the accuracy of the information contained in this publication, it is for general guidance only and should not be treated as a substitute for specific advice. If you would like advice onany of the issues raised, please speak to theauthors, Rhoda Yung and RonnieBow, whosecontacts are listed on the contacts law is stated as at 15 March2014. Deacons 2014 ABOUT DEACONSD eacons is Hong Kong's premier independent firm. We provide an extensive range of legal and commercial services to local and international corporations. With over 160 years of experience in providing legal services, our clients are assured of the integrity and stability of one of the region's oldest and most respected law was the first firm to be granted three licences to operate representative officesin Mainland China.

2 We currently have representative offices in Beijing, Guangzhou and Shanghai where our lawyers have extensive expertise, experience and contacts in the PRC principal service areas include Corporate Finance & Capital Markets, M&A and Private Equity Investment, Corporate Commercial, Private Equity & Venture Capital, Financial Services, Compliance Services, Insurance, Human Resources & Pensions, Taxation, China Trade & Investment, Company Formation & Corporate Services, Banking & Finance, Insolvency & Restructuring, Intellectual Property, Patents & Designs, Communications & Technology, Entertainment & Media, Property, Litigation and Construction & CORPORATE FINANCE PRACTICED eacons Corporate Finance Practice Group is one of the market leaders in the Hong Kong equity and debt capital markets.

3 We ranked number onein terms of advising on the most number of successful new listings in Hong Kongin 2013 (a total of 11 successful new listings in Hong Kong, representing 10% of all the new listings in Hong Kong for the year). In the same year, we were also involved in 6takeovers-related transactions involving Hong Kong listed practice group currently comprises eightpartners, one consultant and over40 other fee earners, who are qualified and, in some cases, have practised in different jurisdictions. We have extensive experience in all types of corporate finance, equity and debt capital markets, structured products and regulatory work. In addition to new listings and takeovers-related transactions, we have also demonstrated a proven ability to handle major and complex transactions including secondary issues, public and private company mergers and acquisitions, private equity, corporate restructurings, debt financing, bond issues (including sovereign bond issues), cross-border and local joint venture and other commercial transactions.

4 ContactsFor more information about our Corporate Finance practice, please contact:Mr. Ronny Chow Tel: (852) 2825 9435Ms. Eugina Chan Tel: (852) 2825 9786Mr. Alexander Que Tel: (852) 2825 9770Ms. Rhoda Yung Tel: (852) 2825 9624Ms. Sabrina Fung Tel: (852) 2825 9478Mr. Kevin (852) 2825 9229Mr. Ronnie BowMr. Kelvan (852) 2825 9793 Tel: (852) 2825 9279Mr. Simon Lai (852) 2825 533011/15 Deacons 2015 For further information please email us: or visit our website: | 1 INTRODUCTION Floating a company marks a significant milestone in the company s to the market statistics published by the HKEx,as at 31 December2013, 1,451companies were listed on the Main Board of the HKExand 192companies were listed on the Growth Enterprise Market of the HKEx.

5 The HKEx's securities market has placed in the top five among global exchanges in terms of IPO funds raised for 12 consecutive years since a gateway to the rapidly growing market of MainlandChina and equipped with a well-established and sound regulatory framework and settlement system, the HKExhas been one of the most sought-afterplatforms for floating a FloatGuideaims to provide you with an overview ofthe Hong Kong regulatory requirements and process forlisting a company s equity securities on the HKEx as at 15 March2014 only and should not be relied upon as legal advice. The information contained in this Float Guide is forgeneralguidanceand may not apply in a specific situation.

6 There are also constant changesto the regulatory requirements and practices from time to time, which may affect the applicability of this Float Guide . No representation or warranty, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information contained in this Float Guide andDeacons accepts no responsibility for any errors or omissions this Float Guide may contain. Detailed legal advice should be soughtin respect of any specific issues. If you wouldlike advice on any specific issues, please feel free to contact our contacts listed on the front page of this Float | 2 ContentsDefinitions3 Executive Summary4 Listing requirements6 Working parties11 Listing timetable13 Due diligence and verification14 The Prospectus17 Prospectus vetting process20 Structure of an offering21 Underwriting22 Marketing and publicity restrictions24 Special listing requirements27 Post listing compliance29 Conclusion32 Page | 3 DEFINITIONSA pplication Proofa draft prospectus that is required to be substantially complete and is submitted to the HKEx together with the listing applicationCASBEC hina Accounting Standards Committee of the China Ministry of FinanceCIScollective

7 Investment schemesCompanies (Winding Up and Miscellaneous Provisions)OrdinanceCompanies(Winding Up and Miscellaneous Provisions)Ordinance(Chapter 32 of the Laws of Hong Kong)GEMG rowth Enterprise Market of the HKExGEML isting RulesRules Governing the Listing of Securities on GEMHDRHong Kong depositary receiptsHKExThe Stock Exchange of Hong Kong LimitedIPOinitial public offeringListing RulesMain Board Listing Rules and GEM Listing RulesMain BoardMain Board of the HKExMain BoardListing RulesRules Governing the Listing of Securities on the HKExPHIPPost Hearing information PackPN21/PN2 Practice Note 21 of the Main Board Listing Rules/Practice Note 2 of the GEM Listing RulesPRCP eople s Republic of ChinaRecognised JurisdictionsHong Kong, the PRC.

8 Bermuda and the Cayman IslandsSecurities and Futures OrdinanceSecurities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)SFCS ecurities and Futures Commission of Hong KongWPIPWeb Proof information PackPage | 4 EXECUTIVE SUMMARY WHAT ARE THE KEY LISTING REQUIREMENTS?There are a number of listing methodson the HKEx: offer for subscription, offer for sale, placing, introduction and in the case of Main Board listing, transfer from GEM. Some of the listing methods may overlap to allow different offering are a number of basicrequirements for a primary listing of equity securities on the Main Board or GEM, including those relating to financial requirements, acceptable jurisdictions, suitability for listing, ownership and management continuity, accounts, management presence and integrity, market capitalisation, public Float , shareholder protectionand shareholder spread.

9 In practice, some of these requirements may be waived by the HKEx but others are strictly enforced and less likely to be ARE THE WORKING PARTIES?The sponsor is usually one of the first and most important working parties that the listing applicant has to engage, as the sponsor will provide corporate finance advice for the listing applicant, assist the listing applicant in appointingother working partiesand supervise and coordinate works of all the parties involved in the IPO process. Other working parties typically involved in a Hong Kong IPO include the global coordinator, bookrunner and lead manager (who may also be, or affiliated with, the sponsor), the underwriters, the legal advisers, the reporting accountants, valuers, receiving banks, share registrar and transfer agent, internal control advisers, industry expert, financialprinter, public relations advisers, compliance adviser and (for issuance of HDR only) LONG DOES THE IPO TAKE?

10 A relatively straight-forward and well-organised Float can be completed in 4 to 6months. The complexity of the structure and issues (both legal, regulatoryand commercial) involvedwill dictate the time required to complete the DO DUE DILIGENCE AND VERIFICATION INVOLVE?Misrepresentations or misleading statements in the listing documents such asprospectus or, possibly, publicity materials to subscribe for shares in the issuer, attract civil and criminal liabilities under the Hong Kong regulatory regime. Careful due diligence and verification of statements disclosed, supported with independent documentary evidence if possible, may help the directors and other working parties put forward a defence that they had reasonable grounds to believe the statements at the time when they were included in the prospectus were DOES THE PROSPECTUS COVER?