HKSE new listing rules to benefit Australian resources sector

According to Minter Ellison Hong Kong-based partner Fred Kinmonth, who advised the HKSE on the new rules in conjunction with partner Bruce Cowley in the firm's Brisbane office, there are a number of selling points for listing in Hong Kong. Namely, the Chinese appetite for minerals and the HKSE's strategic location at the cross roads of investors from mainland China, Europe, the UK and the USA. Previously missing were rules for listing mineral and petroleum companies that meet international standards.
"The new rules, which take effect on June 3rd, ensure that investors are provided with material, relevant and reliable information that meets globally recognised standards," he said. "Eligible companies incorporated in Australia may now apply for a primary or secondary listing on the HKSE under rules that are clear and comprehensive.
"Chapter 18 of the HKSE Listing Rules will be readily understood by Australian companies and their advisers in particular, because the new rules have been drafted with the rules in Australia and other resource-rich jurisdictions in mind," Kinmonth noted.
The new rules set out disclosure obligations, standards for reporting resources and reserves and for valuing mineral and petroleum assets, and the qualifications and experience of technical experts.
In recent years, more overseas companies have shown interest in listing on the HKSE, attracted by Hong Kong's deep capital pool, financial expertise, strategic location, English common law regulatory infrastructure, and the HKSE's strong fund raising capability. The HKSE has also expanded its approved list of acceptable jurisdictions for listing applicants, and Australia and Canada (British Columbia and Ontario) are now included.
To establish eligibility for initial listing under the new Chapter 18 rules, a company's main activity must be the exploration for and/or extraction of natural resources (including minerals and petroleum) and this must represent 25 per cent or more of the total assets, revenue or operating expenses of the company and its subsidiaries.
The company must also have a portfolio of resources identifiable under the applicable international reporting standard, the JORC Code, NI 43-101 or the SAMREC Code (Minerals) or PRMS (Petroleum). Companies that have only inferred or prospective resources will not qualify.
The HKSE currently ranks 7th in the world in terms of market capitalisation (US$2.3 trillion) – this compares to the LSE at US$2.8 trillion and the ASX at US$1.2 trillion. In 2009, the HKSE led the world in IPO funds raised (US$32 billion) and was ranked 4th in relation to total funds raised (behind NYSE Euronext, LSE and ASX). Its spread of international investors includes 36 per cent USA, 23 per cent UK, 16 per cent Asia, and 11 per cent Europe.
"Given the capital intensive nature of mining, Australian mineral and petroleum companies seeking capital to grow are increasingly looking to the HKSE and the HKSE now has a solid set of rules to encourage that interest," Kinmonth said.