Law and regulation of private placement of common stock in Hong Kong

1. Prospectus requirement

Prospectus is required where an offer is to the “public” which is defined widely and includes any section of the public in Hong Kong.

2. Prospectus exemptions

Key exemptions
  • Not more than 50 persons.
  • Professional investors which generally include financial institutions, financial intermediaries, corporate investors with total assets of not less than HKD 40m and high net worth individuals with a portfolio of not less than HKD 8m.
  • Total consideration does not exceed HKD 5m.
  • Minimum consideration payable by any offeree is not less than HKD 500,000.

3. Ability to offer shares to

3.1 Institutional/professional/authorised investors (for example investment funds, insurers, pension funds)

Yes, subject to falling within meaning of “professional investors”.

3.2 High net worth individuals 

Yes, subject to falling within the meaning of “professional investors”.

3.3 Retail/public/others

No - any such offer may fall within the meaning of “offer to the public” and will therefore be subject to the prospectus requirements.

4. Can the issuer approach potential investors on their own?

Yes, subject to numerous restrictions including restrictions relating to issuing documents with invitations to acquire equity; and the manner of approach must not be construed as an offer to the public and thus any offer document should be serial numbered, state that it is not an offer to the public, and should be individually addressed to a specific offeree and only that offeree may accept the offer.

5. Can the issuer's financial adviser/ placement agent approach potential investors on their own?

Yes, subject to numerous restrictions including restrictions relating to issuing documents with invitations to acquire equity and the manner of approach must not be construed as an offer to the public.

6. Are there any other exemptions which may be relied on?

No.