Difficulties in applying for a Hong Kong Stock Exchange license: In-depth analysis by a partner at Baker & McKenzie

In recent years, Hong Kong's status as an international financial center has become increasingly prominent, attracting countless companies hoping to list here. However, the process of applying for a Hong Kong Stock Exchange (HKEX) license is not an easy task, especially for some small and medium-sized enterprises. The process is full of challenges. A partner at Baker & McKenzie Law Firm has a deep understanding of this. He said frankly at an industry conference: "It is too difficult to apply for a Hong Kong Stock Exchange license." This sentence not only speaks out the voice of many companies, but also triggers deep thinking about the regulatory policies, market environment and corporate strategies of the Hong Kong Stock Exchange.

In this article, we will delve into the complexity of applying for a Hong Kong Stock Exchange license, analyze the relevant laws and regulations, market dynamics and the practical challenges that companies need to face in this process, and strive to provide readers with detailed insights.

First of all, the license application process of the Hong Kong Stock Exchange is complex and diverse, involving many laws and regulations. According to the relevant regulations of the Hong Kong Stock Exchange, companies must meet a series of financial and legal requirements before applying for listing. These requirements include not only the transparency of financial statements and the rationality of corporate governance structure, but also a deep understanding of the company's business model and its sustainability. For example, companies need to provide audited financial statements for the past three years and ensure that they comply with the International Financial Reporting Standards (IFRS). This process is particularly difficult for many small and medium-sized enterprises, especially those that lack professional financial teams.

Secondly, the regulatory policies of the Hong Kong Stock Exchange are also constantly changing, which puts additional pressure on applicants. In recent years, in order to improve market transparency and investor protection, the Hong Kong Stock Exchange has strengthened its supervision of listed companies. This means that companies must not only meet basic financial requirements during the application process, but also deal with increasingly stringent compliance reviews. This change requires companies to invest more time and resources in preparing application materials to ensure the accuracy and compliance of various data.

In this context, the partner of Baker & McKenzie said that one of the biggest challenges many companies face during the application process is how to effectively respond to these regulatory requirements. "We often see some companies preparing listing materials, but due to insufficient understanding of regulatory policies, they have repeatedly revised them, which consumes a lot of time and energy." He pointed out that this situation not only delays the listing process, but may also affect the company's market image.

In addition, changes in the market environment have also had a direct impact on companies' listing plans. In recent years, the uncertainty of the global economy, geopolitical risks and intensified market competition have forced companies to consider more external factors when applying for listing. Take the technology industry as an example. With the rapid iteration of technology, the business model and profitability of many companies may change in a short period of time, which makes them face greater risks when applying for listing. The partner mentioned: "We found that many technology companies often need to constantly adjust their business strategies when applying for listing to adapt to the rapid changes in the market, which undoubtedly increases the difficulty of application." In addition, companies also need to face investors' expectations and market reactions during the application process. At present, investors have higher and higher requirements for companies. They not only pay attention to the financial performance of companies, but also hope to have a deep understanding of the company's long-term development strategy and social responsibility. In this case, companies need to more clearly show their business model, market positioning and future development plans in the listing materials. The partner said: "We recommend that companies should focus on telling their own stories in addition to providing necessary financial data when preparing listing materials, so that investors can trust the company." In this complex environment, if companies want to successfully apply for a license from the Hong Kong Stock Exchange, they need to formulate practical strategies. First of all, companies should strengthen their research on the regulatory policies of the Hong Kong Stock Exchange to ensure that they have a full understanding of relevant regulations. Secondly, companies should form a professional team or work with professional legal and financial advisors to improve the efficiency and quality of material preparation. In addition, companies should also focus on communication with investors and improve their visibility and influence through effective marketing strategies.

Finally, although applying for a license from the Hong Kong Stock Exchange is challenging, it is also an important development opportunity for many companies. A successful listing can not only bring the required financial support to the company, but also enhance its brand image and market competitiveness. As the partner of Baker & McKenzie said: "Although the process is difficult, we believe that as long as companies can actively respond to challenges, they will be able to succeed in Hong Kong, an international financial center."

In summarizing the above views, it is worth emphasizing that the difficulty of applying for a license from the Hong Kong Stock Exchange is not insurmountable. Companies only need to take every link seriously, make full use of professional resources, and formulate reasonable strategic plans to succeed in this process. In the future, as the Hong Kong market continues to develop, we look forward to seeing more outstanding companies emerge here and create more brilliant results. In any case, Hong Kong's status as an international financial center will continue to attract global attention, and every company that bravely pursues its dreams is an indispensable part of this stage.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

Coin Circle (120Btc.com) News: The Hong Kong government is committed to promoting Hong Kong to become a global cryptocurrency center. In November 2022, the Hong Kong Financial Affairs Bureau issued the "Policy Declaration on the Development of Virtual Assets in Hong Kong", which for the first time clarified Hong Kong's ambition to become the most international and economically active financial region; on June 1 this year, a new virtual asset service provider licensing system officially came into effect.

It is certain that the Hong Kong government has sent a clear signal that they will actively promote the steady and sustainable development of the cryptocurrency and Web3 industries, and many companies and investors are also encouraged; however, Joy Lam, a partner of Baker&Mc
Kenzi law firm, held a different view when participating in the online live broadcast of the "Rock Tree OG Talk Series" on the 7th of this month.

It's not easy to get a Hong Kong license! Stricter regulation

Joy Lam said in the live broadcast of "Rock Tree OG Talk
Series" that although Hong Kong's policies on the cryptocurrency industry are favorable, it does not mean that it is easy to obtain a Hong Kong license. In fact, it requires a strict process, a high-standard authorization process and a complete corporate compliance process, while also ensuring the safety of investors and the market, and the potential for long-term sustainable growth in the free-flowing market.

In addition, Joy
Lam also mentioned: Hong Kong's regulation of the cryptocurrency industry is stricter than many countries and regions in the world. Hong Kong pays attention to market integrity and long-term protection of investors and participants. Therefore, if you want to invest in the Hong Kong market, you need to adopt a cautious and prudent attitude to achieve a long-term balance.

Hong Kong's crypto industry job market is cold

It is worth mentioning that according to Cointelegraph's report today (10), after the Hong Kong government's new virtual asset service provider licensing system came into effect on June 1, about 150 companies applied for licenses to set up cryptocurrency trading platforms, but the recruitment demand in the industry is not as active as expected.

Sue Wei, managing director of recruitment firm Hays, told Cointelegraph that while exchanges have been seeking to establish a base in Hong Kong, the industry’s recruitment demand is still sluggish, and mentioned: Many Web3 companies are still in the early stages of development, but we expect that as they continue to scale and mature, vacancies will increase. In addition, Sue Wei further pointed out that since the cryptocurrency market fell, the demand for recruiting technical talent has been greatly reduced; especially when talents are "collectively fired", a chain reaction is more likely to occur, which will make job seekers hesitant to work in crypto companies because the industry's business relies heavily on the price of cryptocurrencies and has unstable characteristics.