In Hong Kong, listing Rule 8.05(3)(f) currently requires an applicant that lists using the market capitalization / revenue test to have at least 1,000 shareholders. This listing requirement is more onerous than both the profit and the market capitalization / revenue / cash flow tests, and effectively prevents applicants with a large market capitalization and revenues from listing if they cannot secure sufficient retail investor interest.

The Exchange therefore feels it may not be appropriate to require a large retail investor interest in IPOs of applicants that list under the market capitalization / revenue test since they may constitute riskier investments: applicants to listing do not have to be profitable or to have a minimum cash flow, and can also have a track record of less than three years.

The large public float requirement under the market capitalization / revenue test (at least HK$1 billion, equivalent to approximately US$128 million), and a minimum requirement for fewer than 1,000 shareholders may accordingly be enough to ensure an open market without the need for major retail investor participation.

The Exchange has therefore proposed changing the minimum shareholder requirement under the test to only 300.

A consultation paper was issued in September 2010 and 12 overwhelmingly positive responses have now been received from market participants in November. Consultation conclusions are pending.