Governance Briefing — March 31, 2023
HKEX’s Chapter 18C Specialist Technology Company regime, effective 31 March 2023, sets differentiated listing thresholds, R&D intensity requirements, and investor safeguards for high-growth tech issuers.
Executive briefing: Hong Kong Exchanges and Clearing Limited (HKEX) implemented the new Specialist Technology Company listing regime on 31 March 2023, introducing Chapter 18C of the Main Board Listing Rules to attract high-growth technology issuers in sectors such as next-generation information technology, advanced hardware, new energy, food and agriculture, and advanced materials. The regime establishes differentiated financial eligibility tests, enhanced disclosure obligations, and cornerstone investor safeguards for both commercial and pre-commercial companies.
Capabilities: Understanding Chapter 18C requirements
The HKEX framework distinguishes between Commercial Companies—those generating at least HK$250 million in revenue from specialist technology products for the most recent audited financial year—and Pre-Commercial Companies that have yet to meet this revenue threshold. Commercial applicants must demonstrate a minimum expected market capitalisation of HK$6 billion, at least three financial years of operations under substantially the same management, and R&D investment of at least 15% of total operating expenditure on average over the latest three financial years.
Pre-commercial companies face a higher market capitalisation requirement of HK$10 billion and must show R&D expenditure of at least 50% of total operating expenses on average over the past three financial years. They are also subject to tighter dilution safeguards: existing shareholders are locked up for 12 months post-listing and must allocate 50% of the offering to institutional “pathfinder” investors or independent price-setting investors.
All specialist technology applicants must have engaged in R&D for at least three financial years, employ a meaningful proportion of R&D personnel, and own or have rights to relevant intellectual property. Disclosure obligations include detailed descriptions of core technologies, commercialisation plans, industry value chain positioning, key performance indicators, and material dependencies. Issuers must outline use of proceeds, capital expenditure plans, and milestones for achieving commercialisation or profitability.
Implementation sequencing: Preparing for a Chapter 18C listing
Phase 1 — Readiness assessment. Companies should conduct a gap analysis against Chapter 18C eligibility criteria. This involves validating revenue composition, segment reporting, and R&D accounting to ensure compliance with percentage thresholds. Legal teams must review intellectual property portfolios, licensing agreements, and exclusivity arrangements to confirm ownership or long-term rights. Governance functions should evaluate board composition, independence, and experience in technology sectors, as HKEX expects a majority of independent non-executive directors to have relevant expertise.
Phase 2 — Documentation and due diligence. Prepare detailed prospectus disclosures covering technology roadmaps, go-to-market strategies, customer concentration, supply-chain resilience, and regulatory approvals. Financial advisers must coordinate with auditors to validate R&D expenditure classifications, capitalisation policies, and control environments. Pathfinder investors should be identified early to demonstrate market validation, with term sheets outlining investment size, lock-up, and governance rights.
Phase 3 — Execution. Establish internal project management offices to coordinate listing tasks across finance, legal, investor relations, and product teams. Implement data rooms with version control for due diligence. Engage with the HKEX Listing Division and the Securities and Futures Commission (SFC) to address regulatory queries. Develop investor education materials emphasising technology differentiation, addressable markets, and risk mitigation plans. Pre-commercial companies must articulate milestones for achieving revenue thresholds and provide progress monitoring structures to satisfy ongoing disclosure obligations.
Responsible governance and ongoing obligations
Chapter 18C imposes post-listing requirements tailored to the risk profile of specialist technology issuers. Pre-commercial companies must disclose quarterly updates on R&D activities, commercialisation progress, and use of proceeds until they meet the commercial revenue threshold. Both commercial and pre-commercial issuers must maintain a minimum free float of 25% (or HK$600 million in public float value) and ensure that no single shareholder controls more than 50% of voting rights post-listing.
Corporate governance expectations include robust internal controls over R&D expenditure, safeguarding of intellectual property, and risk management for emerging technologies. Boards should establish technology committees or expand audit committee mandates to oversee R&D investment efficiency, cybersecurity, and regulatory compliance across target markets. Disclosure controls must ensure timely reporting of material developments, including breakthroughs, setbacks, or changes in regulatory approvals.
HKEX also emphasises responsible engagement with investors: issuers must publish key performance indicators relevant to their specialist technology, such as product development milestones, pilot project conversions, or production capacity utilisation. Investor relations teams should prepare to answer detailed questions on technology readiness levels, competitive landscape, and capital allocation.
Sector-specific considerations
Next-generation information technology. Companies developing AI, cloud, or semiconductor solutions must address export controls, data localisation, and cybersecurity regulations across target jurisdictions. Demonstrating scalable architecture, customer adoption, and partnerships with hyperscalers or telecom operators can strengthen investor confidence.
Advanced hardware and manufacturing. Issuers producing robotics, advanced sensors, or autonomous systems should provide evidence of supply-chain resilience, quality assurance certifications, and manufacturing ramp-up plans. Detailed disclosure on pilot deployments and unit economics is critical.
New energy and environmental technologies. Applicants in energy storage, hydrogen, or carbon management must present lifecycle analyses, regulatory approvals, and alignment with global sustainability frameworks. Long-term offtake agreements or strategic investors can substantiate revenue visibility.
New food and agriculture. Firms developing alternative proteins, precision agriculture, or agri-biotech solutions need to document safety testing, regulatory authorisations (e.g., CFDA, EFSA), and scalability of production. Engagement with supply-chain partners and retailers demonstrates go-to-market readiness.
Measurement and investor communication
Specialist technology issuers should establish dashboards tracking R&D intensity, burn rate, cash runway, customer acquisition, and milestone achievement. Pre-commercial companies must monitor progress toward commercial revenue thresholds and be prepared to disclose any deviations from stated timelines. Compliance teams should track adherence to post-listing obligations, including quarterly updates, lock-up expirations, and free-float maintenance.
Investor relations strategies should include regular briefings, technology demonstrations, and transparent reporting on risk factors. ESG reporting aligned with HKEX’s Environmental, Social and Governance Reporting Guide can complement technology disclosures, especially for sustainability-focused investors. Use of proceeds reporting should break down capital deployment across R&D, manufacturing, and market expansion, demonstrating disciplined execution.
As global markets remain volatile, HKEX encourages issuers to maintain conservative leverage, diversify funding sources, and implement hedging strategies for currency or commodity exposures. Boards should periodically review strategic partnerships, M&A opportunities, and ecosystem collaborations that can accelerate commercialisation.
Sources
- HKEX news release — HKEX launches new listing regime for Specialist Technology Companies (24 March 2023).
- HKEX Main Board Listing Rules — Chapter 18C (effective 31 March 2023).
- HKEX Frequently Asked Questions on Specialist Technology Company listings (March 2023).
Zeph Tech supports specialist technology issuers with IPO readiness, R&D governance, and investor communication frameworks aligned to HKEX Chapter 18C.
Continue in the Governance pillar
Return to the hub for curated research and deep-dive guides.
Latest guides
-
Public-Sector Governance Alignment Playbook — Zeph Tech
Align OMB Circular A-123, GAO Green Book, OMB M-24-10 AI guidance, EU public sector directives, and UK Orange Book with digital accountability, risk management, and service…
-
Third-Party Governance Control Blueprint — Zeph Tech
Deliver OCC, Federal Reserve, PRA, EBA, DORA, MAS, and OSFI third-party governance requirements through board reporting, lifecycle controls, and resilience evidence.
-
Governance, Risk, and Oversight Playbook — Zeph Tech
Operationalise board-level governance, risk oversight, and resilience reporting aligned with Basel Committee principles, ECB supervisory expectations, U.S. SR 21-3, and OCC…