What Is an IPO? A Step-by-Step Guide for Hong Kong Companies Listing in the US

The calculus for Hong Kong companies weighing a US listing has shifted materially in 2025. The Public Company Accounting Oversight Board (PCAOB) retains full access to audit working papers in mainland China and Hong Kong, a status confirmed in its December 2024 report, removing the existential delisting risk that plagued Chinese issuers in 2022-2023. Concurrently, the Hong Kong Stock Exchange (HKEX) has tightened its own listing regime—notably through enhanced Chapter 18C rules for specialist technology companies effective March 2024—making the US route comparatively more streamlined for certain sectors. For a Hong Kong-incorporated or Cayman Islands-incorporated company with PRC operations, the US initial public offering (IPO) process remains a distinct, regulatorily defined path governed by the Securities Act of 1933 and the Securities Exchange Act of 1934. This guide provides a step-by-step, rule-based framework for Hong Kong companies navigating this process, focusing on the mechanics of SEC registration, exchange listing, and post-IPO compliance.

The Decision Framework: US vs. Hong Kong Listing Mechanics

The choice between a US listing on the NYSE or NASDAQ versus a Hong Kong Main Board listing is not merely jurisdictional but structural. The US market offers a different regulatory trade-off: lighter ongoing disclosure obligations under the SEC’s scaled disclosure regime for foreign private issuers (FPIs) versus the HKEX’s more prescriptive continuing obligations under the Listing Rules.

FPI Status and Eligibility Criteria

A Hong Kong company qualifies as a Foreign Private Issuer (FPI) under SEC Rule 3b-4 if it is incorporated outside the US and more than 50% of its shares are held by non-US residents. This classification is critical. FPIs can file annual reports on Form 20-F (not the more onerous 10-K), are exempt from quarterly reporting on Form 10-Q, and are not subject to US proxy rules for shareholder meetings. As of Q1 2025, approximately 85% of Hong Kong-headquartered companies listed on NASDAQ file as FPIs, according to SEC EDGAR data.

Exchange Listing Standards: NYSE vs. NASDAQ

The minimum quantitative standards differ materially. For a Hong Kong company seeking a primary listing on the NYSE, the exchange requires a minimum of 1.1 million publicly held shares at the time of listing, with a market value of publicly held shares of at least USD 40 million for the standard financial criteria. NASDAQ’s Global Select Market requires a minimum of 1.25 million publicly held shares and a market value of at least USD 45 million under its Market Value of Listed Securities standard.

The financial threshold is the more binding constraint. Under the NYSE’s earnings test, a company must demonstrate aggregate pre-tax earnings of USD 10 million over the most recent three fiscal years, with each of the two most recent years exceeding USD 2 million. For Hong Kong companies with shorter operating histories—common in the biotech and fintech sectors—the NYSE’s valuation/revenue test is an alternative: a global market capitalization of at least USD 500 million and revenues of at least USD 100 million in the most recent fiscal year. NASDAQ’s equivalent standard, under its Market Value of Listed Securities standard, requires a market capitalization of at least USD 75 million and total assets and total revenue of at least USD 75 million each.

The SEC Registration Process: S-1 Mechanics

The core of any US IPO is the SEC registration statement on Form S-1. For Hong Kong companies, this process is structurally identical to that for US domestic issuers but with specific disclosure requirements for cross-border structures.

The Confidential Submission Advantage

A critical procedural advantage for Hong Kong companies is the ability to file confidentially under the Jumpstart Our Business Startups (JOBS) Act, as amended. An Emerging Growth Company (EGC)—defined as one with total annual gross revenues of less than USD 1.235 billion during its most recently completed fiscal year—can submit a draft registration statement to the SEC for non-public review. This allows the company to resolve SEC comments without the market scrutiny that accompanies a public filing. As of March 2025, the SEC’s Division of Corporation Finance typically provides initial comments within 30 calendar days of submission.

The Structure of the Prospectus

The S-1 must contain two primary sections: the prospectus (Part I) and the supplementary information (Part II). The prospectus must include:

• Business description: A detailed, line-of-business breakdown of operations, including any VIE (Variable Interest Entity) structures if the Hong Kong company controls PRC operations through contractual arrangements. The SEC’s 2021 guidance specifically requires VIE disclosures to state explicitly that investors are purchasing shares in the Hong Kong or Cayman holding company, not the PRC operating entities.
• Risk factors: These must be specific to the issuer, not generic boilerplate. For Hong Kong companies, standard risk factors include the PRC’s Cybersecurity Review Measures (effective February 2022) and the Data Security Law (effective September 2021), both of which can affect data transfers from PRC subsidiaries.
• Use of proceeds: A specific allocation of net proceeds, typically broken into R&D, working capital, and potential acquisitions.
• Management’s Discussion and Analysis (MD&A): A three-year comparative analysis of financial condition and results of operations, prepared in accordance with US GAAP or IFRS as issued by the IASB.

The SEC Review Process and Comment Resolution

The SEC’s review typically involves two to four rounds of comments. Common comment areas for Hong Kong companies include:

• Revenue recognition: The SEC frequently queries whether revenue from PRC government contracts is recognized appropriately under ASC 606.
• Related-party transactions: Any transactions with directors, officers, or their affiliates must be fully disclosed and benchmarked against arm’s-length standards.
• VIE structure legality: The SEC requires a legal opinion from PRC counsel confirming that the VIE structure does not violate PRC law.

The SEC does not “approve” an IPO. It declares the registration statement effective. This occurs when the SEC is satisfied that all material disclosures are adequate. The effective date is the date on which the company can price and sell the securities.

The Listing and Post-IPO Compliance Cycle

Once the SEC declares the S-1 effective, the company must simultaneously satisfy exchange listing requirements and commence post-IPO obligations.

The Pricing and Allocation Process

Pricing occurs after the SEC effectiveness. The underwriters—typically a syndicate of one or more lead managers and several co-managers—determine the final offer price based on book-building demand. For a Hong Kong company, the typical underwriting discount is 5.5% to 7.0% of gross proceeds, depending on deal size and complexity. The allocation of shares is documented in the underwriting agreement, which must be filed as an exhibit to the S-1.

Post-IPO Reporting Obligations

Once listed, the company enters a perpetual compliance cycle. Key filings include:

• Form 20-F: Annual report due within four months of fiscal year-end. This is the equivalent of the HKEX’s annual report under Listing Rule 13.46.
• Form 6-K: A current report for material information, filed with the SEC within five business days of the event. This is the functional equivalent of an HKEX inside information announcement under Part XIVA of the Securities and Futures Ordinance (SFO).
• Section 16 filings: For directors, officers, and 10% beneficial owners, changes in ownership must be reported on Form 3 (initial), Form 4 (changes), and Form 5 (annual).

The SFC and HKEX Interaction

A Hong Kong company listed in the US remains subject to Hong Kong’s securities laws. The Securities and Futures Commission (SFC) retains jurisdiction over market misconduct occurring in Hong Kong, including insider dealing under Section 270 of the SFO and market manipulation under Section 295. The SFC’s 2024 enforcement report noted 15 cases involving cross-border trading patterns between US and Hong Kong markets. Companies must ensure their insider trading policies cover both SEC Rule 10b-5 and the SFO’s insider dealing provisions.

SPACs and Alternative Paths

Special Purpose Acquisition Companies (SPACs) remain a viable, though structurally distinct, alternative to a traditional IPO. As of Q1 2025, the SEC’s proposed rules on SPACs (Release No. 33-11245) remain in effect, requiring enhanced disclosures on sponsor compensation, conflicts of interest, and the fairness of the de-SPAC transaction.

The De-SPAC Mechanics

For a Hong Kong company merging with a US-listed SPAC, the transaction is structured as a reverse merger. The target company’s shareholders exchange their shares for shares in the SPAC, which then changes its name and ticker. The SEC requires a proxy statement or registration statement on Form S-4, which must include audited financial statements of the target for the two most recent fiscal years. The PCAOB’s auditing standards apply to the target’s financial statements, a requirement that has caused delays for Hong Kong companies with PRC subsidiaries that have not previously been audited under PCAOB standards.

SPAC Redemption Risk

A critical risk for Hong Kong companies pursuing a SPAC route is the redemption rate. In 2024, the average redemption rate for de-SPAC transactions involving Chinese targets was 62%, according to SPAC Research data. This means the surviving company must have sufficient committed capital—either from the SPAC’s trust account or from a PIPE (Private Investment in Public Equity) financing—to meet minimum cash requirements. The NYSE requires a minimum of USD 5 million in stockholders’ equity post-business combination; NASDAQ requires USD 2.5 million.

Actionable Takeaways

1. Confirm FPI status early in the process to determine whether you can file confidentially and use Form 20-F, as this directly affects the timeline and disclosure burden.
2. Engage PRC counsel to prepare a legal opinion on VIE structure legality under the 2022 Cybersecurity Review Measures before submitting the draft S-1 to the SEC.
3. Budget for at least 8-12 weeks of SEC review time from the initial confidential submission to the public filing, factoring in the SEC’s 30-day comment cycle.
4. Ensure your auditor is registered with the PCAOB and has experience auditing under PCAOB standards, as the SEC will reject financial statements audited by non-registered firms.
5. Structure the underwriting agreement to include a 30-day lock-up period for existing shareholders, consistent with market practice for Hong Kong issuers on NASDAQ.