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What Is Expert Consent in an S-1? Responsibility Documents from Auditors and Lawyers

The SEC’s Division of Corporation Finance issued a series of Staff Legal Bulletins in late 2024 and early 2025 that materially tightened the standard of review for expert consent letters—specifically, the requirement that an expert’s consent under Securities Act Rule 436(c) must be “explicit” and “unambiguous” as to the specific filing it covers. This shift, combined with the SEC’s increased scrutiny of non-GAAP financial measures and pro forma financial information in registration statements, has made the expert consent process a critical gating item for any issuer proceeding with an initial public offering on the NYSE or NASDAQ. For Hong Kong-based issuers—particularly those with a Cayman Islands holding company, a PRC operating subsidiary, and a pre-IPO restructuring that involved a BVI intermediate holding vehicle—the consent mechanics are further complicated by the need to coordinate with the Hong Kong Stock Exchange (HKEX) if a dual-primary or secondary listing is contemplated. A single omission or ambiguity in an expert consent letter can delay the SEC’s declaration of effectiveness by weeks, directly impacting pricing windows and market sentiment. This article examines the precise regulatory framework governing expert consent in an S-1, the specific documents and experts involved, and the practical steps that issuers and their Hong Kong-based legal and audit teams must take to ensure compliance.

The requirement for expert consent in an S-1 registration statement stems directly from Section 11(a) of the Securities Act of 1933. This section imposes strict liability on any person who signs the registration statement, any director or partner of the issuer, any underwriter, and—critically—any expert who has consented to be named as having prepared or certified any part of the registration statement. For an expert to be named in an S-1 without assuming Section 11 liability, the issuer must obtain a signed consent letter from that expert, filed as an exhibit to the registration statement.

SEC Rule 436(c) provides a limited safe harbor: an expert is not deemed to have consented to the use of its report or opinion in a registration statement unless the consent is explicitly given in a written statement filed with the SEC. The SEC’s 2025 Staff Legal Bulletin No. 14H clarified that a general consent letter referencing “any amendments or supplements” is insufficient; the consent must specifically identify the registration statement by its SEC file number and the exact document (e.g., “the audited financial statements for the fiscal year ended December 31, 2024, included in the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on [date]”). This requirement applies equally to the issuer’s independent auditor, any valuation expert, any geological or engineering expert for mineral property issuers, and any legal counsel providing a tax opinion or legality opinion that is explicitly referenced in the prospectus.

The independent auditor’s consent is the most common and most scrutinized expert consent in an S-1. Under Item 601(b)(23) of Regulation S-K, the auditor must file a consent that explicitly states it consents to the inclusion of its audit reports in the registration statement and to the reference to the auditor as an expert in accounting and auditing. For a Hong Kong-headquartered issuer with a PRC operating subsidiary, the auditor is typically one of the Big Four firms—Deloitte Touche Tohmatsu, Ernst & Young, KPMG, or PricewaterhouseCoopers—with a Hong Kong office acting as the lead auditor.

The consent must cover all financial statements included in the S-1, including any predecessor financial statements, acquired business financial statements under Rule 3-05 of Regulation S-X, and any carve-out financial statements for a significant subsidiary. The SEC staff will review the consent letter to ensure it does not contain any qualification or limitation that could be interpreted as a withdrawal of consent. A common issue arises when an auditor’s consent letter includes language stating that the consent is “solely for the purposes of the Securities Act” or “does not constitute an admission that the auditor is an expert within the meaning of Section 11.” The SEC has taken the position that such language is permissible, provided it does not negate the explicit consent to be named as an expert.

For issuers that have changed auditors within the past two fiscal years, the predecessor auditor must also file a consent letter. This is a frequent source of delay for Hong Kong companies that have switched from a local Hong Kong audit firm to a Big Four firm in preparation for a U.S. listing. The predecessor auditor’s consent must cover the financial periods it audited, and the issuer must ensure the predecessor auditor’s consent is executed and filed concurrently with the initial S-1 filing.

Legal counsel consent in an S-1 is less straightforward than auditor consent. As a general rule, the issuer’s corporate counsel—whether based in Hong Kong, New York, or the Cayman Islands—is not required to file a consent letter simply because its name appears in the prospectus as “counsel to the issuer.” The consent requirement is triggered only when the legal opinion is explicitly quoted or summarized in the registration statement, or when counsel is identified as an expert on a specific matter.

The most common scenario requiring legal counsel consent is a tax opinion. Under Item 601(b)(8) of Regulation S-K, if the issuer includes a tax opinion in the prospectus regarding the tax consequences of the offering or the issuer’s organizational structure, the law firm providing that opinion must file a consent letter. For a Hong Kong issuer with a PRC operating subsidiary, the tax opinion typically covers the Hong Kong profits tax implications of the offering and the PRC enterprise income tax treatment of dividends paid by the PRC subsidiary to the Cayman holding company. The consent letter must explicitly state that the law firm consents to the inclusion of its tax opinion in the registration statement.

A second scenario is the legality opinion, which is required under Item 601(b)(5) and covers the validity of the securities being registered. The legality opinion is typically provided by the issuer’s U.S. counsel or Cayman Islands counsel. While the legality opinion itself is filed as an exhibit, the counsel providing it is not automatically deemed an expert. The SEC staff has clarified that a consent letter is not required for the legality opinion unless the opinion is specifically referenced in the prospectus as “expert” opinion. In practice, most issuers file a consent letter for the legality opinion to avoid any ambiguity.

For Hong Kong legal counsel providing an opinion on the issuer’s corporate structure under Hong Kong law—such as the enforceability of the VIE structure or the compliance with the Companies Ordinance (Cap. 622)—the consent requirement depends on whether that opinion is referenced in the prospectus. If the prospectus states that “the validity of the VIE arrangements has been confirmed by Hong Kong counsel,” then a consent letter is required.

The timing of expert consent letters is tightly linked to the SEC’s review and effectiveness process. An S-1 registration statement becomes effective only when the SEC declares it effective, and the SEC will not declare effectiveness until all required exhibits, including expert consent letters, are filed. This means that any amendment to the S-1 that adds or modifies a financial statement, a tax opinion, or a valuation report requires a new or updated consent letter from the relevant expert.

Before the initial confidential S-1 submission (typically filed under the Emerging Growth Company (EGC) regime for issuers with less than USD 1.235 billion in annual revenues for the most recently completed fiscal year), the issuer’s U.S. counsel should prepare a consent checklist that identifies every expert whose report or opinion is included in the registration statement. The checklist should include:

  • The independent auditor (including any predecessor auditor)
  • Any valuation expert (for business combination accounting, purchase price allocation, or impairment testing)
  • Any geological or engineering expert (for mining or oil and gas issuers)
  • Any legal counsel providing a tax opinion or a legality opinion
  • Any other expert explicitly named as having prepared or certified a part of the registration statement

For each expert, the checklist should specify the exact document that requires consent (e.g., “Audited financial statements for the fiscal year ended December 31, 2024, as included in the S-1”), the SEC file number, and the expected filing date. The consent letter should be drafted and executed before the initial S-1 filing to avoid a last-minute scramble.

The SEC does not prescribe a specific form for expert consent letters, but the Division of Corporation Finance has provided guidance through Staff Legal Bulletins. The consent letter should be on the expert’s letterhead, signed by an authorized representative, and addressed to the SEC. The letter should include:

  • The exact name of the registration statement (e.g., “Registration Statement on Form S-1 of [Issuer Name], File No. 333-[number]”)
  • The specific document or report being consented to
  • An explicit statement that the expert consents to the inclusion of that document or report
  • An explicit statement that the expert consents to being named as an expert in the registration statement
  • The date of the letter

A typical auditor consent letter reads: “We consent to the inclusion in the above-captioned Registration Statement of our audit report dated [date] relating to the consolidated financial statements of [Issuer Name] as of and for the year ended [date]. We also consent to the reference to our firm under the caption ‘Experts’ in the prospectus.”

For a tax opinion consent, the language is similar but specifies the opinion: “We consent to the inclusion in the above-captioned Registration Statement of our opinion dated [date] regarding the tax consequences of the offering, as described under the caption ‘Material Tax Considerations’ in the prospectus.”

Post-Filing Amendments and Consent Updates

Any pre-effective amendment to the S-1 that changes the financial statements, the prospectus, or the expert reports requires an updated consent letter. For example, if the issuer files Amendment No. 1 to include updated financial statements for a subsequent quarter, the auditor must file a new consent letter covering those updated statements. If the issuer changes the description of the tax opinion in the prospectus, the tax counsel must file a new consent letter.

The SEC staff will review the consent letters as part of its overall review of the registration statement. If a consent letter is missing, incomplete, or contains ambiguous language, the staff will issue a comment letter requesting clarification. This can delay the effectiveness of the registration statement by 5-10 business days, which is significant in a volatile market where pricing windows can close quickly.

Practical Considerations for Hong Kong Issuers and Cross-Border Structures

Hong Kong-based issuers face unique challenges in the expert consent process due to the complexity of their corporate structures and the involvement of multiple jurisdictions. A typical structure involves a Cayman Islands holding company, a Hong Kong intermediate holding company, and a PRC operating subsidiary, often with a VIE structure. Each jurisdiction may require a separate legal opinion, and each opinion may require a separate consent letter.

Coordinating with HKEX for Dual-Listing Issuers

For issuers that are also listed on the Hong Kong Stock Exchange (HKEX) or are pursuing a dual-primary listing, the expert consent process must be coordinated with the HKEX Listing Rules. Under HKEX Listing Rule 11.10, a listing document must include a statement that the issuer’s auditors have consented to the inclusion of their report and to being named as experts. The HKEX requires the consent letter to be filed with the listing application, similar to the SEC requirement. However, the HKEX does not require a separate consent for legal opinions unless the opinion is specifically referenced in the listing document.

The timing of the SEC consent letters and the HKEX consent letters must be synchronized. If the issuer files its S-1 with the SEC and its A1 application with HKEX simultaneously, the auditor must prepare two separate consent letters—one for the SEC and one for the HKEX—with slightly different language to comply with each regulator’s requirements. The SEC consent letter must reference the SEC file number, while the HKEX consent letter must reference the HKEX application number.

For issuers with a VIE structure—common among PRC-based companies listing in the U.S.—the legal counsel consent is particularly important. The prospectus typically includes a detailed description of the VIE arrangements, including the contractual agreements that give the Cayman holding company control over the PRC operating subsidiary. The issuer’s PRC legal counsel must provide an opinion on the enforceability of these agreements under PRC law. If that opinion is referenced in the prospectus, a consent letter is required.

The SEC staff has historically scrutinized VIE-related disclosures and the associated expert consents. In 2024, the SEC issued multiple comment letters to PRC issuers requesting clarification on whether the VIE structure had been reviewed by independent legal counsel and whether that counsel had consented to the inclusion of its opinion in the S-1. Issuers that failed to file a consent letter for the PRC legal opinion faced delays of up to three weeks.

Auditor Independence and PCAOB Registration

A critical prerequisite for the auditor’s consent is that the auditor must be registered with the Public Company Accounting Oversight Board (PCAOB) and must have undergone a PCAOB inspection within the past three years. For Hong Kong-based auditors, this is generally not an issue, as all Big Four firms and most mid-tier Hong Kong audit firms are PCAOB-registered. However, for issuers that have used a local PRC audit firm for historical financial statements, the SEC may require that the PRC audit firm be PCAOB-registered and that its consent letter be filed. The PCAOB’s 2024 annual report noted that 87% of Hong Kong-based audit firms inspected had no deficiencies, compared to 72% for PRC-based firms, making Hong Kong auditors a preferred choice for U.S. listings.

If the issuer has changed auditors from a PRC firm to a Hong Kong firm, the predecessor PRC auditor must also file a consent letter. This can be a logistical challenge if the PRC auditor is not PCAOB-registered or if the auditor is unwilling to provide the consent due to regulatory concerns under PRC law. In such cases, the issuer may need to engage a PCAOB-registered auditor to re-audit the historical financial statements, which can add 4-6 weeks to the timeline.

Actionable Takeaways for Issuers and Their Advisors

  1. Prepare a comprehensive expert consent checklist at least eight weeks before the initial confidential S-1 filing, identifying every expert whose report or opinion is included in the registration statement, and ensure each consent letter explicitly references the SEC file number and the specific document being consented to.
  2. For Hong Kong issuers with a PRC operating subsidiary and a VIE structure, obtain a consent letter from PRC legal counsel for the enforceability opinion, and confirm that the opinion is explicitly referenced in the prospectus to trigger the consent requirement.
  3. Coordinate the timing of SEC consent letters with HKEX consent letters if a dual-primary or secondary listing is contemplated, and ensure the auditor prepares separate consent letters for each regulator with the appropriate file or application number.
  4. Verify that all auditors—including any predecessor auditor—are PCAOB-registered and have undergone a PCAOB inspection within the past three years, and if not, engage a PCAOB-registered auditor to re-audit the historical financial statements.
  5. File all consent letters as exhibits to the S-1 at the time of the initial filing, and update them with each pre-effective amendment that modifies the financial statements, the prospectus, or any expert report, to avoid SEC comment letters that could delay effectiveness.