Key factors to consider in choosing your offshore listing vehicle in Hong Kong

Companies in the Cayman Islands and Bermuda comprise more than 70% of those listed on the Hong Kong Stock Exchange (HKEx), and the offshore world plays a significant role in corporate finance. Since December 2009, companies incorporated in the BVI have also been allowed to list on the HKEx, and there are now six BVI companies listed, making up 0.3% of the exchange.

These offshore jurisdictions are welcomed by regulators and are acceptable to underwriters, rating agencies and institutional and private investors. They are well regulated and have strong service infrastructures. Each has a flexible and responsive legislative, business and regulatory environment, providing for innovative legal solutions on capital markets transactions.

Cayman, Bermuda and, to a lesser but growing extent, BVI are the most popular vehicles for a Hong Kong listing. Certain features of Cayman, Bermuda and BVI companies may impact on pre-IPO reorganization and the listing process, as well as post-IPO corporate finance transactions like securities offerings or capital restructurings. The following key factors will therefore influence the choice of domicile of an offshore listing vehicle in a HKEx offering.

Judy Lee is a corporate partner and the group head, science & technology, in the Hong Kong office of Appleby. Her practice covers Bermuda, Cayman and BVI corporate laws. She can be contacted on +852 2905 5737 or by email at jlee@applebyglobal.com.