Hong Kong Chamber Urges Removal of 'Novelty Test' to Ease Listing Rules for Biotech and Innovative Companies
核心洞察
The Chamber of Hong Kong Listed Companies (搜索) is pushing HKEX to eliminate the "novelty test" requirement for innovative companies seeking to list under weighted-voting rights.
Chairman Chan Ka-keung argues the current bar is too high, potentially excluding quality companies that use new technologies but are not the first to do so.
HKEX's March reforms expanded listing eligibility for biotechnology firms and non-technology issuers with innovative business models, but the novelty requirement remains a hurdle.
The Chamber of Hong Kong Listed Companies (搜索) (CHKLC) is calling on Hong Kong regulators to further ease listing requirements for innovative companies, arguing that the current "novelty test" creates an unnecessarily high barrier that could deter promising biotechnology and technology firms from going public in the city.
Speaking at a media briefing on Friday, CHKLC Chairman Chan Ka-keung urged the Hong Kong Exchanges and Clearing (搜索) (HKEX) to remove the novelty requirement from its weighted-voting rights (WVR) listing regime. "The chamber recommends removing the 'novelty test' as it means maybe only the first one to use certain technology or business model to qualify to adopt the weighted voting right model to list," Chan said. "This will fail a lot of good, quality innovative companies which have new technologies or business models but may not be the first one to do so."
HKEX's March Listing Reforms
The push comes in the wake of HKEX's most significant listing reforms since 2018, unveiled in March. The reforms expanded the scope of businesses eligible to list under a weighted-voting rights regime and redefined the classification criteria for innovative companies. The changes were designed to allow biotechnology firms and non-technology issuers with innovative business models to access Hong Kong's capital markets.
However, according to the HKEX consultation paper, the exchange will only permit innovative companies whose technologies are "novel in themselves, or essential to the novelty of the applicant's core business" to apply for listing via the WVR pathway. It is this specific requirement that the CHKLC contends is overly restrictive.
Competitive Pressures from Global Markets
Chan emphasized that Hong Kong faces intensifying competition from other financial centers vying for innovative company listings. "Hong Kong would need to compete with many other markets for the innovative companies to list, while the US market has no requirement for innovations to list with weighted voting rights," he noted.
The chamber's position reflects broader concerns about Hong Kong's ability to attract high-growth technology and biotech issuers in an increasingly competitive global landscape. The absence of innovation-related listing requirements in US markets, combined with the deep liquidity and established investor base for life sciences companies on exchanges such as Nasdaq, places pressure on Hong Kong to streamline its own regulatory framework.
Implications for the Biotech Sector
For biotechnology companies, which often operate at the frontier of science without necessarily being the first to deploy a given platform technology, the novelty test could prove particularly challenging. A company developing a monoclonal antibody using established platform technologies, for instance, might struggle to demonstrate sufficient novelty under the current framework, even if its therapeutic candidate addresses significant unmet medical needs.
The CHKLC's recommendation, if adopted, would broaden the pipeline of companies eligible to list in Hong Kong, potentially strengthening the city's position as a premier capital-raising hub for the Asia-Pacific life sciences industry.