SFC issues statement on backdoor listings and shell activities

26 Jul 2019

The Securities and Futures Commission (SFC) today published a statement explaining its general approach to utilising its statutory powers under the Securities and Futures (Stock Market Listing) Rules (SMLR) and the Securities and Futures Ordinance (SFO) to tackle backdoor listings and shell activities.

In recent years, problems associated with undesirable backdoor listings and shell activities have attracted wide attention.  Against this backdrop, the SFC has been working closely with The Stock Exchange of Hong Kong Limited (SEHK) to address these problems through listing policy changes and other means (Note 1).  SEHK today published a consultation conclusions paper on backdoor listings and continuing listing criteria together with related amendments to the Listing Rules following a market consultation (Note 2).

"These listing policy changes are a big step forward in restricting undesirable backdoor listings and shell activities under the Listing Rules regime", said Mr Ashley Alder, the SFC’s Chief Executive Officer.

The SFC will work in parallel with SEHK to monitor the market and will intervene using its statutory powers under the SMLR and the SFO when appropriate to tackle these activities which harm the reputation and integrity of our markets. 

"This combined approach by the SFC and the Exchange, deploying the different regulatory tools available to us, strengthens significantly our ability to eliminate the serious problems that have been caused by deliberate attempts to game the tests that need to be passed by all other businesses wishing to access public investors’ money through a listing." Mr Alder added.

As set out in the statement, the SFC will take into consideration the facts and circumstances of each case before deciding whether to exercise its statutory powers, including whether there are any red flags indicating a possible scheme designed to mislead regulators and/or the investing public or to circumvent applicable rules, or suggesting that other forms of serious misconduct have been or will be committed. 



  1. This is part of a broader review of the regulation of listed companies, which has already resulted in a series of Listing Rules changes over the past year, including reforms aimed at curbing sharp share price movements of GEM stocks on their trading debuts and highly dilutive capital-raisings that are prejudicial to minority shareholders.
  2. The consultation conclusions paper on backdoor listing, continuing listing criteria and other rule amendments is available on HKEX’s website.



Page last updated : 26 Jul 2019