Reforming the sponsor regulatory regime: A case of Hong Kong's response to the impact of Chinese listings

This paper aims to illustrate how the continuing reform initiatives concerning the sponsor regulatory regime in Hong Kong were precipitated by the need to tackle cross-border enforcement problems relating to Mainland Chinese companies. Despite the reunification in 1997, Hong Kong and Mainland China remain two separate jurisdictions under the "One Country, Two Systems" constitutional design and full reciprocity of law enforcement assistance between both sides has yet to be achieved. Consequently, Hong Kong regulators face a considerable challenge in finding ways to regulate Chinese issuers operating their businesses primarily outside the territory. In attempting to solve the problem of initial public offerings' disclosure, Hong Kong regulators have turned their attention to sponsors who can perform a significant gatekeeper function in ensuring that the issuers' prospectuses are complete and accurate. The sponsor reform thus provides a useful case study for elucidating the impact that Chinese listings have exerted upon the regulation of Hong Kong's listing market. Copyright © 2013 Hong Kong Law Journal Ltd.