Hong Kong: SFC Action against IPO Sponsor

April 25, 2012

On April 22, 2012, the Securities and Futures Commission (SFC) one of Hong Kong’s main securities regulators and the body in charge of licensing securities industry participants in Hong Kong, revoked the licence of Mega Capital (Asia) Company Limited and fined it HK$42 million (US$5.38 million). Not only was this the largest fine ever handed down by the SFC, but also the first time a sponsor’s licence has been revoked. This memo looks at the SFC’s findings against Mega Capital, suggests some practical guidance for sponsor due diligence work and considers the future regulatory environment for IPO sponsors in Hong Kong.