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Sponsor Due Diligence Guidelines

Charltons has played a coordinating role in the initiative of Hong Kong sponsors to develop due diligence guidelines for the purpose of promoting standards in the conduct of due diligence in respect of new Hong Kong IPOs, particularly relevant to Chinese companies, with a view to maintaining the integrity of the Hong Kong market and assuring the quality of information disclosed in IPO prospectuses. A free download of the 750+ page Hong Kong sponsor due diligence guidelines is available at The due diligence guidelines cover general due diligence matters as well as due diligence matters specific to mineral companies.

The guidelines were developed in light of paragraph 17 of the Securities and Futures Commission’s (SFC’s) Code of Conduct for Persons Licensed by or Registered with the SFC, which sets out the standards and certain procedures, taken together with the Hong Kong Stock Exchange Listing Rules, expected by the SFC of sponsors in the conduct of a due diligence to support IPOs in Hong Kong. The guidelines were developed as an important reference point to guide sponsors and Hong Kong professionals as sponsors’ work is ultimately to be judged “based on what a sponsor’s peers would consider objectively appropriate having regard to all relevant facts and circumstances at the time of making a listing application”. The guidelines are also an educational tool for less experienced market practitioners or those coming to Hong Kong from other jurisdictions.

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