HKEx Publishes Conclusions on Proposed Amendments to Listing Rules Relating to Ongoing Public Float Requirements

This LawFlash summarizes the key reforms of the Hong Kong Stock Exchange’s consultation conclusions on ongoing public float requirements. Mainly, an alternative Ongoing Public Float Threshold has been introduced to offer greater flexibility, and new public float reporting obligations have been implemented for all issuers to improve market transparency.

The Hong Kong Stock Exchange (HKEx) has adopted the proposals broadly as proposed, with minor modifications to reflect comments made by the respondents. The enhancement of the existing public float framework reflects HKEx’s continual initiative to grant issuers increased adaptability in managing their capital, while at the same time preserving transparency and stable operations within the market. The new ongoing public float requirements will come into effect on 1 January 2026.

The key reforms of the new ongoing public float requirements adopted by the HKEx are discussed below. Our previous LawFlash published in August 2025 details the key conclusions of the HKEx’s consultation on optimizing initial public offering price discovery and open market requirements, including the further consultation on allowing more flexibility on the Ongoing Public Float Threshold.

ALTERNATIVE ONGOING PUBLIC FLOAT THRESHOLD

Under the proposal, a portion of the class of shares listed that is held by the public must at all times (1) have a market value of at least HK$1 billion; and (2) represent at least 10% of the issuer’s total number of issued shares in the class of shares listed.

The Initial Prescribed Threshold and the proposed Alternative Threshold would apply to all issuers except for PRC issuers with other listed shares (e.g. A+H issuers) and newly listed issuers whose shares have traded for fewer than 125 trading days since listing on the Exchange. Furthermore, the HKEx expects an issuer relying on the Alternative Threshold to promptly notify the market, by way of an announcement, if it subsequently decides to revert to the Initial Prescribed Threshold. This will ensure that investors are kept informed on a timely basis.

PRC ISSUERS WITH OTHER LISTED SHARES

The HKEx proposed to apply bespoke Ongoing Public Float Thresholds to PRC issuers with other listed shares (such as A+H issuers). At the time of listing, H-shares for which listing is sought on the exchange must either (1) have a market value of at least HK$1 billion; or (2) represent at least 5% of the total number of issued shares in the class to which H-shares belong (excluding treasury shares).

The proposed bespoke Ongoing Public Float Threshold would automatically apply to all existing A+H issuers, including those that were granted public float waivers. These issuers would not need to apply to use the new threshold. The bespoke Ongoing Public Float Thresholds ensure that a “critical mass” of H-shares remains held by the public on a continuous basis.

NEW REGULAR PUBLIC FLOAT REPORTING REQUIREMENTS

The HKEx has proposed that all listed issuers be required to

• confirm, in their monthly returns (in addition to annual reports), whether they have met their applicable Ongoing Public Float Thresholds;
• disclose, in each of its monthly returns
  • if the issuer relies on the Initial Prescribed Threshold, the minimum percentage threshold applicable to the issuer; and
  • if the issuer relies on the Alternative Threshold or the issuer is a PRC issuer with other listed shares (e.g. an A+H issuer) relying on the market value limb of the relevant bespoke Ongoing Public Float Threshold, the market value and percentage of the portion of the class of shares they have listed on the Exchange that are held by the public;
• disclose, in each of their annual reports, the same information proposed in their monthly returns, as at the end of the relevant financial year. Issuers that have relied on the Alternative Threshold at any time within a financial year and PRC issuers with other listed shares (e.g., A+H issuers) that have relied on the market value limb of the applicable Ongoing Public Float Threshold should include in their annual reports
• in respect of each month in which they relied on the aforesaid market value-based thresholds as at the end of that month, the market value and percentage of their public floats as at the end of that month; and
• a commentary on all material changes to their public float levels during that financial year;
• state, in their annual reports, the structure of their share capital as at the end of the relevant financial year.

ISSUERS WITH PUBLIC FLOAT SHORTFALLS

Where an issuer’s public float falls below the proposed applicable Ongoing Public Float Threshold, they must publish an initial announcement of the Rule breach, requiring (1) an issuer to publish an announcement within one business day of it becoming aware of its public float shortfall, which must set out the market value (if applicable) and percentage of its public float, share ownership composition, and the reason for its breach of the Rule; and (2) the issuer to also announce its plan and expected timeline to restore to the applicable Ongoing Public Float Threshold as soon as practicable.

Details of such plan could be announced in a subsequent announcement if that subsequent announcement is published no later than 15 business days of it becoming aware of its public float shortfall.

An issuer with a public float shortfall must also provide monthly updates, by way of announcement, to notify the market of the status of its public float (including the market value (if applicable) and percentage of its public float) and to provide updates on its restoration plan.

RESTRICTION FROM CORPORATE ACTIONS

For so long as an issuer does not comply with the applicable Ongoing Public Float Threshold, the issuer itself, and each of its directors, must not (and each director must use his best endeavours to ensure that his close associates do not) take any action that may further lower the issuer’s public float percentage. Examples of such actions include a share repurchase by the issuer, or an acquisition of shares by its directors or their close associates.

In exceptional circumstances, the HKEx will consider lifting these restrictions, for example: (1) the issuer subsequently seeking privatisation; (2) compliance with court orders or regulatory enforcement actions; and (3) the temporary holding of shares pursuant to a preexisting arrangement, followed immediately by disposal as part of a transaction to restore a public float shortfall.

IDENTIFYING ISSUERS WITH A SIGNIFICANT PUBLIC FLOAT SHORTFALL

The HKEx proposed that an issuer would be considered as having a Significant Public Float Shortfall unless a portion of the issuer’s class of shares listed on the Exchange and held by the public: (1) represents at least 15% of the issuer’s total number of issued shares in the class of shares listed (excluding treasury shares) (or for an issuer subject to a minimum public float percentage lower than 25% at the time of its initial listing, represented at least 50% of the issuer’s Initial Prescribed Threshold); or (2) has a market value of at least HK$500 million and represents at least 5% of the issuer’s total number of issued shares in the class of shares listed (excluding treasury shares).

In terms of a PRC issuer with other listed shares, a public float shortfall will be considered as a Significant Public Float Shortfall unless its H-shares listed on the Exchange and held by the public (1) have a market value of at least HK$500 million; or (2) represent at least 5% of the issuer’s total number of issued shares in the class to which H-shares belong (excluding treasury shares).

These issuers will be designated with a stock marker (“-PF”) at the end of their stock name rather than being suspended from trading. Issuers that do not restore the required public float within 18 months (or 12 months for GEM) will be removed from the listing.

CONCLUSION

The amendments to the Listing Rules implementing the above proposals will apply to all listed issuers. These new provisions will override and replace the existing transitional public float requirements currently in force. The new ongoing public float requirements and a new Guidance Letter (HKEX-GL121-26) will come into effect on 1 January 2026 to assist issuers in adhering to the updated Rule requirements.

These reforms are viewed as complementary to HKEX’s earlier initiatives and would enhance transparency and strengthen market confidence. This highlights HKEx’s dedication to safeguarding investors and upholding market integrity, thereby illustrating Hong Kong’s reputation as a foremost global financial hub.