According to the listing rules of HKEx, the expected initial market capitalization of the securities to be placed for IPO must not be less than HK$25,000,000 or such other amount as may be fixed from time to time by HKEx, which will not normally apply to placings of equity securities by overseas issuers having their primary listing on another stock exchange. HKEx should, however, be consulted in such cases.

The securities to be placed must have an adequate spread of holders, the number depending on the size of the placing, but as a guideline there should be not less than three holders for each HK$1,000,000 of the placing, with a minimum of 100 holders.

The total number of securities available for public subscription (taking account of any clawback feature in the case of issues which involve both placement and public subscription tranches) are to be divided equally into pools: pool A and pool B. The securities in pool A should be allocated on an equitable basis to applicants who have applied for securities in the value of HK$5 million or less. The securities in pool B should be allocated on an equitable basis to applicants who have applied for securities in the value of more than HK$5 million and up to the value of pool B. Where one of the pools is undersubscribed, the surplus securities should be transferred to satisfy demand in the other pool and be allocated accordingly. No applications should be accepted from investors applying for more than the total number of shares originally allocated to each pool. Multiple applications within either pool or between pools should be rejected.

In the cases of offers Involving a Subscription Tranche, issuers are reminded that in accordance with paragraph 7.10 of the Exchange Listing Rules, the Exchange may not permit a new applicant to be listed by way of placing if there is likely to be significant public demand for the securities. A key factor the Exchange will consider in reaching such a determination is the size of the offering.

Where an IPO includes both a placing tranche and a public subscription tranche the minimum allocation of shares to the subscription tranche shall be as follows:

1. an initial allocation of 10% of the shares offered in the IPO;
2. a clawback mechanism that increases the number of shares to 30% when the total demand for shares in the subscription tranche is 15 times but less than 50 times the initial allocation;
3. a clawback mechanism that increases the number of shares to 40% when the total demand for shares in the subscription tranche is 50 times but less than 100 times the initial allocation; and
4. a clawback mechanism that increases the number of shares to 50% when the total demand for shares in the subscription tranche is 100 times or more the initial allocation.

Shares may be transferred from the subscription tranche to the placing tranche where there is insufficient demand in the subscription tranche to take up the initial allocation.

Where the issuer has granted the underwriters an over-allotment option this may be divided between the public subscription tranche and placing tranche at the discretion of the underwriters. Underwriters should restrict the extent of any over-allocation of shares to the limit provided under the over-allotment option.

Before trading in the shares commences, issuers should disclose the level of indications of interest for shares in the placing tranche. This may be provided in either a numerical form or by way of a qualitative description.

Investors are free to select whether to apply in the placing tranche or the subscription tranche. Where the placement tranche and subscription tranche are completed simultaneously an investor may submit an application in one of the pools in the subscription tranche and indicate an interest for shares in the placing tranche. An investor may only receive shares in the placing tranche or the subscription tranche. Any investors which have not received shares in the placing tranche may receive shares from the subscription tranche.

Issuers should reject multiple applications within either pool or between pools. Issuers, their directors, sponsors and underwriters are required to take reasonable steps to identify and reject applications in the subscription tranche from investors that received shares in the placing tranche, and to identify and reject indications of interest in the placing tranche from investors that received shares in the subscription tranche. Invetors which have not received shares in the subscription tranche may receive shares in the placing tranche.

Prospectuses and subscription forms for IPO
Distribution points of prospectuses and subscription forms for IPO are set out in the prospectus of issuers.

The HKEx listing rules also allow prospectuses to be distributed electronically as long as printed copies are also available in the market. Investors can refer to Investor section or New Listings under the Listing Matters and Listed Companies section on the HKEx website for New Listing Announcements and the Prospectus of a company.

Investors can also check with the sponsor(s) or underwriter(s) or receiving banks for details about distribution of prospectuses and subscription forms as well as application procedures.

The forms investors use to subscribe for new shares
Investors can use either the White or Yellow Form to subscribe for new shares but not both forms. Multiple or suspected multiple applications are liable to be rejected.

Investors who want the physical Hong Kong Offer Shares to be issued in their names should use the White Form while those who want the Hong Kong Offer Shares to be deposited directly into CCASS and registered in the name of HKSCC Nominees Limited should use the Yellow Form.

The main difference between the White and Yellow Form is that the White Form subscriber usually has to wait for the mailing of physical share certificates and will normally trade the stock only after receiving the share certificates and having them deposited with a bank or brokerage firm. Investors may not be able to catch the first trading day as they may not have received the physical shares certificates before trading of the new shares commences. However, as the allotted shares of Yellow Form subscribers have already been deposited into CCASS, they can trade the stocks through their brokers on the first trading day of the new issues.