01
First the clause is described, then the exception is thrown
The words private placement by themselves do not exempt the issue from legislation. One card combines the issuer, instrument, number and status of recipients, method of communication, territory offers, intermediaries, listing, calculations and subsequent resale.
Whether the issuer has the authority to create and issue the instrument.
Is prospectus needed or does the exact exception apply.
Who posts, advises and receives rewards.
To whom and how can the tool be offered outside of Hong Kong?
02
The tool defines investor rights and regulatory analysis
- Ordinary shares
- Voice, Dividends and Residual Value; change cap table
- Preference shares
- Liquidation preference, preferred return, conversion and protective rights
- Convertible note
- Debt before conversion; maturity, interest, trigger and conversion mechanics are important
- Bond / note
- Coupon, maturity, covenants, events of default, security and guarantees
- Fund interest
- Separate collective-investment-scheme and manager perimeter
Economics cannot be disguised by a name. Redeemable share revenue participation, tokenized note or SAFE are analyzed by real rights, and not by the title of the document.
03
Before the term sheet, the corporate capacity of the issuer is checked
Articles, shareholder agreement and Companies Ordinance specify authorized capital mechanics, directors' authority, allotment, pre-emption, class rights and release registration. For a group guarantee, security, financial assistance, connected transactions and conflict of interest.
Commercial rationale, terms, allotment and authorized signs.
Mandate, waiver pre-emption and changing class rights.
Dilution, options, convertibles and fully diluted ownership.
Return of allotment, register of members and certificates.
04
Prospectus exemption applies according to its terms
To offer shares or debentures to a Hong Kong company verified by Companies (Winding Up and Miscellaneous Provisions) Ordinance and Seventeenth Schedule. In practice, they are considered offers only to professional investors, offers no more than 50 persons and instruments with a minimum denomination or consideration not less than HK$500,000.
Connected communications, repeat rounds, website, social media, intermediaries and resale may change the rating. Offering memorandum records the selected exception, legends, investor representations and transfer restrictions.
05
Professional investor - verifiable status
For relevant Hong Kong rules, an individual investor usually confirms a portfolio of at least HK$8 million. For a corporation or partnership portfolio used is at least HK$8 million or total assets not less than HK$40 million. Category, calculation method and acceptable evidence is verified as of the offer date.
- Individual
- Portfolio ≥ HK$8 million
- Corporation / partnership
- Portfolio ≥ HK$8 million or total assets ≥ HK$40 million
- Evidence
- Custody statements, certificates, audited accounts and valid aggregation
- Record
- Classification file, representations and inspection date are saved by the arranger
06
The Offer Exception does not replace the reseller's license
Placement, search for investors, negotiations and success fee can form dealing in securities - Type 1 regulated activity. Investment advice may affect Type 4, and advice on corporate finance - Type 6. Analysis is carried out for each participant and his actual role, location and remuneration.
The fact that the issuer offers its own securities does not unlicensed finder or placement agent is acceptable. Engagement letters and fee mechanics are checked before outreach.
07
Equity placement: documents must match the cap table
- Term sheet
- Valuation, amount, instrument, conditions and exclusivity
- Subscription agreement
- Representations, conditions precedent, closing and indemnities
- Shareholders’ agreement
- Board, reserved matters, information, transfer and exit
- Articles
- Class rights, preference, conversion and compulsory-transfer mechanics
- Disclosure
- Business, financials, litigation, tax, IP, licenses and related parties
For an already listed issuer, the Listing Rules are additionally checked: general or specific mandate, pricing, announcements, inside information, connected persons and placing guidelines.
08
Debt placement is built around refunds and enforcement
Terms and conditions describe principal, currency, coupon, maturity, redemption, events of default and acceleration. B secured release adds security documents, guarantees, intercreditor mechanics and local-law perfection where they are assets. Paying agent, registrar, trustee and clearing are selected under size and markets of release.
Leverage, distributions, disposals, reporting and negative pledge.
Shares, accounts, receivables, assets and enforcement order.
Withholding, gross-up, deductibility and investor residence.
Global note, register, paying agent and clearing system.
09
HKEX Chapter 37 - professional debt listing, non-public IPO
Chapter 37 is used for debt securities offered only professional investors. According to the current HKEX summary for normal corporate issuer benchmarks include consolidated net assets not less than HK$1 billion and audited accounts for at least two years; possible established exceptions.
- Investor perimeter
- Professional investors only
- Minimum denomination
- Not less than HK$500,000
- Issue size
- Usually at least HK$100 million, excluding taps
- Issuer financials
- Usually two years audited accounts
- Continuing obligations
- Announcements, defaults, changes and information to holders
Listing adds visibility and infrastructure, but does not transform release into a publicly available product and does not cancel selling restrictions.
10
Each investor country adds its own block
The Hong Kong exception only covers the Hong Kong portion. Offer to investors in Singapore, UAE, EU, UK, USA, The PRC or another country is verified according to local financial rules promotion, prospectus, investor classification and intermediary licensing Restrictions are included in the memorandum and subscription process by territory.
Institutional/accredited-investor route and MAS perimeter.
Separately mainland/SCA, DIFC/DFSA and ADGM/FSRA.
CBB offering rules, professional investors and licensed arranger.
Labuan FSA plus Malaysian SC for onshore marketing.
11
Worker closing checklist
- Fix the instrument, amount, investors and country of offer.
- Confirm corporate authority, cap table and approvals.
- Select offering exemption and collect investor evidence.
- Check the SFC licenses and engagement of each intermediary.
- Prepare memorandum, subscription and instrument documents.
- Complete KYC, sanctions, source of funds and beneficial ownership.
- Perform payment, allotment/issue, registers and filings.
- Set up reporting, covenants, transfer controls and investor communications.
Sources
Normative support
The material is a navigator. Before posting the rules and documents are verified as of the transaction date and for each investor’s country.
Part IV SFO, professional-investor exemption and licensing for investment promotion.
Current regulatory framework and materials on professional investors.
Official overview of exceptions for private offerings under the Companies Ordinance framework.
Rules for listing debt issues addressed only to professional investors.
Brief table of requirements for issuer, issue and documentation.
Rules for placing equity securities for listed issuers.
Capital Markets & Private Placement Desk
We will collect placement from term sheet to closing
We will determine an acceptable route, prepare corporate and offer documents documents, organize local counsel in the countries of investors and We will carry out the transaction through KYC, settlements and post-closing.
Discuss the issue