1
HKEx LISTING DECISION
HKEx-LD30-2012 (published in April 2012)
Parties Company A – a Main Board listing applicant
Group – Company A together with its subsidiaries
Parent Company – Company A's controlling shareholder
Issue Whether Company A's financial and operational reliance on
Parent Company rendered Company A not suitable for listing
Listing Rules Main Board Rule 8.04; Paragraph 27A of Appendix 1A of the
Rules
Decision The Exchange had concern on Company A's suitability for
listing under Rule 8.04 given that (i) Company A had not yet
demonstrated its operational and financial independence from
Parent Company; and (ii) Company A's significant reliance on
Parent Company raised the issue of the sustainability of
Company A's business, and determined that Company A
should take concrete steps to address the issue of reliance on
Parent Company before the Exchange would consider any
further review of Company A's listing application.
FACTS
1. Company A was a "Product X" manufacturer in China. It was a subsidiary of
Parent Company, a "Product Y" manufacturer.
2. The Group started its business as the Product X production unit of Parent
Company in the year preceding the Track Record Period (comprising Year 1,
Year 2, Year 3 and the first six months of Year 4), supplying Product X to Parent
Company and other manufacturers. The Group made its first sales of Product X
to Parent Company in the third quarter of Year 2.
3. Company A applied for listing under Rule 8.05(3) given that it was unable to
meet the profit requirement under Rule 8.05(1)(a) due to net losses in Year 1 and
Year 2.
4. Since the Group's first sales of Product X in Year 2, it had generated substantial
revenue from sales to Parent Company and Parent Company had been the
Group's largest customer, representing over 75% of the Group's total sales in

下一页