New IPO Safeguards To Be Imposed In Hong Kong

by Mary Swire, for LawAndTax-News.com, Hong Kong

30 March 2007

A new measure will be implemented April 2 to deter multiple applications for initial public offerings, the Hong Kong Monetary Authority has announced.

Presently, part of the number of an identification document of an IPO applicant, or the first-named applicant of a joint IPO application, is printed on the IPO refund cheque for unsuccessful applications. In compliance with the requirements of the Personal Data (Privacy) Ordinance, the identity number is printed in such a way that the fifth and sixth digits (including alphabets and numerals) are masked by an asterisk. Recently, some IPO applicants, in submitting multiple applications, have attempted to circumvent the existing arrangement for masking identity numbers in the refund cheques.

Under the new measure, the position of the two masked digits will no longer be fixed at the fifth and sixth digits. The masked positions in each IPO will be randomly selected by a computer programme designed by the share registrar handling the IPO.

The new measure is designed to discourage dishonest people from attempting multiple applications in IPOs because they may encounter difficulties in depositing and encashing the refund cheques bearing an identity number which is different from their own.

The Securities & Futures Commission has said that it will work with the industry and other relevant parties to identify ways to improve the operation and the integrity of the IPO application process.

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