On 27 November 2020, the Stock Exchange of Hong Kong Limited  published a consultation paper seeking the market’s views on the proposals to increase the Main Board profit requirement and introduce temporary conditional relief from the Profit Requirement if the proposal to increase the Profit Requirement is adopted. 

The Exchange proposes to increase the current Profit Requirement of HK$50M during the track record period, which comprises of (a) HK$20M in the most recent financial year and (b) HK$30M in aggregate in the two preceding financial years, with two options:

Option 1 - 150% (i.e. HK$125M) - based on the percentage increase in the minimum market capitalisation from HK$200 million to HK$500 million. This will increase the minimum amount of profit attributable to shareholders to (a) HK$50 million in the most recent financial year and (b) HK$75 million in aggregate in the two preceding financial years.

Option 2 - 200% (i.e. HK$150M) - based on an approximate percentage increase in the average closing price of Hang Seng Index from 9,541 in 1994 when the Profit Requirement was introduced to 27,569 in 2019. This will increase the minimum amount of profit attributable to shareholders to (a) HK$60 million in the most recent financial year and (b) HK$90 million in aggregate in the two preceding financial years.

Due to the COVID-19 pandemic and other uncertainties in the global economy in 2020, many companies' businesses have been adversely affected. Therefore, subject to the adoption of the proposal to increase the Profit Requirement, the Exchange proposes to introduce temporary conditional relief from the profit spread in the increased Profit Requirement to facilitate the listings of quality companies that are temporarily affected by the market downturn in 2020.

The deadline for submissions is 1 February 2021.