A sponsor firm and its management are responsible for ensuring that staff undertaking sponsor work as Principals and Representatives are licensed and meet the sponsor guidelines. Under the new IPO sponsor regime coming into force on 1 October 2013, there are now three distinct routes through which staff working as Principals on IPO transactions where their firm has been appointed in the role of sponsor can be licensed.
In all cases, a sponsor firm must appoint at least two Principals, whose primary role is to supervise transaction teams undertaking sponsor assignments. Appointing two Principals is a minimum requirement and a Principal must also be an Responsible Officer (for a licensed corporation) or an Executive Officer (for a registered institution) of the sponsor firm.
At least one of the Principals must have at least five years of corporate finance experience in respect of companies listed on the Stock Exchange of Hong Kong, including a substantial role as sponsor in at least two IPOs on the exchange.
This option requires high level IPO experience in Australia, the U.K. or the U.S. and the completion of a refresher course or special examination on the conduct of IPOs (for Principals, Paper 15, administered by the Hong Kong Securities and Investment Institute or HKSI) within six months prior to appointment.
This entails “active and substantial” participation in at least four IPOs in Hong Kong, at least five years of corporate finance experience for listed companies in Hong Kong as well as the completion of Paper 15.
Representatives, i.e. staff working on IPO transactions in a sponsor role but in an execution capacity under the supervision of one or more Principals, are required to sit Paper 16.
I am the joint author, together with Syren Johnstone, of the “Study Manual for Paper 15 Sponsors (Principals) and Paper 16 Sponsors (Representatives) of the Licensing Examination for Securities and Futures Intermediaries” (published in English and Chinese by the Hong Kong Securities and Investment Institute in September 2013). I will also be lecturing at the institute for preparatory courses for Paper 15 and Paper 16, as well as for refresher courses, in the third and fourth quarter of 2013.