SPECIAL FEATURE: A Practical Guide for PRC Property Valuation Under the Listing Rules

The valuation of property generally has a great impact on the financial statements of any company, and because of this, any applicant intending to list on the stock exchange may be required to include a valuation of their property investments in the listing document. A listing on the Hong Kong Stock Exchange requires applicants to comply with certain rules. We take a look at some of these rules and explain how they can be addressed in practice.

REQUIREMENTS UNDER THE LISTING RULES

In seeking a listing on The Stock Exchange of Hong Kong Limited (Exchange), the valuation of PRC properties may be required under the Rules Governing the Listing of Securities (Listing Rules). The requirement of valuing properties applies also to H share listings and is not restricted to initial public offerings. Further, it applies to Growth Enterprise Market (GEM) listings where the GEM Listing Rules on valuation of property follow closely those of the main board.

A listing applicant invariably seeks to include a valuation of its property investment in the listing document as this may have a substantial impact on the financial statements and the net tangible asset statement, especially when there is a revaluation surplus. Nevertheless, certain rules of the Exchange must be complied with before the listing applicant is entitled to ascribe any value to its property interests.