Due Diligence Guidelines –
Interviews of Major Business Stakeholders
3. Interview Timing and Preparation
3.1.1 Third party due diligence interviews should be carried out sufficiently in advance of the filing of the listing application to allow adequate time for follow-up work before the filing, whilst acknowledging the benefit in minimising the opportunity for interviews to become stale through the elapse of time.
3.1.2 If there is a significant delay in publication of the listing document (i.e., publication occurs more than 12 months after filing of the Application Proof), the sponsor should conduct new interviews with relevant business stakeholders. Where the listing document will be published more than six months but less than 12 months after filing of the Application Proof, the sponsor should update its due diligence on business stakeholders already interviewed (e.g., by obtaining their confirmation that answers given in earlier interviews remain correct) and conduct new interviews if there has been a significant change in the listing applicant’s major business stakeholders.
3.1.3 If publication of the listing document occurs within six months after filing of the Application Proof, the sponsor should need to update its due diligence on business stakeholders already interviewed (e.g., by obtaining their confirmation that answers given in earlier interviews remain correct) only in exceptional circumstances, such as where there is a very high degree of dependence on a single customer or supplier or a “red flag” was raised during the initial due diligence.
3.1.4 Third party interviews will be conducted most effectively where the sponsor is well prepared. Typically, good preparation would include:
(a) reviewing the third party’s website and other publicly available data about the third party;
(b) obtaining an understanding ahead of the interview of the nature of the transactions between the listing applicant and the third party and the role played by the interviewee within the third party; and
(c) preparing a list of initial questions (recognising that additional questions may arise as a result of the responses).
HKCFEF Limited and the contributing law firms, accountants and sponsors are not offering these due diligence guidelines as legal, financial or professional advice or services and they should not be relied upon as such. These due diligence guidelines should not be used as a sole basis for any decision, action or inaction and are not meant to serve as a substitute for the advice of qualified professionals. See here for the full terms and conditions.