Chapter 1

Due Diligence Guidelines –

Introduction

2. Nature of the Due Diligence Guidelines

2.1 These due diligence guidelines are framed so far as possible in non-technical language and should not be interpreted as if they are statutes or regulations. These due diligence guidelines represent a broad consensus of opinion of those who act as sponsors for Hong Kong listings of equity securities as to what is good market practice in relation to carrying out due diligence to the standard set by the regulatory regime of Hong Kong in relation to the role of sponsors. They are primarily directed at new listings on the Stock Exchange of equity securities which are not already listed outside Hong Kong. They may not be applicable in their entirety, and alternative considerations may apply, to secondary listings in Hong Kong.

2.2 These due diligence guidelines have been written with particular regard to the requirements of Paragraph 17 of the Code of Conduct which is effective for all listing applications submitted on or after 1 October 2013. They therefore relate solely to the conduct of due diligence in respect of listing applications to which those requirements apply and are not intended to apply to due diligence conducted in respect of listing applications submitted on or before 30 September 2013. In particular, these due diligence guidelines are not intended to be, and should not be regarded as, a statement of, or comment as to, what may constitute reasonable due diligence in relation to any listing application which is submitted on or before 30 September 2013.