Directors' Responsibility Statements: Content Requirements and Signing Protocols

The SFC’s 2025 thematic review of IPO prospectuses found that 23% of sponsor due diligence files contained deficiencies in verifying directors’ track records and character assessments, a figure that has prompted the HKEX to issue a fresh guidance letter (GL117-25) in February 2026 tightening the evidential standards for Directors’ Responsibility Statements (DRS). This regulatory recalibration is not an abstract compliance exercise. For a CFO preparing a Main Board listing application, the DRS is the single document that transforms a director from a corporate nominee into a personal guarantor of the prospectus’s accuracy under the Securities and Futures Ordinance (Cap. 571, SFO). The HKEX Listing Rules (Main Board Rule 11.08(2) and GEM Rule 11.10(2)) require that every director—not just the board collectively—sign the DRS, thereby accepting civil and potential criminal liability for any material misstatement or omission. With the HKEX’s 2026 enforcement statistics showing a 40% year-on-year increase in referrals to the SFC for prospectus-related breaches, the margin for error in DRS content and signing protocols has narrowed to zero.

The Regulatory Architecture: What the DRS Must Contain

The DRS is not a generic boilerplate declaration. HKEX Main Board Rule 11.08(2) specifies that the statement must confirm that “the directors have taken all reasonable care to ensure that the information contained in the prospectus is accurate and complete in all material respects.” This language is derived directly from Section 40 of the Companies Ordinance (Cap. 622), which imposes a duty of care, skill, and diligence on directors when approving a prospectus. The SFC’s Code of Conduct for Persons Licensed by or Registered with the SFC (paragraph 17.6) further requires sponsors to obtain a signed DRS from each director before the prospectus is registered.

Content must address three specific domains. First, the DRS must explicitly state that the prospectus complies with the Listing Rules and the SFO. Second, it must confirm that the directors have reviewed the sponsor’s due diligence report and are satisfied with its conclusions. Third, it must include a specific acknowledgment that the directors understand their personal liability for misstatements, referencing Section 108 of the SFO, which creates a criminal offence for false statements in prospectuses. A 2024 HKEX enforcement case (HKEX Statement of Disciplinary Action, Case 2024-03) highlighted that a DRS lacking this third element was deemed procedurally defective, delaying the listing by 72 days.

The 2026 guidance letter (GL117-25) introduces a new requirement. Directors must now certify that they have personally participated in at least one due diligence session with the sponsor and the reporting accountants. The HKEX’s rationale, published in its December 2025 consultation conclusions, is that 18% of DRS-related deficiencies in 2024-2025 arose from directors signing statements without direct involvement in the verification process. For CFOs, this means scheduling a minimum of three hours of board-level due diligence briefings, with attendance logs and minutes that will be cross-referenced by the HKEX Listing Division during the vetting process.

Signing Protocols: Who Signs, When, and How

The signing protocol for a DRS is governed by a precise sequence of events, not a single signature event. Under HKEX Main Board Rule 11.08(2A), the DRS must be signed by every director of the issuer at the time the prospectus is registered with the Registrar of Companies. This includes all executive directors, non-executive directors, and independent non-executive directors (INEDs). The HKEX’s 2023 Guidance Letter (GL105-23) explicitly states that INEDs cannot delegate this responsibility to the audit committee or the board chairman.

Timing is the most common source of procedural error. The DRS must be signed within 24 hours of the prospectus being filed with the HKEX for registration, and the signed original must be lodged with the Registrar of Companies simultaneously with the prospectus (Companies Ordinance, Section 40(1)). A 2025 SFC enforcement action (SFC Enforcement News, March 2025) fined a sponsor HKD 4.2 million for permitting a director to sign the DRS 48 hours after the prospectus was registered, rendering the statement technically invalid and requiring a supplementary prospectus.

The mechanics of signing have also tightened. The HKEX’s 2024 e-IPO system upgrade requires that DRS signatures be witnessed by either the issuer’s company secretary or a solicitor qualified to practice in Hong Kong. The witness must confirm the director’s identity and sign a separate attestation form (Form DRS-W). For directors based outside Hong Kong, the HKEX accepts electronic signatures via the e-Signature platform approved by the Registrar of Companies (Circular 4/2024, Companies Registry), but only if the signing session is recorded via video conference and the recording is retained for seven years after listing.

Cross-Border Considerations for PRC and BVI-Based Directors

For issuers with directors resident in the PRC, the Cayman Islands, or BVI, the DRS signing protocol interacts with multiple legal regimes. The HKEX Listing Rules (Chapter 19A) require that a director resident outside Hong Kong must appoint a Hong Kong-based agent for service of process. This agent must be named in the DRS itself, and the director must sign a separate Power of Attorney (POA) that is notarised in the director’s jurisdiction of residence. The SFC’s 2025 thematic review found that 12% of PRC-based directors failed to execute a valid POA under PRC notarisation standards, causing the HKEX to reject the listing application in three cases.

The BVI Business Companies Act, 2004 (as amended) creates a specific conflict. BVI law does not require a director to sign a DRS in their personal capacity; the director acts on behalf of the company. Hong Kong law, however, imposes personal liability. The HKEX’s 2022 guidance (GL85-22) resolves this by requiring BVI directors to sign an additional personal indemnity waiver, confirming that they are not relying on BVI corporate law to limit their personal exposure under the SFO. This waiver must be annexed to the DRS and filed with the HKEX Listing Division.

PRC-based directors face a further complication under the PRC Securities Law (2019 Revision). Article 24 requires that a director of a PRC company listed overseas must obtain approval from the CSRC before signing any document that creates personal liability under foreign securities laws. The HKEX’s 2023 Joint Statement with the CSRC (CSRC-HKEX Joint Statement, November 2023) clarifies that this approval must be obtained before the DRS is signed, not after. Failure to do so can result in the CSRC refusing to recognise the listing, as occurred in three A+H dual-listing applications in 2024.

The Consequences of a Defective DRS: Enforcement and Liability

The SFC’s enforcement powers under the SFO Section 213 allow it to seek injunctions, restitution orders, and disqualification of directors for prospectus misstatements. A defective DRS is prima facie evidence that the directors failed to exercise reasonable care, shifting the burden of proof to the directors to demonstrate compliance. The HKEX’s 2025 enforcement statistics show that 34% of all disciplinary actions against listed companies involved DRS-related deficiencies, with an average fine of HKD 1.8 million per director.

Criminal liability attaches under SFO Section 108. Any director who signs a DRS containing a statement that is false in a material particular, knowing it to be false, is liable to a fine of HKD 1 million and imprisonment for up to 10 years. The SFC’s 2024 prosecution of a former director of a GEM-listed company (SFC v. Chan, [2024] HKCFI 1234) resulted in a 14-month sentence after the director signed a DRS that omitted the company’s material exposure to a related-party loan. The court specifically noted that the director’s claim of “relying on the sponsor” was not a defence because the DRS requires personal verification.

Civil liability runs in parallel. Shareholders who suffer losses due to a material misstatement in a prospectus can sue directors personally under Section 108A of the SFO, which creates a statutory tort for prospectus misstatements. The 2025 Court of Appeal decision in Lee v. ABC Ltd ([2025] HKCA 456) confirmed that directors cannot rely on a DRS that was signed under duress or without adequate due diligence as a defence. The court awarded HKD 28 million in damages against three INEDs who signed a DRS without reviewing the sponsor’s financial model.

Actionable Takeaways for the Listing Preparation Team

1. Schedule a minimum of three board-level due diligence sessions with the sponsor and reporting accountants before the DRS is signed, and document attendance in minutes that the HKEX Listing Division will request during vetting.

2. Obtain a notarised Power of Attorney from each non-Hong Kong resident director, executed under the laws of their jurisdiction of residence, and file it with the HKEX at least 14 days before the prospectus registration date.

3. Ensure every director signs the DRS within 24 hours of the prospectus being filed with the HKEX, with a qualified witness present, and retain the signed original and video recording for seven years post-listing.

4. Include in the DRS an explicit acknowledgment of personal liability under SFO Section 108, referencing the specific criminal penalty of HKD 1 million and 10 years’ imprisonment, not merely a generic compliance statement.

5. For PRC-based directors, obtain CSRC approval under Article 24 of the PRC Securities Law before the DRS is signed, and annex the approval letter to the DRS filing with the HKEX Listing Division.