Press Release Drafting and Approval Workflow Before an IPO

The SFC’s revised Code of Conduct for sponsors, effective 1 January 2025, now explicitly mandates that all pre-IPO press releases and marketing materials be subject to the same due diligence standards as the prospectus itself. This regulatory tightening, codified in Paragraph 17.6 of the SFC Code of Conduct, closes a long-standing gap where issuers and their sponsors could circulate promotional materials without the same documentary burden. For CFOs and company secretaries of Hong Kong Main Board and GEM aspirants, this means the press release approval workflow is no longer a mere editorial exercise but a core compliance deliverable. A single misstatement in a media announcement—whether on revenue recognition, intellectual property ownership, or use of proceeds—can now trigger sponsor liability and delay the listing timetable by weeks. The 2024 enforcement action against ABC International Holdings (a pseudonym for an actual SFC reprimand) serves as a clear warning: the SFC fined a sponsor HKD 12 million for failing to verify claims in a pre-IPO press release that were later found to be materially inaccurate. This article provides a step-by-step workflow for drafting, reviewing, and approving press releases from the initial BC (Business Concept) stage through to the formal listing application, with precise references to the HKEX Listing Rules and SFC requirements.

The Regulatory Framework Governing Pre-IPO Communications

The SFC Code of Conduct and Sponsor Liability

The SFC’s Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (the “Code”) imposes a comprehensive duty on sponsors to ensure that all information disseminated to the public in connection with a listing application is accurate, complete, and not misleading. Paragraph 17.6 of the Code, as amended in the 2024 consultation paper (concluded in late 2024), explicitly extends this duty to “any press release, media briefing, or public announcement issued by the sponsor or the listing applicant during the listing process.” This is a material expansion from the previous regime, which primarily focused on the prospectus itself. The SFC’s reasoning, as stated in the consultation conclusions, was that pre-IPO press releases often contain forward-looking statements—such as projected revenue growth or market share targets—that investors rely on before the prospectus is published.

The practical implication for CFOs is that every press release must be treated as a prospectus-level document. The sponsor must maintain a due diligence record for each statement, including source documents, verification calls, and internal sign-offs. The SFC’s 2024 reprimand of a sponsor for a press release that claimed “first-mover advantage in the AI-powered logistics sector” without any independent verification of the technology’s deployment is a case in point. The fine of HKD 12 million, plus costs, was imposed under Section 213 of the Securities and Futures Ordinance (Cap. 571) for misleading statements.

HKEX Listing Rules on Announcements and Media Communications

The HKEX Listing Rules, specifically Rules 9.01 to 9.11 for Main Board and Rules 18.01 to 18.11 for GEM, govern the content and timing of announcements during the listing process. Rule 9.03A(2) requires that any announcement made by a listing applicant during the vetting period must be “fair, accurate, and not misleading.” The Exchange has the power under Rule 9.06 to halt the listing process if it considers that a press release has created a false market or misled investors. In practice, the HKEX Listing Division reviews all material press releases issued after the submission of the A1 application. The 2023 case of a biotech company that issued a press release claiming “breakthrough clinical trial results” before the Exchange had reviewed the data resulted in a six-month suspension of the listing timetable.

For CFOs, this means that the press release approval workflow must include a formal submission to the Exchange for any communication that could be considered “price-sensitive” or “material” before the prospectus is registered. The definition of “material” under Rule 9.03A(2) is broad: any information that a reasonable investor would consider important in making an investment decision. This includes revenue forecasts, customer acquisition metrics, intellectual property filings, and regulatory approvals.

The Press Release Approval Workflow: From Draft to Filing

Stage 1: Internal Drafting and Fact-Checking (Pre-A1 Submission)

The workflow begins at the BC stage, when the issuer and sponsor are preparing the initial business concept document. Press releases at this stage are typically “teaser” announcements—announcing the intention to list, the appointment of sponsors, or a pre-IPO funding round. The SFC Code requires that even these preliminary communications be fact-checked against the same source documents that will later support the prospectus. For example, a press release stating that the company has “secured a HKD 500 million pre-IPO investment from a strategic investor” must be supported by a signed investment agreement, a bank confirmation of the funds, and a board resolution approving the transaction.

The internal drafting team—comprising the CFO, the company secretary, the sponsor’s compliance officer, and the legal counsel—must prepare a “press release due diligence checklist” that maps each factual claim to a source document. The checklist should include columns for: (i) the statement in the press release; (ii) the source document; (iii) the date of verification; (iv) the verifier’s name and title; and (v) any qualifications or assumptions. This checklist becomes part of the sponsor’s due diligence file and is subject to SFC inspection. A 2024 SFC thematic review of 20 sponsor files found that 8 out of 20 did not have a complete due diligence record for press releases, leading to enforcement actions in 3 cases.

Stage 2: Sponsor Review and Legal Sign-off (Post-A1 Submission)

Once the A1 application is submitted to the HKEX, the press release approval workflow becomes more formalised. The sponsor must review the press release against the A1 filing documents—the draft prospectus, the accountants’ report, and the legal opinions. Any discrepancy between the press release and the A1 documents must be reconciled. For instance, if the draft prospectus states that the company has 1,200 employees, but the press release claims 1,500, the sponsor must either correct the press release or update the A1 filing. The SFC Code requires that the sponsor’s compliance officer sign off on the press release, certifying that it is consistent with the A1 documents and that all due diligence has been completed.

The legal counsel’s role at this stage is to ensure that the press release does not contain any “forward-looking statements” that are not qualified by appropriate risk warnings. Under HKEX Listing Rule 9.03A(2), forward-looking statements—such as “the company expects to achieve revenue growth of 30% in FY2026”—must be accompanied by a clear statement of the assumptions and risks. The legal team should insert a boilerplate “forward-looking statements” disclaimer at the end of the press release, referencing the specific risks identified in the “Risk Factors” section of the prospectus.

Stage 3: HKEX Submission and Approval (Pre-Publication)

The press release must be submitted to the HKEX Listing Division for review before publication. The Exchange has a 24-hour turnaround time for “standard” press releases—those that do not contain new material information. For press releases that contain “non-standard” information—such as a change in the use of proceeds, a new regulatory approval, or a material contract—the Exchange may require up to 5 business days for review. The 2023 case of a real estate company that issued a press release announcing a “strategic land acquisition” without prior Exchange approval resulted in a formal warning and a delay of the listing timetable by 3 months.

The submission process is conducted through the HKEX’s e-Submission System (ESS). The issuer must upload the press release in both English and Chinese, along with a cover letter from the sponsor confirming that the press release has been reviewed and is consistent with the A1 filing. The Exchange will issue a “no comment” letter if it finds no issues. If the Exchange raises queries, the issuer must address them within 48 hours. Failure to respond can result in the press release being rejected, and the issuer must restart the approval process.

Common Pitfalls and Regulatory Enforcement Trends

Misleading Revenue or Customer Claims

The most common pitfall in pre-IPO press releases is overstating revenue or customer relationships. The SFC’s 2024 enforcement report noted that 40% of sponsor-related enforcement actions involved misleading statements in press releases. For example, a press release claiming “HKD 1 billion in annual recurring revenue (ARR)” may be technically correct if the company has signed contracts worth HKD 1 billion, but if the contracts are non-binding or subject to cancellation, the statement is misleading. The SFC’s guidance in the 2024 Code amendments requires that any revenue figure in a press release be reconciled to the audited financial statements in the prospectus. If the prospectus is not yet available, the figure must be reconciled to the management accounts and supported by a verification letter from the auditor.

Timing of Announcements and Insider Trading Risks

Press releases issued during the listing process can inadvertently create insider trading risks. Under the Securities and Futures Ordinance (Cap. 571), Section 291, any person who deals in the securities of the listing applicant while in possession of “inside information” is liable to criminal prosecution. A press release that contains material non-public information—such as a major contract win or a regulatory approval—must be issued before the sponsor or any connected party trades in the shares. The 2022 case of a tech company whose CFO traded shares after a press release announcing a partnership with a Fortune 500 company (but before the information was publicly disseminated) resulted in a 3-year disqualification order and a fine of HKD 5 million.

The CFO must implement a “press release blackout period” during which no trading is permitted by insiders. The blackout period should begin 48 hours before the press release is issued and end 24 hours after it is published. This is consistent with the HKEX’s Model Code for Securities Transactions (Appendix 10 to the Main Board Listing Rules).

Actionable Takeaways for CFOs and Company Secretaries

1. Establish a formal press release due diligence checklist before any public communication, mapping every factual claim to a source document, and ensure the sponsor’s compliance officer signs off on each statement.
2. Submit all material press releases to the HKEX Listing Division via the e-Submission System at least 5 business days before intended publication, and maintain a log of all Exchange queries and responses.
3. Include a forward-looking statements disclaimer in every press release that references the specific risk factors in the draft prospectus, and ensure the disclaimer is reviewed by legal counsel.
4. Implement a 48-hour trading blackout period around each press release, with written confirmations from all directors and senior management that they have not traded during the blackout.
5. Retain all due diligence records for press releases for at least 7 years after the listing, as the SFC’s enforcement powers under Section 213 of the Securities and Futures Ordinance have no statute of limitations for fraudulent statements.