There is a variety of reasons why some private companies decide to go public and some of the reasons why they do so is they want to gain access to more capitals; become highly visible in the market and enhance the status of their company. However, it is important to take note that not all private companies can go public. Only companies which are well established and are key players in their industry are allowed to go public.
Company owners should understand that there are many implications to listing your company as it will obviously have a very big impact. What should you ask before deciding on IPO in HK?
- What is the reason for going public?
- Is the company ready to accept potential losses?
- Is the company ready for the obligations of going public?
- What comes with the listing exercise?
Advantages of Public Companies
There are many advantages to be had with going public and this is why several companies choose IPO in HK. Companies which are publicly listed have the ability to raise capitals by offering transferable shares to the public. Publicly listed companies can have over 50 shareholders and can trade shares on the Stock Exchange after being approved by the Hong Kong Stock Exchange.
Listing your company publicly entails changes and responsibilities so it is something which must not be thought of lightly. Some of the benefits which can be had for going public are:
- Liquidity – Public company stockholders have the ability to sell their shares. This also gives them an exit strategy, as well as portfolio diversity.
- Prestige – if a company has public offerings, this means that they are stable. If your company is listed publicly on Hong Kong, it will get prestige. This is something which can be indispensable when searching for new clients and employees, as well as marketing products and services to the masses.
- Ease of raising capital – it can be difficult to raise capital for private companies. Publicly listed companies can raise a substantial amount of capital by inviting the general public to subscribe for shares. This will result to an increase in the company’s market share too.
Hong Kong Listing Procedure
After deciding to take your company public, there is a set of procedure which must be followed to complete the process. In a nutshell there is a process called due diligence which must be undertaken. This is the analysis and valuation phase of the company and this is performed by no less than a professional accounting firm. After due diligence, the public is then given the opportunity to purchase shares of the company.