The lawyers’ perceptions on overseas incorporated companies listed in Hong Kong

The phenomenon of the majority of the companies listed in Hong Kong (HK) but incorporated overseas (OLCs) has caused a widespread concern among investors from all over the world as well as the policy makers in HK, the United Kingdom and China. However, no empirical study has attempted to find out why these OLCs did not incorporate in HK. This study aims to investigate this issue. We conducted a survey with a sample of HK lawyers advising OLCs. The results suggest that the main attractions for OLCs to list in HK were the absence of exchange control and its sound legal system. The main objective for these OLCs to list in HK was to raise capital. It is also found that the subjects considered the overall contribution of OLCs towards the success of the HK stock market as more important than the contribution of the Hong Kong Stock Exchange to the success of OLCs. Further, the respondents, on average, seemed to be marginally satisfied with the existing HK laws and regulations governing OLCs. Simplicity in these laws and regulations and the reasonable listing requirements were identified as the two most satisfying areas, whereas transparency was singled out as the most unsatisfying area. The implications of these results are discussed in this paper.