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保荐人 · 2026-10-03

What a cornerstone investor actually is

Under HKEX-GL85-16, footnote 1, a cornerstone investor generally refers to an investor allocated IPO shares under the placing tranche on an assured basis who usually agrees to restrictions on share disposal. Chapter 4.15, paragraph 27, and HKEX-GL51-13, section 2.1, describe the usual investors as larger institutions and well-known individuals, including asset management funds, sovereign wealth funds and Hong Kong tycoons.

The assured entitlement is decisive. A cornerstone investor is guaranteed to receive an allocation irrespective of the final offer price. HKEX therefore regards the placing as a preferential placing. The sponsor must examine the substance of the assured allocation and the related contractual arrangements rather than rely on the label used in the prospectus.

Why the five cornerstone principles matter

Main Board Rules 2.03(2) and (4), and the corresponding GEM Rules 2.06(2) and (4), require securities to be issued and marketed in a fair and orderly manner and all holders to be treated fairly and equally. Chapter 4.15, paragraph 28, and HKEX-GL51-13, section 2.2, permit preferential placings to cornerstone investors only where the following principles are followed:

IPO price and full payment. The placing must be at the IPO price, and the cornerstone investor must fully pay for the shares before dealings in the applicant’s securities on the Exchange commence.
Lock-up. The IPO shares placed must be subject to a lock-up period generally for at least six months following the listing date.
No board representation and independence. Each cornerstone investor must have no board representation in the applicant and must be independent of the applicant, its connected persons and their respective associates.
Prospectus disclosure. Details of the placing arrangement, including the investors’ identity and background, must be disclosed in the prospectus.
Public float. Notwithstanding the lock-up, the shares must form part of the public float under Main Board Rule 8.08, or GEM Rule 11.23, as applicable, provided that the investor is a member of the public for the purpose of Main Board Rule 8.24.

The sponsor must be able to evidence each principle against the final cornerstone arrangements. An assured allocation is not a substitute for the price, payment, lock-up, independence, disclosure and public-float conditions.

Disclosure the sponsor must secure

Under Chapter 4.15, paragraph 28(iv), and HKEX-GL51-13, section 2.2(d), the prospectus must disclose the details of the placing arrangement and the identity and background of each cornerstone investor.

For an allocation to a connected client, an existing shareholder or a close associate, the Chapter 4.15 paragraph 7 and footnote 7 framework also requires the sponsor to cover the following fields:

the investor’s name;
the number of securities allocated;
the percentage of offer shares and/or total issued share capital taken up;
the basis on which the cornerstone investor or placee is regarded as a connected client under Main Board Appendix F1 or GEM Rule 10.12(1A), as applicable;
the name of the connected Distributor; and
the lock-up arrangement, where applicable.

The sponsor must also check the final allocation information in the allotment results announcement. The announced name, number of securities allocated and relevant percentages must agree with the approved prospectus disclosure. The sponsor must not allow the announcement and prospectus to present different allocation data.

The disclosure must also cover any arm’s-length commercial arrangement forming part of the cornerstone relationship. As explained below, the fact that such an arrangement is outside the prohibited-benefit rule does not remove its prospectus disclosure requirement.

Side letters, additional benefits and reclassification

The only benefit a cornerstone investor may receive for its cornerstone participation is the assured allocation of securities at the IPO price. No direct or indirect benefit may be provided by side letter or otherwise. This prohibition applies regardless of whether the benefit is granted by the applicant, a controlling shareholder, a sponsor or another syndicate member.

Prohibited benefits include:

waiver of brokerage commission;
a put option from the controlling shareholder or another person to repurchase the securities after listing;
sharing of underwriting commissions;
an assurance that the applicant will reinvest the IPO proceeds in funds managed by the cornerstone investor;
an agreement to allocate securities in another IPO;
any other transaction or arrangement connected with the acquisition of the securities and made on non-arm’s-length commercial terms.

If an investor receives any such benefit, it must be classified as a pre-IPO investor and the requirements in Chapter 4.2 apply. The sponsor must resolve the classification before accepting the investor as a cornerstone investor for prospectus and allocation purposes.

The accuracy consequence is separate and equally important. HKEX-GL51-13, section 4.4, states that non-disclosure of any direct or indirect benefit beyond the guaranteed allocation violates the principles under Main Board Rule 2.13 and GEM Rule 17.56. Non-disclosure of a side-letter benefit is therefore itself a breach of the accuracy requirement; it is not cured by describing the investor as a cornerstone investor.

There is a limited arm’s-length commercial carve-out. Commercial arrangements between an applicant and an investor, such as arrangements where the investor is a major customer or supplier, or the formation of a joint venture for business development with the investor, are not regarded as indirect benefits for this purpose. The sponsor must nevertheless ensure that the commercial arrangements are fully disclosed in the prospectus.

Connected clients and the allocation conditions

A connected client cannot participate both as a cornerstone investor and as a placee, whether or not it holds securities on behalf of independent third parties. HKEX-GL85-16 also states that an existing shareholder or its close associates cannot undertake both roles.

Consent is not automatic. Under HKEX-GL85-16, section 4.2, consent for an allocation to a connected client for its proprietary account will not be given unless exceptional circumstances are demonstrated and the matter is considered on a case-by-case basis. Under section 4.6, even where consent is available, the connected-client cornerstone investment must comply with the HKEX-GL51-13 principles and the applicable conditions in section 4.9 or section 4.11.

For a non-discretionary connected client, section 4.9 requires confirmations and information addressing the absence of investor discretion and preferential treatment. The sponsor must obtain and retain evidence that:

the overall coordinator has confirmed that the securities are held on behalf of independent third parties and that the connected client receives no preferential treatment beyond its assured entitlement under HKEX-GL51-13;
the issuer has confirmed that the cornerstone investment agreement contains no material terms more favourable than those in other cornerstone agreements;
the connected client has confirmed that it has received no preferential treatment;
the sponsor has obtained the connected client’s identity, its connected relationships and the identity of the ultimate beneficial owner; and
for a collective investment plan, the sponsor has obtained its asset-management scale, whether it is publicly marketed, its establishment date, its general partner, its 20 largest limited partners, its manager, and its relationships with the applicant’s controlling shareholder and the applicant.

A discretionary connected client presents a different risk profile. Under section 4.11, the authorized manager has investment decision-making authority, and its fee arrangements may create an incentive to use the connected relationship to obtain the allocation. The connected Distributor must not participate in the allocation decision process or the related discussions under section 4.11(c)(i). The sponsor must obtain evidence that this exclusion has been implemented rather than assume it from the appointment structure.

The sponsor’s specific verification and documentation duty

This work is part of the sponsor’s own due diligence. It is not discharged because the issuer has prepared prospectus disclosure or has confirmed that the cornerstone arrangements comply.

Paragraph 17.6(a) of the SFC Code of Conduct requires the sponsor to exercise reasonable judgement about the nature and extent of due diligence needed to understand the listing applicant and satisfy itself in relation to listing-document disclosure. Paragraph 17.6(b) requires professional scepticism regarding the accuracy and completeness of statements and representations, including attention to information that contradicts or questions their reliability. Paragraph 17.6(d) requires the sponsor to oversee and be closely involved in preparing the listing document and to achieve a thorough understanding of the applicant’s business, history, background, structure and systems.

Paragraph 17.6(c) is particularly important for cornerstone arrangements. The sponsor must not accept the applicant’s or its directors’ statements, representations or documents at face value. It must perform verification procedures appropriate to the circumstances, including reviewing source documents, making inquiries of knowledgeable persons and obtaining independently sourced information. Where information gives rise to doubt, further due diligence is required. Reliance on management’s representations or confirmations alone cannot constitute reasonable due diligence.

Applied to the cornerstone arrangement, the sponsor’s working papers should evidence:

the identity and background of each investor, its ultimate beneficial ownership and any basis on which it is a connected client;
whether the connected-client arrangement is non-discretionary or discretionary, including the manager’s authority, relevant fee arrangements and the connected Distributor’s role;
the assured allocation, IPO price, full-payment obligation and the investor’s financial capacity to meet that obligation;
the lock-up, absence of board representation, independence requirements and public-float analysis;
the terms of every cornerstone agreement and the search for side letters or other arrangements giving direct or indirect benefits;
the basis for treating any commercial arrangement as arm’s length and the corresponding prospectus disclosure; and
reconciliation of the prospectus and allotment results announcement, together with any consent or waiver obtained from the Exchange.

HKEX Practice Note 2, section 2, requires the sponsor to make such inquiries as are necessary reasonably to satisfy itself about the disclosure. Section 3 confirms that the due-diligence steps are case-specific rather than a fixed checklist. Under section 4, the sponsor must document its due-diligence planning, significant departures from that plan, the conclusions reached and the effect of any waiver. The sponsor’s conclusion must therefore address the cornerstone arrangement itself, independently of the issuer’s disclosure exercise.