Thursday, February 22, 2018

Rising demand for IPO legal insurance in Hong Kong

Hong Kong’s new stock market listing rules could trigger demand for legal insurance to cover liabilities arising from initial public offerings, according to Chris Fischer Hirs, group chief executive of Allianz Global Corporate & Specialty.

In an interview with the South China Morning Post, Fischer Hirs said that with more firms enticed to list in Hong Kong after the listing reform, many companies would also seek insurance cover for any possible legal fallout from IPOs.

Companies and their directors could face lawsuits for compensation for any disclosure failures.

Fischer Hirs said these companies and directors prefer to get insurance cover for legal costs and other related expenses when their companies go public.

In 2015 and 2016, Hong Kong saw very strong demand for such insurance when the city ranked top among IPO locations worldwide in terms of funds raised.

But when the city lost its IPO ranking last year, demand for such insurance also declined, Fischer Hirs added.

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