Investors want improvements in sponsor standards, a Securities & Futures Commission survey has found. They also want the commission to be the single statutory regulator responsible for the oversight and discipline of sponsors.

Releasing the Investor Survey on Sponsors findings today, the commission said most respondents have a fair understanding of a sponsor's role in the listing process.

Hong Kong University last October and November interviewed 1,623 adults - 47.1% were retail investors, 10.6% potential investors and 42.3% non-investors. The survey also covered 10 institutional investors, which include local and international fund management companies.

Key findings

Some 83.9% of retail investors and 100% of institutional investors are aware that a listing applicant must appoint a sponsor to provide corporate finance advice during the listing application.

About 88.5% of retail investors, 89.9% of potential investors, and 100% of institutional investors identify due diligence work as one of the sponsor's duties.

Respondents are in unison in their views regarding local sponsor standards. Ninety-five percent of retail investors, 94.2% of potential investors, and 100% of institutional investors agree that there is a need to raise sponsor standards.

Over 90% of the retail and institutional investors are of the view that in enhancing sponsor standards, the following four aspects should be considered:

* relevant IPO sponsor experience and competence of firms and professional staff;

* firm's internal system and control to oversee the quality of sponsor work;

* sufficient human and organisational resources of a firm in carrying out sponsor work; and,

* sufficient financial resources of a firm including professional indemnity of sponsor firms.

Action plan

Executive Director of Intermediaries & Investment Products Alexa Lam said the commission will conduct an action plan for the enhancement of sponsor standards.

The commission will review the licensing regime and formulate a specific set of eligibility criteria for sponsors and independent financial advisers under the licensing regime. It will also review the conduct rules applicable to sponsors and independent financial advisers and make revisions where necessary.

The commission plans to conduct a theme inspection on sponsor compliance with the recently revised Listing Rules and the newly implemented practice notes on due diligence regarding sponsor work.

It will prepare for public consultation eligibility criteria for sponsors and independent financial advisers in the first half of 2005. In the second half, it will conduct a theme inspection on sponsors' compliance with the recently implemented amendments to the Listing Rules and practice notes.

For survey details click here.