Thirty-six listing applications were received via the Stock Exchange in the third quarter, up 56.5% on the previous quarter, the Securities & Futures Commission says.

It issued comments on 17 applications, compared to 12 cases in the second quarter. In the first quarter it commented on 19 out of 30 applications received. Of those, three lapsed due to the expiry of the six-month application period, one was withdrawn, and 13 were listed or approved by the Stock Exchange to be listed. Two applications are outstanding.

The commission noted two serious disclosure deficiencies common to several cases. First, neither the business model of the listing applicant nor the commercial rationale of its key business transactions was clearly explained, making it difficult for potential investors to see the genuine business substance of the applicant.

This is typically observed where the listing applicant's operations involve close business arrangements with other, often related, parties. Second, disclosure of the relationship with the controlling shareholders is often incomplete.

The commission's Executive Director of Corporate Finance Peter Au-Yang said some companies' business models involve unusual relationships with related parties or other third parties.