From Dow Jones Newswires:

Hong Kong’s securities regulator said Wednesday it is considering introducing both criminal and civil liabilities for listing sponsors, as part of efforts to prevent substandard companies from listing shares in the city.

Listing sponsors, which include investment banks and brokerages, are responsible for the contents of new listing documents and are bound by the Securities and Futures Commission’s rules.

The SFC said it plans to launch a public consultation in the next few weeks regarding enhancing sponsor regulations in the city, which was the world’s top IPO destination by value last year. The consultation is aimed at seeking the public’s views on both types of liabilities for listing sponsors.

The plan to introduce new sponsor regulations comes amid increasing investor scrutiny of the quality of some firms that have listed in the city in recent years.

The SFC has been pushing for the banks and brokerages that underwrite initial public offerings in Hong Kong to take greater responsibility for keeping substandard companies at bay. Last year, an inspection of 17 IPO underwriters by the SFC uncovered various problems, including unsatisfactory due diligence and inadequate internal systems and controls over sponsor work.

A person familiar with the situation said last week the SFC hopes to strengthen existing guidelines covering the conduct of listing sponsors, which operate under licenses granted by the commission, and examine the responsibilities sponsors take on in local IPOs. In addition, the SFC is also looking to make underwriters legally liable for the accuracy and completeness of listing prospectuses, the person said.