HKSI Paper 8 SEHK primary and secondary markets question: Lantern Holdings Ltd's IPO

HKSI Paper 8SEHK primary and secondary markets

In Lantern Holdings Ltd's IPO, the company issues 150 million new shares and its founder, Mr Leung, sells 50 million existing shares, all offered to the public under one prospectus. How is this offering best described?

A An offer for subscription of the new shares combined with an offer for sale of Mr Leung's shares
B An offer for subscription of all 200 million shares, as they are offered under one prospectus
C An offer for sale of all 200 million shares, as they are offered to the public at a single price
D A placing of the new shares combined with an introduction of Mr Leung's existing shares

Show the answer and explanation

Answer: A. An offer for subscription of the new shares combined with an offer for sale of Mr Leung's shares

Rule 7.02 defines an offer for subscription as an offer to the public by or for the issuer of its own securities, and r.7.06 defines an offer for sale as an offer to the public by or for holders of securities already in issue. Here the 150 million new shares are an offer for subscription, so the company receives that money, and Mr Leung's 50 million existing shares are an offer for sale, so he receives that money. One prospectus and one price do not turn the deal into a single method. A placing (r.7.09) is to selected persons, and an introduction (r.7.13) involves no marketing at all. Source: HKEX Main Board Listing Rules r.7.02, r.7.06, r.7.09, r.7.13 (as at October 2026).

Common mistake

Labelling the whole IPO by one method. New shares are subscribed and existing shares are sold, so one offering can combine both methods.

Practise more Paper 8 SEHK primary and secondary markets questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practising →

Study note: SEHK primary and secondary markets HKSI Paper 8 practice questions & mock exams

Related HKSI Paper 8 questions

Peng Chau Robotics Ltd seeks a GEM listing under the market cap/revenue/R&D test. Expected market capitalisation is HK$300 million. Over two years revenue was HK$45 million then HK$60 million, and R&D spending HK$13 million then HK$19 million, being 18% then 13% of total operating expenditure. It meets the record and continuity conditions. Does it qualify?A Main Board applicant relying on the profit test made profits attributable to shareholders of HK$30 million in year 1 and HK$18 million in year 2. What is the minimum profit it needs in year 3, its latest financial year?A Main Board applicant will list 400 million shares, its only class, at HK$20 each, an expected market value of HK$8 billion. What is the minimum number of shares that must be held by the public at listing?

Build a daily practice habit — a few exam-style questions a day, with worked answers. Free to start.

Start practising →

Original study material mapped to the public HKSI Paper 8 syllabus. Unofficial, not endorsed by HKSI Institute or the SFC. Verify figures and rules against current guidance before relying on them.