Paper 16 Exam Study Guide (2026)
Everything the HKSI LE Paper 16: Sponsors (Representatives) tests, topic by topic: what each section covers, the facts that come up most, and how to study it. Pair it with the free 15-question practice test.
The exam at a glance
| Questions | 40 multiple-choice questions |
|---|---|
| Time | 60 minutes |
| Passing score | 70% |
| Format | Closed book, computer-based |
| Certifying body | Hong Kong Securities and Investment Institute (HKSI Institute) |
| Test provider | HKSI Institute computer-based test centre in Hong Kong, or Prometric centres outside Hong Kong |
Mind map: the whole exam on one screen
Read the complete Paper 16 study notes for “General Framework”
Our first full set of comprehensive notes, about 10 minutes of reading: Why sponsors are regulated · Who may act as a sponsor · The rulebook for sponsor work · Who does what in a listing · Powers of the SFC and SEHK · Integrity and consequences, a worked exam example, the traps examiners use and a one-minute recap. Create a free account to read it and see how premium notes work before you decide.
1. General Framework
The sponsor regime, who may act as a sponsor, and the rules and regulators behind Hong Kong IPOs.
Key facts
- The sponsor regime was introduced on 1 October 2013 through paragraph 17 of the SFC Code of Conduct.
- Sponsor work is Type 6 regulated activity (advising on corporate finance) under the SFO; underwriting or placing the offer shares is Type 1 (dealing in securities).
- A sponsor must be a licensed corporation or an authorised financial institution permitted to carry out sponsor work.
- Sponsors gatekeep Hong Kong listings: they vet applicants, run due diligence and stand behind the listing document.
- The rulebook includes the SFO, the Code of Conduct, the Financial Resources Rules, the Main Board and GEM Listing Rules, the Takeovers Code and SFO Part XV.
- The SFC investigates and disciplines licensed persons (fines up to the greater of HK$10 million or three times profit gained or loss avoided); SEHK approves listing applications and disciplines listed issuers.
Flashcards
Exam tip: Sort the rules by source: licensing under the SFO, sponsor conduct under Code of Conduct paragraph 17, listing requirements under the Listing Rules.
2. Listing Rules and the IPO Process
How companies qualify to list on the Main Board or GEM and how a Hong Kong IPO is structured and run.
Key facts
- Methods of listing: offer for subscription, offer for sale, placing and introduction; an introduction lists existing shares with no offering or fundraising.
- Main Board profit test: HK$80 million aggregate profit over three years (HK$35 million in the latest year and HK$45 million for the two before), with market capitalisation of at least HK$500 million.
- Market cap/revenue test: market capitalisation of at least HK$4 billion and revenue of at least HK$500 million in the most recent audited year.
- Market cap/revenue/cash flow test: market capitalisation of at least HK$2 billion, revenue of at least HK$500 million, and positive operating cash flow of at least HK$100 million over three years.
- Main Board applicants need at least three financial years' trading record with management continuity and recent ownership continuity, enough working capital for 12 months, a minimum public float (25% for most issuers, lower for very large ones) and at least 300 shareholders.
- The clawback moves shares from the placing tranche to the Hong Kong public offer when public demand is strong, under the Listing Rules mechanism; price stabilisation usually runs through an over-allotment option of up to 15% of the offer.
Flashcards
Exam tip: Learn the three financial tests side by side; the exam swaps their market capitalisation and revenue numbers.
3. Preparing an IPO Assignment
The resources, teams, vetting and record keeping a sponsor needs before taking on an IPO.
Key facts
- A sponsor must have adequate resources, systems and internal controls before accepting and executing IPO engagements (Code of Conduct paragraph 17).
- Each IPO must be handled by a dedicated Transaction Team with sufficient knowledge, experience and professional qualifications.
- New mandates should be vetted before acceptance: conflicts checks, review of the applicant's track record and the firm's own capacity.
- Clear reporting lines should run from the Transaction Team to senior management, and the team's authority should be defined.
- Records of mandates, due diligence and verification must be kept for at least 7 years.
- Sponsors coordinate third parties such as reporting accountants, lawyers, valuers and industry consultants, and deal with HKEX and the SFC.
Flashcards
Exam tip: Watch for questions on what a sponsor must have in place before an engagement, not just during it.
Test yourself on these topics
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4. Preparing a Listing Application
Appointment terms, independence, undertakings to regulators and whether an applicant is fit to list.
Key facts
- At least one sponsor must be appointed no later than two months before the listing application is filed (Main Board Rule 3A.02).
- Engagement letters should cover scope of work, fees, the sponsor's regulatory duties and termination.
Flashcards
Exam tip: The two-month clock runs from filing the application, not from the expected listing date.
5. Due Diligence
How sponsors investigate a listing applicant, verify the listing document and work with experts.
Key facts
- Sponsors must conduct reasonable due diligence so they are satisfied that the directors' statements and beliefs in the listing document are reasonable and verifiable.
- Due diligence must be planned and documented: scope, steps, findings and follow-up points.
Flashcards
Exam tip: Scepticism questions turn on corroboration: the wrong answers all involve accepting management's word.
6. After Prospectus Issuance
Compliance advisers, the SFC's findings on sponsor shortcomings and the consequences of failed work.
Key facts
- Newly listed issuers must appoint a compliance adviser to guide them on Listing Rules compliance during the initial period after listing.
- Issuers should consult the compliance adviser before announcing major transactions, connected transactions and other compliance matters.
Flashcards
Exam tip: Match the sanction to the regulator: the SFC polices licensed sponsors, while SEHK polices listed issuers.
How to pass
- 40 questions in 60 minutes gives you 90 seconds each, which is comfortable if you keep moving.
- The pass mark is 70%, so you need 28 out of 40; you can drop 12 and still pass.
- Learn the three Main Board financial tests as a set: the options love to swap their market capitalisation and revenue numbers.
- Due diligence answers turn on professional scepticism: corroborate with evidence rather than accepting management's word.
Frequently asked questions
How long should I study for the Paper 16 exam?
Most working candidates need 4 to 8 weeks at 45 to 60 minutes a day. Book your exam once your Readiness Score has stayed at 80 or higher for about a week.
Can I take the Paper 16 exam online?
Yes. Paper 16 can be taken at the HKSI Institute's computer-based test centre in Hong Kong or, for candidates outside Hong Kong, at a Prometric centre (higher fee). Format: closed book, computer-based. Check the HKSI Institute's current candidate information for the rules.
What score do I need to pass the Paper 16 exam?
70%. The exam has 40 multiple-choice questions and a time limit of 60 minutes.
What are the most tested topics?
The outline covers general framework, listing rules and the ipo process, preparing an ipo assignment, preparing a listing application, due diligence, after prospectus issuance. Use the free practice test to see which ones you need most.
The premium Paper 16 study path
Premium Paper 16 prep is studied one topic at a time. Each step starts with that topic's key notes and flashcard deck, then its own question sets of 25, so you master one topic before you move to the next. When every topic is strong, the 6 full mock exams show you're ready.
Your step-by-step study path
- 1General Framework10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25Notes free with an account
- 2Listing Rules and the IPO Process10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25Premium
- 3Preparing an IPO Assignment10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25Premium
- 4Preparing a Listing Application10 key notes, 135 flashcards, then 500 practice questions in 20 sets of 25Premium
- 5Due Diligence10 key notes, 130 flashcards, then 500 practice questions in 20 sets of 25Premium
- 6After Prospectus Issuance10 key notes, 130 flashcards, then 500 practice questions in 20 sets of 25Premium
- Final step: 6 full mock exams50 questions each, timed like test day. Pass them, then book your exam.Premium
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Summarized from the HKSI Institute's official candidate information and the rules cited, checked October 2026. Confirm current requirements with Hong Kong Securities and Investment Institute (HKSI Institute).