Charles Li Xiaojia, former CEO of Hong Kong Exchanges and Clearing (HKG:0388), has filed to list Micro Connect International Finance (MCIF) under HKEX's Chapter 21 regime, aiming to help small companies raise capital, the South China Morning Post reported Monday.

Li, who led multiple listing reforms during his 11-year tenure at HKEX, said that although Chapter 21 was once viewed unfavorably, MCIF offers a clear theme, letting international investors back cash-flow-based assets of SMEs and start-ups in mainland China and beyond, the report said.

Chapter 21 allows investment companies to raise at least HK$150 million from a minimum of 300 qualified investors, each committing HK$500,000 or more, SCMP said. Only 21 firms have used this route since it was introduced in 1989, with the last in 2011.

Li told SCMP that past issues under Chapter 21, including regulatory action against Ding Yi Feng in 2023, should not invalidate its potential. Over 80% of SMEs don't meet traditional HKEX listing thresholds on profit, revenue, or assets, he said.

MCIF differs from Li's Micro Connect Group, which runs a Macau platform for trading revenue-based obligations. Instead, MCIF would raise capital, appoint a fund manager from Micro Connect, and invest in cash-flow-based products structured as contingent obligations, SCMP said.

These obligations would entitle international investors to daily income from SMEs for fixed terms of 12 to 18 months, Li said. MCIF also plans to partner with 100 entities, including landlords and payment platforms, to deliver real-time cash flow updates, SCMP added.

Li said the structure avoids share dilution and fixed interest payments for SMEs, while offering investors transparency and reliable returns, supported by digital protocols and partner networks.

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