The benefits of Pre‑IPO Trusts in today’s Hong Kong market
This article was originally published in May 2021 and has been updated in September 2025 by Sharon Yam.
As of mid‑2025, Hong Kong has reclaimed its crown as the world’s leading venue for IPO activity.
In the first half of the year, the Hong Kong Stock Exchange (HKEX) attracted 42 company listings1, raising US$13.5–14.1 billion in IPO proceeds2, outpacing global rivals and accounting for nearly 24% of total global IPO proceeds3. Against this buoyant backdrop, founders and executives preparing for IPOs are revisiting their corporate structure and their personal wealth strategies.
Increasingly, many are turning to pre‑IPO trusts to protect, govern, and optimise their shareholdings before a public listing.
What is a Pre‑IPO Trust and why does it matter?
A pre‑IPO trust is a legal arrangement structured before an IPO, typically designed to hold the founder’s (or senior executive’s) company shares. With sharp IPO market growth in H1 2025, now is an ideal moment to consider the strategic advantages of using a pre‑IPO trust.
Key benefits of Pre‑IPO Trusts
1. Asset protection & mitigating risk
Shares held in a pre‑IPO trust are legally owned by a professional trustee (not the founder) shielding the assets from personal creditors or legal claims. This structure can safeguard family wealth against unexpected liabilities.
2. Enhanced control & continuity
Trustees ensure the IPO process moves forward, even in the event of founder incapacity or internal disputes. A well-structured pre‑IPO trust maintains smooth transitions and prevents loss of control during critical transactions.
3. Probate avoidance and succession planning
By transferring shares into the trust, founders remove shares from their estate bypassing probate. A letter of wishes can guide the trustee in distributing assets, offering greater flexibility than a will if circumstances evolve.
4. Tax efficiency & Stamp Duty minimisation
For offshore holding companies, transferring shares into a pre‑IPO trust may offer relief from stamp duty and capital gains liabilities, depending on jurisdictional rules.
5. Structured ownership & future flexibility
The trust structure allows founders to create share classes, such as fixed-value preference shares for themselves and growth shares for heirs, preserving control while being estate-efficient.
Structuring a Pre‑IPO Trust: Key considerations
Setting up an effective pre‑IPO trust typically involves transferring shares into a holding company owned by the trustee. The optimal structure depends on multiple variables: the founder’s tax residence, beneficiary profiles, potential risks, and cross-border exposure.
Hong Kong offers a full ecosystem (legal, fiduciary, and tax advisory) that supports founders through the complexities of establishing pre‑IPO trusts. Expert guidance helps strike the right balance between control and independence ensuring the trust maintains integrity and even potential tax benefits.
The popularity of ESOPs and their role in Pre‑IPO structuring
Pre‑IPO trusts aren’t just for protecting founder wealth. Many companies also use them to implement Employee Stock Ownership Plans (ESOPs) a powerful tool for encouraging employee retention and incentivising key contributors.
When integrated into a pre‑IPO trust, ESOPs reward employees with equity, align interests, and help to preserve capital, especially useful in a market enjoying record IPO activity.
In summary
Today’s booming IPO environment, especially in Hong Kong where IPO proceeds in H1 2025 surged over 600% year-on-year4, offers a significant opportunity for founders to thoughtfully structure both their personal and corporate wealth before going public.
Establishing a pre‑IPO trust now can provide protection, clarity, and flexibility for you, your company, and your beneficiaries long into the future.
If you’re on an IPO journey or planning one, it’s critical to consider how a pre‑IPO trust might support both your family and your business through this pivotal moment. Contact our Hong Kong team for a confidential, no-obligation discussion.
This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. This article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained within this article without obtaining specific professional advice. Please contact Equiom Group to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.
