Hong Kong's stock exchange was the world's hottest IPO market last year with more than 30 billion US dollars in new listings, but it stands accused of sacrificing quality for quantity. The bourse is keen to stay ahead of rival Shanghai and attract non-Chinese companies, but criticism has mounted after the controversial approval of Russian aluminium giant UC Rusal's share sale and a string of listing debacles. The exchange repeatedly delayed approving Rusal's 2.6-billion-US-dollar initial public offering (IPO). Unproven allegations that chief executive Oleg Deripaska has links to organised crime dogged the world's biggest aluminium maker in its attempts to become the first Russian company to list in Hong Kong. And when the listing was finally approved last month, the Securities and Futures Commission (SFC) stepped in with what observers call 'unprecedented' restrictions for the IPO. The SFC stipulated a minimum investment in Rusal equivalent to about 130,000 US dollars -- reportedly a bid to shield small investors from the complicated offering. 'It was quite a surprise that the SFC agreed to Rusal's listing,' said Raymond Chan, acting director of the Centre for Corporate Governance and Financial Policy at Hong Kong Baptist University. 'I think the exchange and SFC are aware of the quality problem.' Chan warned that the exchange could be putting its reputation at risk. 'Listing in Hong Kong would be associated with low quality.' Concern over the issue spiked after a string of mainland Chinese companies shocked the market with less-than-full disclosure in 2009. 'We list a lot of fairly sub-standard companies here -- just look at the listings in the past year,' said a corporate governance expert who requested anonymity. 'It doesn't do anything for this exchange.' Trading in shares of Asian Citrus, the mainland's largest orange plantation owner, was suspended on their debut amid claims that executives had misrepresented the company's value. Aluminium producer China Zhongwang Holdings raised more than one billion US dollars in April and then was also accused of misrepresenting details in its share sale prospectus, and obscuring its links to China's military. The company said last week that it had been cleared of wrongdoing after an independent review by accounting giant Ernst & Young. It did not make that report public and China Zhongwang has since suspended trading in its shares without explanation. China Metal Recycling, which also listed in Hong Kong last year, saw its shares plunge almost 50 percent when its chief financial officer quit, saying he was denied access to company financial records. Chan said Hong Kong was perceived as a good place to list because of the lighter regulatory touch. 'That's one reason why many mainland Chinese companies select the city as their first overseas exchange -- the regulations are not too tight for them, especially compared with the US,' he said. 'But the transparency and disclosure in Hong Kong is less stringent than in most Western exchanges. 'We need to improve that to get the same standard as other exchanges.' For its part, the exchange said it had joined a general trend away from so- called merit-based listings to a disclosure-based regime, putting the onus on company directors for the accuracy of information flowing to investors. Loss-making Rusal did not meet the bourse's profit test, but companies can still list if they meet other criteria, including positive cash flow, an exchange spokesman said. 'HKEx agrees entirely that good corporate governance is of paramount importance and therefore over the years has committed itself to building a quality market,' the spokesman said in a statement to selfnews. 'A quality market will result in a virtuous cycle which attracts issuers and investors.' But a high-profile critic questioned the adequacy of the exchange's disclosure rules, with no requirement for quarterly financial reports. 'Virtually every place in Asia requires quarterly reporting now,' said shareholder activist David Webb. 'Some people think that the easier we make it to list, the better. If that's the case, we might as well just trade on eBay without any regulation at all.' 