Hong Kong's Securities and Futures Commission found compliance failures in financial institutions that carry out sponsor work for IPOs and urged those institutions to review and enhance their systems and controls.

The SFC said March 26 that its inspection found that some sponsors failed to follow up on obvious red flags and only followed standard checklists without adapting them to the circumstances of each listing application. The regulator also found that some sponsors did not confirm that interviewees had the authority and knowledge to provide the information requested.

The SFC will "take enforcement action" against sponsors that have not complied with the expected standards and codes, said Ashley Alder, CEO of the commission.

The regulator had returned or rejected 44 listing applications since October 2013. It did not name the sponsors that have failed to comply with standards.