Formally the over-allotment option. An option granted by the issuer to underwriters allowing additional shares to be placed at the offer price after the offering, used for price stabilization: when the share price falls below the offer price, the stabilizing manager may buy shares in the market to support the price, using shares available under the option; when it rises, the option may be exercised for additional issuance. Exercising it is an ancillary stabilizing action under the price stabilizing rules, and the extent of exercise must be announced after the stabilizing period. Named after the Green Shoe Company, which first used the mechanism in 1963. The exact period and cap follow the terms disclosed in each prospectus.
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This page explains the HK IPO term "Greenshoe (Over-allotment Option)" and links to related terms. Definitions are compiled from HKEX Practice Note 18 and the Listing Rules, for understanding subscription rules only — not investment advice.
