HKEX and SEHK consultation papers on widening capital markets access and strengthening Hong Kong’s listing regime

Jun 2017

The main purposes of the “New Board Concept Paper” and “The Consultation Paper on the Review of the Growth Enterprise Market (“GEM”) and Changes to the GEM and Main Board Listing Rules” are to broaden capital markets access in Hong Kong by opening up to a more diverse range of issuers, improving the quality of the Exchange’s market and enhancing Hong Kong’s competitiveness as a global financial centre.

New Board Concept Paper proposes an establishment of a New Board which will be divided into two segments - New Board PREMIUM and New Board PRO. New Board PREMIUM would be open to retail investor participation and, accordingly, a regulatory approach similar to that of the Main Board would apply. New Board PRO would be open to professional investors only and would provide a “lighter touch” approach to initial listing requirements.

Review of GEM and Changes to GEM and Main Board Listing Rules proposes a reform to the rules for GEM seeking to address market and regulatory concerns over the quality and performance of applicants to and listed issuers on GEM. The proposed reform to the Main Board Listing Rules ensures that there is clear distinction between the Main Board and GEM.

Key provisions of the proposals on which the Exchange is seeking public feedback include the following:

  • the removal of the streamlined process for GEM transfers to the Main Board;
  • an increase in the minimum expected market capitalisation of GEM applicants from $100 million to $150 million and a corresponding increase in the minimum public float value of a GEM company from $30 million to $45 million;
  • an increase in the minimum expected market capitalisation of Main Board applicants from $200 million to $500 million and a corresponding increase in the minimum public float value of a Main Board company from $50 million to $125 million (25 per cent of $500 million);
  • an increase in the cash flow requirement for GEM applicants from $20 million to $30 million;and 
  • the introduction of a mandatory public offering requirement of at least 10 per cent of the total offer size for all GEM IPOs.

 

The consultation period will end on 18 August 2017. For details of the two papers, please refer to the Hong Kong Exchanges and Clearing Limited website.

The Exchange aims to finalise detailed New Board listing rules in early 2018. It also aims to publish its conclusions on the GEM review proposals in late 2017.

Contact us

Loretta Chan
Partner
Tel: +[852] 2289 6700
Email

Follow us