On 15 December 2017, the Hong Kong Exchanges and Clearing Limited ('HKEX') published the conclusions to the Consultation Paper on the Review of the Growth Enterprise Market (GEM) and changes to the GEM and Main Board Listing Rules with a view to reflecting the new role of GEM as a market for small and mid-sized companies and to ensure that there is a clear distinction between issuers listed on GEM and the Main Board ('GEM Consultation Conclusions'). The key changes are:
1. The names 'Growth Enterprise Market' and 「創業板」will be changed to 'GEM'.
2. Key Listing Rules changes:
- the removal of the streamlined process for GEM transfers to the Main Board;
- the introduction of a mandatory sponsor requirement for transfer of listing from GEM to the Main Board;
- an increase in the minimum expected market capitalisation of GEM applicants at the time of listing from HK$100 million to HK$150 million and a corresponding increase in the minimum public float value of GEM companies at the time of listing from HK$30 million to HK$45 million;
- an increase in the minimum expected market capitalisation of Main Board applicants at the time of listing from HK$200 million to HK$500 million and a corresponding increase in the minimum public float value of Main Board companies at the time of listing from HK$50 million to HK$125 million;
- an increase in the minimum cash flow requirement for GEM applicants from HK$20 million to HK$30 million;
- the introduction of a mandatory public offering requirement of at least 10% of the total offer size for all GEM IPOs; and
- an extension of the post-IPO lock-up requirement on controlling shareholders from one year to two years for GEM while there will be no change to the post-IPO lock-up requirement for the Main Board.
The revised GEM Listing Rules and Main Board Listing Rules will become effective on 15 February 2018. There will be transitional arrangements for new listing applicants that submit their applications before the rule amendment effective date.
For further details on the GEM Consultation Conclusions and the respondents’ submissions, please refer to the links below:
GEM Consultation Conclusions
The amendments to the GEM Listing Rules (Update no. 54) and to the Main Board Listing Rules (Update no. 118), together with the related frequently asked questions ('FAQ'), can be found in the links below:
Amendments to the GEM Listing Rules
Amendments to the Main Board Listing Rules
FAQ relating to the GEM Consultation Conclusions