HKEx News Release 

The Exchange Publishes GEM Consultation Conclusions

The Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx), today (Friday) published its Growth Enterprise Market (GEM) Consultation Conclusions (GEM Consultation Conclusions).  They include details on the proposed development of GEM as a second board. 

The GEM Consultation Conclusions present the results of a public consultation held from July 2007 to October 2007.  The Exchange received 11 sets of market comments.  The respondents comprised members of GEM listed companies, corporate finance and advisory firms, professional organisations, accounting firms and private individuals.

As a result of the consultation and discussions with the Securities and Futures Commission, the Exchange considers that the appropriate way forward is to reposition GEM as a second board, and as a stepping stone towards the Main Board. 

Listing Rules amendments will be introduced to reflect the new role of the market but GEM will largely retain its existing structure.  The key changes are:

Under new quantitative admission requirements, applicants will need to have achieved positive cash flow of not less than $20 million in aggregate for two preceding financial years;

The power to approve the admission of new issuers to GEM will be delegated from the GEM Listing Committee to the Listing Division, and the GEM Listing Committee will retain monitoring, appeal and policy responsibilities;

Continuing obligations of GEM listed issuers will be brought closer to the requirements applicable to the Main Board requirements;

Existing GEM issuers will be required to comply with the new rules from their effective date, except that in the case of the public float requirement they will be given a three-year grace period; and


The process for transferring listing from GEM to the Main Board will be streamlined and there will be a 50 per cent cut in the Main Board initial listing fee for all transfer applicants from GEM.

Table 1 below shows key differences between the existing and new arrangements for admission to GEM.

Table 1 – Key GEM admission arrangements




Financial Credentials

“Business of substance and potential”

Operating cash flow > $20 million in aggregate for latest 2 full financial years

Operating History
and Management

24 months active business pursuits (may be reduced to 12 months)

Latest 2 financial years under substantially the same management

Market Capitalisation

Effectively > $46 million
(> $500 million for companies with 12 months active business pursuits)

> $100 million *

Focused Line of Business


Not required

Approval By

GEM Listing Committee

Listing Division

* Main Board market capitalisation requirement is > $200 million.

Table 2 below highlights key changes in the transfer arrangements from GEM to the Main Board.

Table 2 – Key changes in GEM to Main Board transfer arrangements 





Two steps: Delisting on GEM and new listing on Main Board

One step: New method of listing on the Main Board, “Transfer of Listing from GEM”


Standard initial listing fee for Main Board

Main Board initial listing fee reduced by 50% for GEM transfer applicants

Sponsor(s) or Financial Advisor(s)


Not required



Prospectus replaced by announcements

“For new applicants, the quantitative admission requirements provide a clear benchmark for eligibility to the market, thereby removing a degree of uncertainty and cost in the application process.”, HKEx’s Head of Listing, Richard Williams, said.

Mr Williams also explained that “Delegating the power to approve the admission of new issuers to the Listing Division should also help address concerns about the duration and predictability of the listing process, helping to minimise the applicants’ costs, without compromising regulatory standards”.

“For existing GEM-listed companies, the more established ones will be encouraged to treat the platform as a stepping-stone to the Main Board when the entry requirements for the latter are met. Under the streamlined transfer procedure, a sponsor is no longer necessary and the prospectus will be replaced by regulatory announcements published electronically. The time and cost of transferring to the Main Board should thus be significantly reduced” he said.

Implementation and Transitional Arrangements

New listing applications received by the Exchange on or before 2 May 2008 will be processed according to the GEM Listing Rules in force when the application was accepted for vetting.  Any new listing application and any refreshed application received after 2 May 2008 will be subject to the GEM Listing Rules that are in force on the date of listing.

These transitional arrangements for new listing applications will not affect continuing obligations and other aspects of the revised GEM Listing Rules, which will become effective immediately on the implementation date save for the grace period of three years from that date to secure compliance with the revised public float obligations.

The revised GEM Listing Rules and Main Board Listing Rules will become effective on 1 July 2008.

The GEM Consultation Conclusions and copies of submissions can be downloaded from the “Market Consultation – Consultation Conclusions” section of the HKEx website.

Amendments to the GEM Listing Rules can be downloaded from the “Regulatory Framework and Rules – Rules and Guidelines on Listing Matters – Listing Rule Update/Interpretation for GEM Listing Rules” section of the HKEx website.

Amendments to the Main Board Listing Rules can be downloaded from the “Regulatory Framework and Rules – Rules and Guidelines on Listing Matters – Listing Rules Update for Main Board Listing Rules” section of the HKEx website.

A set of Frequently Asked Questions (FAQs) relating to the Listing Rules Amendments can be downloaded from the “Regulatory Framework and Rules – Rules and Guidelines on Listing Matters – Supplementary materials on Listing Rules and rule changes” section of the HKEx website.