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Update No. 42

Note to subscribers for the amendments
to the rules governing the listing of securities on the Growth Enterprise Market
(the “GEM Listing Rules”)

Update No. 42

December 2011

Dear Sirs,

GEM Listing Rule amendments to Property Valuation Requirements and
to the Review of the Corporate Governance Code

We enclose reprinted pages of the GEM Listing Rules and the filing instructions. The reprinted pages incorporate amendments to implement proposals in the Joint Consultation Conclusions on Proposed Changes to Property Valuation Requirements published on 20 October 2011 and certain of the proposals in the Consultation Conclusions on Review of the Corporate Governance Code and Associated Listing Rules (“Corporate Governance Conclusions”) published on 28 October 2011. We will publish another Update containing the remaining proposals in the Corporate Governance Conclusions in due course.

We have amended the GEM Listing Rules to:-

Property valuation requirements

B02A24241D934714AD273561037F6D6D For applicants:
- require different valuation requirements for property activities and non-property activities;
 
- for property activities, require property valuations unless the property interest has a carrying amount below 1% of the applicant’s total assets. The total carrying amount of property interests not valued must not exceed 10% of the applicant’s total assets. Summary disclosure in the listing document is allowed if the market value of a property interest as determined by the valuer is less than 5% of the applicant’s total property interests that are required to be valued;
 
- for non-property activities, require a property valuation only if the carrying amount of a property interest is or is above 15% of the applicant’s total assets; and
 
- for mining activities, not require a separate valuation of property interests ancillary to mining activities if the mining activities and ancillary property interests have been valued as a business or an operating entity.
 
B02A24241D934714AD273561037F6D6D For issuers:
- remove property valuation requirements for an acquisition or disposal of a company listed on the Exchange;
 
- for an acquisition or disposal of an unlisted company, not require valuations if the carrying amount of a property interest in the company being acquired or disposed of is below 1% of the issuer’s total assets. The total carrying amount of property interests not valued must not exceed 10% of the issuer’s total assets; and
 
- for mining activities, not require a separate valuation of property interests ancillary to mining activities if the mining activities and ancillary property interests have been valued as a business or an operating entity.

Corporate governance review

B02A24241D934714AD273561037F6D6D emphasise directors’ duties and provide practical guidance to directors;
 
B02A24241D934714AD273561037F6D6D remove the requirement for a company secretary to be ordinarily resident in Hong Kong and introduce a requirement for company secretary to undergo 15 hours’ professional training in a financial year;
 
B02A24241D934714AD273561037F6D6D remove the requirement for issuers to publish a Next Day Disclosure Form following the exercise of an option for shares in the issuer by a director of its subsidiaries;
 
B02A24241D934714AD273561037F6D6D allow a chairman at a general meeting of shareholders to exempt certain prescribed procedural and administrative matters from a vote by poll;
 
B02A24241D934714AD273561037F6D6D clarify the disclosure requirements regarding poll results;
 
B02A24241D934714AD273561037F6D6D remove the 5% exemption for voting by a director on a board resolution in which he has an interest;
 
B02A24241D934714AD273561037F6D6D require disclosure of information on the retirement or removal of a director or supervisor;
 
B02A24241D934714AD273561037F6D6D require disclosure of information on the appointment, resignation, re-designation, retirement or removal of a chief executive;
 
B02A24241D934714AD273561037F6D6D require disclosure of director’s information on all civil judgments of fraud, breach of duty, or other misconduct involving dishonesty;
 
B02A24241D934714AD273561037F6D6D clarify the requirement on disclosure of sanctions;
 
B02A24241D934714AD273561037F6D6D introduce a new Rule requiring shareholders’ approval at a general meeting of any proposal to appoint or remove an auditor before the term of his office;
 
B02A24241D934714AD273561037F6D6D require the circular relating to a major transaction or a connected transaction to contain information on the competing interests of any proposed director of the issuer and his associates;
 
B02A24241D934714AD273561037F6D6D require disclosure of a chief executive’s emoluments by name in the issuer’s financial statements; and
 
B02A24241D934714AD273561037F6D6D require fuller contact details of the issuer’s authorised representatives.

Coming into effect

The amendments will come into effect on 1 January 2012.

Please click HERE to see the amendments to the GEM Listing Rules relating to amendments to property valuation requirements.

Please click HERE to see the amendments to the GEM Listing Rules relating to the corporate governance review.

Yours faithfully,

For and on behalf of
The Stock Exchange of Hong Kong Limited

 

Mark Dickens JP
Head of Listing


Updated 30 Dec 2011

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