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Update No. 51

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. 51

January 2016

Dear Sirs, 

Amendments to the GEM Listing Rules relating to the Corporate Governance Code and Corporate Governance Report, the Environmental, Social and Governance Reporting Guide, and minor Listing Rule amendments

 
We enclose reprinted pages of the GEM Listing Rules and the filing instructions. The reprinted pages incorporate amendments to implement proposals in: (i) the "Consultation Conclusions on Risk Management and Internal Control: Review of the Corporate Governance Code and Corporate Governance Report" published in December 2014; and (ii) the "Consultation Conclusions on Review of the Environmental, Social and Governance Reporting Guide" published in December 2015. The reprinted pages also incorporate minor amendments relating to the terms of office of GEM Listing Committee members and the composition of the Listing Nominating Committee.
 
We have amended the GEM Listing Rules to:
 
Amendments to the Corporate Governance Code and Corporate Governance Report ("Corporate Governance Code")
 
B02A24241D934714AD273561037F6D6D incorporate risk management into the Corporate Governance Code where appropriate;
 
B02A24241D934714AD273561037F6D6D  define the roles and responsibilities of the board and management;
 
B02A24241D934714AD273561037F6D6D clarify that the board has an ongoing responsibility to oversee the issuer's risk management and internal control systems;
 
B02A24241D934714AD273561037F6D6D upgrade the provisions on the annual review of the effectiveness of the issuer's risk management and internal control systems, and related disclosures in the Corporate Governance Report, from Recommended Best Practices ("RBPs", i.e. voluntary) to Code Provisions ("CPs", i.e. subject to "comply or explain");
 
B02A24241D934714AD273561037F6D6D revise and upgrade the provision on issuers' obligation to review the need for an internal audit function on an annual basis if they do not have one from an RBP to a CP;
 
Amendments to the Environmental, Social and Governance Reporting Guide ("ESG Guide") and related GEM Listing Rules
 
B02A24241D934714AD273561037F6D6D require issuers to state in their annual reports or ESG reports whether they have complied with the "comply or explain" provisions set out in the ESG Guide for the relevant financial year; and if they have not, to give considered reasons in their ESG reports;
 
B02A24241D934714AD273561037F6D6D revise the introductory section of the ESG Guide to provide more guidance on reporting and to bring it more in line with international standards;
 
B02A24241D934714AD273561037F6D6D re-arrange the ESG Guide into two Subject Areas: A. Environmental and B. Social;
 
B02A24241D934714AD273561037F6D6D upgrade the General Disclosures under each Aspect of the ESG Guide from recommended disclosures (i.e. voluntary) to "comply or explain" provisions;
 
B02A24241D934714AD273561037F6D6D revise the wording of the General Disclosures (where relevant) to be consistent with the directors' report requirements under the Companies Ordinance (Cap. 622 of the Laws of Hong Kong), which have been incorporated in the Rules for financial years ending on or after 31 December 2015;
 
B02A24241D934714AD273561037F6D6D upgrade the Key Performance Indicators ("KPIs") in the "Environmental" Subject Area of the ESG Guide from recommended disclosures to "comply or explain" provisions;
 
B02A24241D934714AD273561037F6D6D revise the wording of the recommended disclosures of the ESG Guide to bring it more in line with international standards of ESG reporting by incorporating disclosure of gender diversity;
 
Minor amendments relating to the terms of office of GEM Listing Committee members and the composition of the Listing Nominating Committee
 
B02A24241D934714AD273561037F6D6D provide that GEM Listing Committee members will be appointed for a term of approximately one year and vacate office at the end of their term, unless they are re-appointed; and
 
B02A24241D934714AD273561037F6D6D correct a printing error in the GEM Listing Rules to reinstate the reference to the Chairman of the Securities and Futures Commission as a member of the Listing Nominating Committee, in line with the Main Board Listing Rules.
 
Coming into effect
 
The amendments come into effect as follows:-
 
(a) the amendments to the Corporate Governance Code come into effect for accounting periods beginning on or after 1 January 2016;
 
(b) the amendments to the ESG Guide and related GEM Listing Rules will come into effect in two phases:
 
(i) the GEM Listing Rule amendments and the upgrade of the General Disclosures in the ESG Guide from recommended disclosures to "comply or explain" provisions, as well as the revised recommended disclosures, are effective for issuers' financial years commencing on or after 1 January 2016; and
 
(ii)   the upgrade of the KPIs in the "Environmental" Subject Area of the ESG Guide from recommended disclosures to "comply or explain" provisions will be effective for issuers' financial years commencing on or after 1 January 2017; and
 
(c) the minor amendments relating to the terms of office of GEM Listing Committee members and the composition of the Listing Nominating Committee will take effect on 1 January 2016.
 
Please click HERE to see the amendments to the Corporate Governance Code.
 
Please click HERE to see the amendments to the ESG Guide and related GEM Listing Rules.
 
Please click HERE to see the minor amendments relating to the terms of office of GEM Listing Committee members and the composition of the Listing Nominating Committee.  

Yours faithfully,

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

David Graham
Chief Regulatory Officer and Head of Listing


Updated 16 Jan 2016

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