Growth Enterprise Market
The past year has seen rapid change in the Hong Kong economy. It has begun to emerge from recession. There has been a considerable growth in so-called e-businesses and i-businesses, sectors of the economy which scarcely existed 12 months ago. GEM is targeted at companies in these fast-evolving sectors.
The GEM market rules are designed to set out adequate standards in the market place. Formulating those rules requires a careful balancing of the interests of issuers and the interests of the investing public. Make those standards too onerous and companies will not be attracted to the market: too lax and investors will not be attracted to the market.
There are many international markets that would welcome the companies that the GEM is targeted at. It is therefore important that the GEM rules are comparable with those of other international markets.
tom.com limited
The company was listed on 1st March, 2000. The company raised around HK$762 million in a placing and public offer of securities. Since listing the average daily turnover in the stock has been over HK$1 billion per day. This listing has attracted considerable publicity and comment.
Waivers
None of the waivers granted are unique to the company, nor was it the first company to request these waivers. Each of the waivers granted is described in the company's prospectus so investors are aware of the waiver that has been granted. (See list attached)
We have recently agreed and published guidelines for granting waivers to enhance transparency.
Errors
It is regrettable that two errors occurred in the processing of the listing application. The omission of residential addresses for directors was corrected by publishing these details in a separate announcement.
The Exchange is committed to maintaining the highest standards and will work to improve its checking procedures.
Stock Code
Certain stock codes are seen as attractive. To capitalise on this the Exchange has offered these codes to issuers through a programme which has raised HK$3 million for charity.
Stock code 8001 was offered to a number of listing candidates before it was offered to tom.com. Tom.com was the first company to express interest in the code.
Processing Time
The GEM Rules state that applications must be submitted 25 clear business days before the intended GEM Listing Committee hearing date.
The Exchange endeavours to process listing applications in less than 25 days. Up to the listing of tom.com about half the listing applications were processed in less than 25 days. Of these one was processed in 12 days and four others in 20 to 24 days. It should be noted that much of the processing on tom.com took place at a time when the market was comparatively quiet.
Conclusion
The GEM is a new market, catering for the fast-growing companies of the new economy. It is less than one year old. The first listing took place on November 25, 1999 and two companies were listed. Since then GEM has attracted 12 more listings.
Since publishing the GEM rules in August 1999 there have been two updates to the listing requirements in relation to the public float and accounting standards. The GEM rules will continue to develop in future. The Exchange is committed to working with the SFC and the market to ensure that the GEM rules continue to be relevant whilst providing an adequate standard of investor protection.
Summary of principal waivers granted in respect of the GEM Listing Rules as of 10 March 2000