The Stock Exchange Of Hong Kong Publishes GEM Consultation Conclusions

Exchange News Direct, UK

02/05/08

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. Read the complete article.