The downward slide of technology stock prices worldwide continues to concern companies wishing to list shares on Hong Kong's Growth Enterprise Market (GEM). With a view to maintaining Hong Kong's prime competitive position, a joint announcement by the Securities and Futures Commission and the Stock Exchange of Hong Kong on proposed amendments to the GEM Listing Rules was issued on July 27 2001 with the following notable highlights:
- the minimum active business pursuit period will be extended from 12 to 24 months (except for companies of substantial size and with significant public following satisfying certain criteria);
- the restriction on issuance of new securities during the first six months after listing will be removed provided the securities are issued to acquire assets to complement the issuer's focused line of business and certain other conditions are satisfied;
- the moratorium period for initial management shareholders will be changed from six to 12 months. If they hold no more than 1% shareholding in the issuer, the moratorium period will remain at six months;
- the requirements governing share option schemes will be amended to: (i) remove the restriction that only full time employees of the issuer can participate in the scheme; and (ii) increase the total number of options subject to all of the issuer's schemes from 10% to 30% of the securities in issue; and
- the minimum percentage of securities in public hands will be increased for issuers with market capitalization not exceeding HK$4 billion ($513 million) to 25% and over HK$4 billion to 20%.
These amendments will become effective in stages commencing in the next one to two months.