The listing rules of the Hong Kong Growth Enterprise Market (GEM) were amended as of October 1 2001. Key revisions of note include the following:
To facilitate good quality companies being listed on the GEM, a new category of entry requirements has been introduced allowing companies of substantial size and with significant public following to apply for listing if they have been in business for at least 12 months.
To provide flexibility to initial management shareholders of GEM applicants, the moratorium period for such shareholders has been reduced to 12 months (or six months for those with no more than a 1% shareholding). What constitutes initial management shareholders has also been amended for the purpose of lock-up to include: (i) all members of senior management; (ii) all directors; and (iii) all investors with board representation.
To improve market liquidity, the minimum percentage of securities that should be in public hands has been increased to 25% for listed issuers with market capitalization not exceeding HK$4 billion ($513 million) and 20% for those over HK$4 billion. Employees of the GEM applicant and their associates would now be excluded from determining the public float.
To allow greater flexibility, certain restrictions in respect of the operation of share option schemes have been relaxed, such as the number of options that can be granted and the identity of participants. At the same time, to safeguard against abuse of the scheme and to protect minority shareholders, stricter requirements have been imposed in other areas, such as the granting of options to connected persons and the disclosure of information relating to options.
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