Chapter 1 Interpretation
Throughout these Rules, the following terms, except where the context otherwise requires, have the following meanings:
"accounts" has the same meaning as "financial statements" and vice-versa "affiliated company" a company which, in accordance with the Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, is recorded using the equity method of accounting in an entity's financial statements. This includes associated companies and jointly controlled entities as defined in those standards "announcement" announcement published under rule 16.17 and "announce" means make an announcement "Application Proof" a draft listing document that is required to be substantially complete and is submitted to the Exchange together with a listing application form for the purpose of listing equity securities of a new applicant "approved share registrar" a share registrar who is a member of an association of persons approved under section 12 of the Securities and Futures (Stock Market Listing) Rules "Articles" the Articles of Association of the Exchange "asset-backed securities" debt securities backed by financial assets which, at the time of the relevant issues, are evidenced by agreements and intended to produce funds to be applied towards interest payments due on the securities and repayment of principal on maturity, except those debt securities which are directly secured, in whole or in part, on real property or other tangible assets "associate" has the meaning in rule 20.06(2) "authorised representative" a person appointed as an authorised representative by a listed issuer under rule 5.24 "balance sheet" has the same meaning as "statement of financial position" and vice-versa "bank" a bank licensed under the Banking Ordinance or a bank incorporated or otherwise established outside Hong Kong which is, in the opinion of the Hong Kong Monetary Authority, adequately supervised by an appropriate recognised banking supervisory authority in the place where it is incorporated or otherwise established "bearer securities" securities transferable to bearer "Board" the Directors of the Exchange elected or appointed in accordance with the Articles and, where the context so permits, any committee or sub-committee thereof "business day" any day on which the Exchange is open for the business of dealing in securities "CCASS" means the Central Clearing and Settlement System established and operated by HKSCC "chief executive" a person who either alone or together with one or more other persons is or will be responsible under the immediate authority of the board of directors for the conduct of the business of a listed issuer "China Accounting Standards for Business Enterprises" or "CASBE" financial reporting standards and interpretations for business enterprises issued by the China Accounting Standards Committee of the China Ministry of Finance "China Auditing Standards" or "CAS" standards and interpretations issued by the China Auditing Standards Board of the China Ministry of Finance "close associate"(a) in relation to an individual means:—(i) his spouse;(ii) any child or step-child, natural or adopted, under the age of 18 years of the individual or of his spouse (together with (a)(i) above, the "family interests");(iii) the trustees, acting in their capacity as trustees, of any trust of which he or any of his family interests is a beneficiary or, in the case of a discretionary trust, is (to his knowledge) a discretionary object; and(iv) [Repealed 3 June 2010](v) any company in the equity capital of which he, his family interests, and/or any of the trustees referred to in (a)(iii) above, acting in their capacity as such trustees, taken together are directly or indirectly interested so as to exercise or control the exercise of 30% (or any amount specified in the Takeovers Code as the level for triggering a mandatory general offer) or more of the voting power at general meetings, or to control the composition of a majority of the board of directors and any subsidiary of this company; and(b) in relation to a company means:—(i) its subsidiary or holding company or a fellow subsidiary of its holding company;(ii) the trustees, acting in their capacity as trustees, of any trust of which the company is a beneficiary or, in the case of a discretionary trust, is (to the company's knowledge) a discretionary object; and(iii) [Repealed 3 June 2010](iv) any other company in the equity capital of which the company, its subsidiary or holding company, a fellow subsidiary of its holding company, and/ or any of the trustees referred to in (b) (ii) above, acting in their capacity as such trustees, taken together are directly or indirectly interested so as to exercise or control the exercise of 30% (or any amount specified in the Takeovers Code as the level for triggering a mandatory general offer) or more of the voting power at general meetings, or to control the composition of a majority of the board of directors and any subsidiary of this other company.
Notes: This definition is:—1 modified in the context of PRC issuers, by virtue of rule 25.04; and
"Code of Conduct" Code of Conduct for Persons Licensed by or Registered with the Commission "Code on Share Buy-backs" or "Share Buy-backs Code" the Code on Share Buy-backs approved by the Commission as amended from time to time "Code on Takeovers and Mergers" or "Takeovers Code" the Code on Takeovers and Mergers approved by the Commission as amended from time to time "Commission" the Securities and Futures Commission established under section 3 of the Securities and Futures Commission Ordinance and continuing in existence under section 3 of the Securities and Futures Ordinance "Companies Ordinance" the Companies Ordinance (Cap.622) as amended from time to time "Companies (Winding Up and Miscellaneous Provisions) Ordinance" the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap.32) as amended from time to time "company" a body corporate wherever incorporated or otherwise established "Company Law" the Company Law of the PRC adopted at the Fifth Session of the Standing Committee of the Eight National People's Congress on 29 December 1993 and effective from 1 July 1994, as amended, supplemented or otherwise modified from time to time "Compliance Adviser" the same meaning as in rule 6A.01 "connected person" has the meaning in rule 20.06(7)
Note: The definition includes a person deemed to be connected by the Exchange under rule 20.07(6) only for the purpose of Chapter 20.
"controlling shareholder" any person who is or group of persons who are together entitled to exercise or control the exercise of 30% (or such other amount as may from time to time be specified in the Takeovers Code as being the level for triggering a mandatory general offer) or more of the voting power at general meetings of the issuer or who is or are in a position to control the composition of a majority of the board of directors of the issuer; or in the case of a PRC issuer, the meaning ascribed to that phrase by rule 25.10 "convertible debt securities" debt securities convertible into or exchangeable for equity securities or other property, and debt securities with non-detachable options, warrants or similar rights to subscribe or purchase equity securities or other property attached (which expression includes convertible bonds) "convertible equity securities" equity securities convertible into or exchangeable for shares and shares with non-detachable options, warrants or similar rights to subscribe or purchase shares attached (which expression excludes convertible bonds) "core connected person"(a) for a company other than a PRC issuer, or any subsidiary of a PRC issuer, means a director, chief executive or substantial shareholder of the company or any of its subsidiaries or a close associate of any of them; and(b) for a PRC issuer means a director, supervisor, chief executive or substantial shareholder of the PRC issuer or any of its subsidiaries or close associate of any of them "corporate communication" any document issued or to be issued by an issuer for the information or action of holders of any of its securities or the investing public, including but not limited to:—(a) the directors' report and its annual accounts together with a copy of the auditors' report thereon and, where applicable, its summary financial report;(b) the half-year report and, where applicable, its summary half-year report;(c) the quarterly report;(d) a notice of meeting;(e) a listing document;(f) a circular;(g) a proxy form(h) an Application Proof; and(i) a Post Hearing Information Pack or PHIP "debt issuance programmes" issues of debt securities where only part of the maximum principal amount or aggregate number of securities under the issue is issued initially and a further tranche or tranches may be issued subsequently "debt securities" debenture or loan stock, debentures, bonds, notes and other securities or instruments acknowledging, evidencing or creating indebtedness, whether secured or unsecured and options, warrants or similar rights to subscribe or purchase any of the foregoing and convertible debt securities "director" includes any person who occupies the position of a director, by whatever name called "domestic shares" shares issued by a PRC issuer under PRC law, the par value of which is denominated in Renminbi, and which are subscribed for in Renminbi "effective economic interest" in relation to any entity means the direct and/or indirect attributable economic interest therein "Eligible Security" means an issue of securities which is from time to time accepted as eligible by HKSCC for deposit, clearance and settlement in CCASS, in accordance with the General Rules of CCASS, and where the context so requires shall include any particular security or securities of such an issue "equity securities" shares (including preference shares), convertible equity securities and options, warrants or similar rights to subscribe or purchase shares or convertible equity securities "Executive Director — Listing Division" the person occupying the position of the Executive Director of the Listing Division from time to time by whatever name such position is called "Exchange" The Stock Exchange of Hong Kong Limited "Exchange Participant" a person: (a) who, in accordance with the Rules of the Exchange, may trade on or through the Exchange; and (b) whose name is entered in a list, register or roll kept by the Exchange as a person who may trade on or through the Exchange "expert" includes engineer, valuer, accountant and any other person whose profession gives authority to a statement made by him "family interests" the same meaning as in (a)(ii) of the definition of "close associate" "financial year" the period in respect of which any profit and loss account of a company laid or to be laid before it in general meeting is made up, whether that period is a year or not "financial statements" has the same meaning as "accounts" and vice-versa "foreign shares" shares issued by a PRC issuer under PRC law, the par value of which is denominated in Renminbi, and which are subscribed for in a currency other than Renminbi "formal notice" a formal notice required to be published under rules 16.07, 16.08, 29.18, 29.19 or 30.37 "gazetted newspapers" those newspapers which are, from time to time, specified in the list of newspapers issued and published in the Gazette for the purposes of sections 162 to 169 of the Companies Ordinance by the Chief Secretary "GEM" GEM operated by the Exchange "GEM Listing Committee" the GEM listing sub-committee of the Board "GEM Listing Review Committee" the GEM listing review sub-committee of the Board "GEM Listing Rules" or "GLR" or "Rules" the rules governing the listing of securities on GEM made by the Exchange from time to time "GEM website" the internet website operated by the Exchange for the purposes of GEM "group" the issuer or guarantor and its subsidiaries, if any "H Shares" overseas listed foreign shares of a PRC issuer which are listed and traded on GEM "HKEC" Hong Kong Exchanges and Clearing Limited "HKEx-EPS" means the Exchange's electronic publication system by whatever name such system is called "HKSCC" means Hong Kong Securities Clearing Company Limited including, where the context so requires, its agents, nominees, representatives, officers and employees "holding company" in relation to a company, means another company of which it is a subsidiary "Hong Kong" Hong Kong, the Special Administrative Region of the People's Republic of China "Hong Kong Financial Reporting Standards" or "HKFRS" financial reporting standards and interpretations issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). They comprise (i) Hong Kong Financial Reporting Standards, (ii) Hong Kong Accounting Standards and (iii) Interpretations "Hong Kong issuer" an issuer incorporated or otherwise established in Hong Kong "Hong Kong register" for an overseas issuer including a PRC issuer, the part of its register of members or branch register located and maintained in Hong Kong pursuant to its articles of association "IFA group"(a) the independent financial adviser;(b) its holding company;(c) any subsidiary of its holding company;(d) any controlling shareholder of:(i) the independent financial adviser; or(ii) its holding company; and(e) any close associate of any controlling shareholder referred to in paragraph (d) "income statement" has the same meaning as "statement of profit or loss and other comprehensive income" and vice-versa "inside information" has the meaning defined in the Securities and Futures Ordinance as amended from time to time
Note: Where the Exchange interprets whether a piece of information is inside information in the context of enforcing the GEM Listing Rules, e.g. rules 13.11(4) and 23.05, it will be guided by decisions of the Market Misconduct Tribunal and published guidelines of the Commission
"Inside Information Provisions" Part XIVA of the Securities and Futures Ordinance "International Financial Reporting Standards" or "IFRS" financial reporting standards and interpretations approved by the International Accounting Standards Board ("IASB"), and includes all International Accounting Standards ("IAS") and interpretations issued under the former International Accounting Standards Committee ("IASC") from time to time "International Standards on Auditing" or "ISA" standards and interpretations issued by the International Auditing and Assurance Standards Board of the International Federation of Accountants "issue" includes circulate, distribute and publish "issuer" any company or other legal person any of whose equity or debt securities are the subject of an application for listing on GEM or some or all of whose equity or debt securities are al listed on GEM "listed issuer" in the case of equity securities means any company or other legal person some of whose equity securities are al listed on GEM, and in the case of debt securities means a company or other legal person some of whose equity or debt securities are al listed on GEM "listing" the grant of a listing of and permission to deal in securities on GEM and "listed" shall be construed accordingly "Listing Division" the Listing Department of the Exchange "listing document" a prospectus, circular or any equivalent document (including the composite document in relation to a scheme of arrangement and/or an introduction document) issued or proposed to be issued in connection with an application for listing "Listing Nominating Committee" the listing nominating sub-committee of the Board "Main Board" the stock market operated by the Exchange prior to the establishment of GEM (excluding the options market) and which stock market continues to be operated by the Exchange in parallel with GEM. For the avoidance of doubt, the Main Board excludes GEM. "Main Board Listing Committee" the Listing Committee as defined in the Main Board Listing Rules "Main Board Listing Rules" the rules governing the listing of securities on the Main Board made by the Exchange from time to time "modified opinion" an opinion in an accountants' or auditors' report which is modified (a qualified opinion, an adverse opinion or a disclaimer of opinion on the financial statements) "modified report" an accountants’ or auditors’ report: —(a) in which the opinion is a modified opinion; and/or(b) which contains any of the following without modifying the opinion: —(i) an emphasis of matter paragraph; and(ii) a material uncertainty related to going concern "new applicant" in the case of equity securities means an applicant for listing none of whose equity securities are al listed on GEM and in the case of debt securities means an applicant for listing none of whose equity or debt securities are al listed on GEM "notifiable transaction" any of the transactions specified in rule 19.06 "overseas issuer" an issuer incorporated or otherwise established outside Hong Kong "overseas listed foreign shares" in respect of a PRC issuer means foreign shares which are listed outside the PRC "Post Hearing Information Pack" or "PHIP" a near-final draft listing document for the listing of equity securities published on the GEM website "practising accountant" an individual, firm or company qualified for appointment as an auditor or reporting accountant of a company "PRC" for the purposes of the GEM Listing Rules means the People's Republic of China, other than the regions of Hong Kong, Macau and Taiwan "PRC issuer" an issuer which is duly incorporated in the PRC as a joint stock limited company "PRC law" the applicable provisions of the PRC constitution, or any statute, ordinance, regulations, rule or normative statement from time to time in force in the PRC, as the context may require "PRC property" property located in the PRC "PRC stock exchange" the Shanghai Stock Exchange or the Shenzhen Stock Exchange "Principal" has the meaning given to it by the Commission's Guidelines for Sponsors and Compliance Advisers from time to time "professional accountant" a person registered as a certified public accountant under the Professional Accountants Ordinance "profit and loss account" has the same meaning as "statement of profit or loss and other comprehensive income" and vice-versa "promoter" in relation to any PRC issuer, any person who undertook the establishment of such issuer, subscribed for shares of such issuer and assumes liability for such issuer's establishment, prepared the initial articles of association of such issuer and convened the inaugural meeting of the subscribers of shares of such issuer, or any person who performed a similar role under PRC law in the establishment of a PRC issuer "prospectus" the same meaning as in section 2(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance "public" the meaning ascribed to that phrase by rule 11.23 and "in public hands" shall be construed accordingly "published on the GEM website" published, in the form prescribed by the GEM Listing Rules, in both the English and Chinese languages on the GEM website "Regulations" the Special Regulations on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies issued by the State Council of the PRC on 4 August 1994, as amended, supplemented or otherwise modified from time to time "reporting accountant" the professional accountant or practising accountant who is responsible for the preparation of the accountants' report included in a listing document or circular in accordance with Chapter 7 "Securities and Futures Ordinance" or "SFO" the Securities and Futures Ordinance (Cap. 571) as amended from time to time "selectively marketed securities" debt securities marketed to or placed with any number of registered dealers or financial institutions either with a view to their reselling such securities as principals off-market, nearly all of which, because of their nature, will normally be purchased and traded by a limited number of investors who are particularly knowledgeable in investment matters or placing such securities with a limited number of such investors and "selective marketing" shall be construed accordingly "significant shareholder" any person who, immediately prior to the date of the new applicant's initial listing document and immediately prior to the date on which securities of the new applicant commence trading on GEM, is (or group of persons who together are) entitled to exercise or control the exercise of 5% or more of the voting power at general meetings of the new applicant
Note: The Exchange reserves a power to deem any party to be a significant shareholder in circumstances where, prior to the date of issue of the new applicant's initial listing document, that party has been entitled to exercise or control the exercise of 5% or more of the voting power at general meetings of the new applicant and, on or after the new applicant's listing, that party again becomes entitled to exercise or control the exercise of 5% or more of the voting power at general meetings of the issuer.
"SFC Sponsor Provisions" paragraph 17 of the Code of Conduct "Sponsor" any corporation or authorised financial institution licensed or registered under the Securities and Futures Ordinance for Type 6 regulated activity and permitted under its licence or certificate of registration to undertake work as a Sponsor and, as applicable, which is appointed as a Sponsor pursuant to rule 6A.02 "Sponsors Guidelines" Additional Fit and Proper Guidelines for Corporations and Authorized Financial Institutions applying or continuing to act as Sponsors and Compliance Advisers "Statutory Rules" the Securities and Futures (Stock Market Listing) Rules as amended from time to time, the text of which is set out in Appendix 12 "subsidiary" includes:(a) a "subsidiary undertaking" as defined in schedule 1 to the Companies Ordinance;(b) any entity which is accounted for and consolidated in the audited consolidated accounts of another entity as a subsidiary pursuant to applicable Hong Kong Financial Reporting Standards or International Financial Reporting Standards; and(c) any entity which will, as a result of acquisition of its equity interest by another entity, be accounted for and consolidated in the next audited consolidated accounts of such other entity as a subsidiary pursuant to applicable Hong Kong Financial Reporting Standards or International Financial Reporting Standards "substantial shareholder" in relation to a company means a person who is entitled to exercise, or control the exercise of, 10% or more of the voting power at any general meeting of the company
Note: This definition is qualified in the case of connected transactions falling within rule 20.27.
"summary financial report" a summary financial report of a company, which complies with sections 437 to 446 of the Companies Ordinance "supervisor" a member elected to the supervisory committee of a PRC issuer which under PRC law performs a supervisory function in relation to such issuer's board of directors, the manager and other officers "tap issues" issues of debt securities where the subscription thereof may continue or further tranches thereof may be issued after listing has been granted "temporary documents of title" allotment letters, letters of allocation, split receipts, letters of acceptance, letters of rights, renounceable share certificates and any other temporary documents of title "title certificates" for the purposes of PRC property must comprise:—(a) a state-owned land use rights certificate (國有土地使用證); or(b) a building ownership certificate (房屋所有權證); or(c) a real estate ownership certificate (房地產權證),provided that the Exchange may, at its discretion, be prepared to accept other certificates or evidence of title in respect of a PRC property as title certificates for the purposes of the GEM Listing Rules, in which regard early consultation with the Exchange is required. "trading halt" an interruption of trading in an issuer's securities requested or directed pending disclosure of information under the Rules and extending for no more than two trading days
Note: Where a trading halt exceeds two trading days, it will automatically become a trading suspension.
The GEM Listing Rules include all the appendices hereto and all practice notes issued by the Exchange from time to time concerning GEM and all of the notes set out in the Chapters hereof and appendices hereto. For the avoidance of doubt, the GEM Listing Rules do not include the Main Board Listing Rules.
In the GEM Listing Rules, references to a document being certified shall mean certified to be a true copy or extract (as the case may be) by a director, the secretary or other authorised officer of the issuer (or by a member of its governing body in the case of an overseas issuer) or by a member of the issuer's auditors or solicitors or by a notary and references to a translation being certified shall mean certified to be a correct translation by a professional translator.
Where the context so permits or requires, words importing the singular number include the plural and vice versa and words importing the masculine gender include the feminine and neuter genders and vice versa.
Where definitions in the GEM Listing Rules are wider than or the obligations and requirements imposed by the GEM Listing Rules are more onerous than the provisions of any ordinance, regulation or other statutory provision from time to time in force in Hong Kong, the provisions of the GEM Listing Rules shall prevail provided that where any provision of the GEM Listing Rules is in conflict with the provisions of any such ordinance, regulation or other statutory provision, the provisions of such ordinance, regulation or other statutory provision shall prevail.
The GEM Listing Rules shall be interpreted, administered and enforced by the Exchange. The decisions of the Exchange in respect thereof shall be conclusive and binding.
The Exchange may issue practice notes and other guidance materials on the GEM website, including guidance letters, listing decisions and other publications on the GEM website, from time to time, to assist issuers and guarantors, in the case of a guaranteed issue, Sponsors and other advisers in interpreting and complying with the GEM Listing Rules.
The GEM Listing Rules have been issued in the English language with a separate Chinese language translation. If there is any conflict in the GEM Listing Rules between the meaning of Chinese words or terms in the Chinese language version and English words in the English language version, the meaning of the English words shall prevail.
Chapter 2 Introduction
The principal function of the Exchange is to provide a fair, orderly and efficient market for the trading of securities. In furtherance of this, the Exchange has made the GEM Listing Rules under section 23 of the Securities and Futures Ordinance prescribing the requirements for the listing of securities on GEM. These comprise requirements which have to be met before securities may be listed and also continuing obligations with which an issuer and, where applicable, a guarantor must comply once listing has been granted. The GEM Listing Rules have been approved by the Commission pursuant to section 24 of that Ordinance.
The purpose of this book is to set out and explain those requirements.
Although GEM is operated by the Exchange, it is entirely distinct from the Main Board. As such the GEM Listing Rules apply only to GEM and the Main Board Listing Rules apply only to the Main Board.
Any entity seeking to withdraw its listing on GEM with a view to listing on the Main Board or vice versa will be obliged to comply fully with the respective rules applicable to the respective stock markets.
The GEM Listing Rules do not apply to Options Contracts traded through the Options System as defined in the Options Trading Rules of the Exchange and the Clearing Rules of The SEHK Options Clearing House Limited. The Traded Options Committee of the Exchange is primarily responsible for the supervision and regulation of the options market. Interested parties are directed to the Options Trading Rules of the Exchange and the Clearing Rules of The SEHK Options Clearing House Limited, as from time to time in effect.
The GEM Listing Rules are designed to ensure that investors have and can maintain confidence in the market and in particular that:—(1) applicants are suitable for listing;(2) the issue and marketing of securities are conducted in a fair and orderly manner and that potential investors are given sufficient information to enable them to make a properly informed assessment of an issuer and, in the case of a guaranteed issue, the guarantor and of the securities for which listing is sought;(3) investors and the public are kept fully informed by listed issuers and, in the case of a guaranteed issue, the guarantors of material factors which might affect their interests;(4) all holders of listed securities are treated fairly and equally;(5) directors of a listed issuer act in the interests of its shareholders as a whole — particularly where the public represents only a minority of the shareholders; and(6) all new issues of equity securities by a listed issuer are first offered to the existing shareholders by way of rights unless they have agreed otherwise.
In these last 4 respects, the GEM Listing Rules seek to secure for holders of securities, other than controlling interests, certain assurances and equality of treatment which their legal position might not otherwise provide.
It is emphasised that the GEM Listing Rules are not exhaustive and that the Exchange may impose additional requirements or make listing subject to special conditions whenever it considers it appropriate. Conversely, the Exchange may waive, modify or not require compliance with the GEM Listing Rules in individual cases (to suit the circumstances of a particular case), as a variety of circumstances may exist which require it to make ad hoc decisions. However, any waiver or modification of, or decision not to require compliance with, a rule, which is intended to have general effect (i.e. to affect more than one issuer and its subsidiaries at the same time) may only be granted with the prior consent of the Commission. The Exchange will not grant an individual waiver or modification of a rule, or agree not to require compliance with a rule, on a regularly recurring basis so as to create the same result as a general waiver. Consequently, both new applicants and listed issuers and, in the case of a guaranteed issue, guarantors are welcome to seek informal and confidential guidance from the Exchange at all times.
The GEM Listing Rules may be amended by the Exchange from time to time, subject to the approval of the Commission under section 24 of the Securities and Futures Ordinance.
Suitability for listing depends on many factors. Applicants for listing should appreciate that compliance with the GEM Listing Rules may not of itself ensure an applicant's suitability for listing. The Exchange retains a discretion to accept or reject applications and in reaching its decision will pay particular regard to the general principles outlined in rule 2.06. Informal and confidential guidance may be sought from the Exchange concerning the eligibility of any proposed application for listing.
Note: Queries should be addressed to the Listing Division and should, so far as practicable, be made by the Sponsor (other than in circumstances where the issuer is not required to have (or does not otherwise retain) a Sponsor).
Listing any securities on GEM, whether of a new applicant or a listed issuer, is in all cases subject to the approval of the Exchange.
No issuer may list its debt securities on GEM unless its equity securities, or the equity securities of its holding company, are al listed on GEM or will be listed on GEM at the same time as the issuer's debt securities.
Characteristics of GEM
GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Main Board. Appropriate warning and disclosure in this regard is required to be made by all issuers in their listing documents and circulars and without prejudice to the generality of this rule, reference is made to the provisions of rule 2.20.
Notes:1 The qualifications for listing on GEM do not include any obligation to forecast future profitability.2 Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.3 [Repealed 15 February 2018]
The GEM Listing Rules require, and emphasise the on-going need for, comprehensive and timely disclosure of relevant information by all issuers. In this regard, particular attention is drawn to the following matters:—(1) A new applicant is required, in its initial listing document, to prepare a detailed statement of business objectives (see rule 11.15). It is subsequently required, in respect of its half-year end (in the event this follows listing) and full-year end for the financial year in which it is listed and the half-year ends and full-year ends of the two financial years thereafter, to draw up a comparison of actual business progress to the information provided in the statement of business objectives for the equivalent period and explain any material differences (including as to its use of proceeds, as indicated in the initial listing document) (see rules 18.08A);(2) A listed issuer is required to publish audited annual accounts and half-year and quarterly reports, which reports need not be audited (see Chapter 18);(3) [Repealed 1 January 2013](4) The directors of an issuer are collectively and individually responsible for ensuring the issuer's full compliance with the GEM Listing Rules; and(5) [Repealed 1 July 2008]
The Exchange expects each director of an issuer to be cognizant of the GEM Listing Rules and reasonably familiar with the obligations and duties imposed upon him and the issuer pursuant to the GEM Listing Rules, the Securities and Futures Ordinance, the Companies Ordinance, the Takeovers Code and the Code on Share Buy-backs.
Having regard to the higher risk profile of GEM, the GEM Listing Rules impose additional responsibilities on the Compliance Adviser of an issuer by comparison to those imposed on a Compliance Adviser to a company listed on the Main Board (see Chapter 6A). Sponsors and Compliance Advisers are expected to play an important role in upholding and maintaining the standard of GEM issuers and hence the market's confidence in GEM.
[Repealed 1 January 2005]
In circumstances where breaches of the GEM Listing Rules have been identified, the Exchange will take appropriate measures to enforce compliance and/or impose appropriate disciplinary measures.
Responsibility and confirmation
Any listing document, circular or announcement issued by an issuer pursuant to the GEM Listing Rules is required to contain a statement of responsibility and confirmation on the part of the directors of the issuer in the following form:—
"This [document], for which the directors of the issuer collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the GEM of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the issuer. The directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this [document] is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this document misleading."
Notes:1 In cases where the directors of the issuer are responsible for part of a listing document, circular or announcement, the directors of another company being responsible for the remainder, the statement must be appropriately adapted. In exceptional cases, the Exchange may require other persons to give, or join in, the statement, in which case the statement must also be appropriately adapted.2 Announcements required to be issued pursuant to rule 9.11 ("holding" announcements issued in connection with a resumption of trading in an issuer's securities), 17.11 or 31.05 (announcements issued in response to enquiries by the Exchange) need not comply with this rule, as they have their own prescribed form of statements of responsibility.3 All the directors of the issuer must, so far as reasonably practicable, participate in approving the form of any announcement to be published by the issuer, such that each accepts the responsibility and is able to provide the confirmation required pursuant to this rule. In exceptional circumstances, such as an issuer being required to publish an urgent announcement, it shall be permissible to exclude from the statement of responsibility and confirmation those directors with whom it has not been possible to communicate prior to publishing the announcement.
Disclaimer and GEM characteristics statements
Any listing document, circular, announcement or notice issued by an issuer pursuant to the GEM Listing Rules must contain on its front cover or inside front cover, or as a heading, a prominent and legible disclaimer statement as follows:—
"Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document."
Any listing document or circular and every annual report and accounts (including, where applicable, a summary financial report), half-year (including, where applicable, a summary half-year report) and quarterly report issued by an issuer pursuant to the GEM Listing Rules (excluding any Explanatory Statement issued pursuant to rule 13.08) must contain, at a prominent position in the document, and in bold type, a statement in the following terms concerning the characteristics of GEM:—
"Characteristics of GEM of The Stock Exchange of Hong Kong Limited (the "Exchange")
GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other companies listed on the Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.
Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.
Communication with the Exchange
References in the GEM Listing Rules to informing or notifying the Exchange mean, unless the context requires otherwise, that the information must be either:—
(1) delivered in hard copy or in an electronic format as specified by the Exchange to The Listing Division, 12th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong; or (2) sent by electronic means (in the format specified by the Exchange) to The Listing Division at its electronic mail address, as specified from time to time; or (3) sent by facsimile copy to The Listing Division on 2295-3599,
or to such other address or number as may be announced by the Exchange from time to time or in such other manner as may be determined and promulgated by the Exchange from time to time. In addition, a hard copy of such information must be provided to the Exchange if requested by the Exchange.
If the information is of an urgent nature, an authorised representative of the issuer or some other responsible officer of the issuer or its Sponsor, financial adviser or legal adviser should communicate the information to the Executive Director — Listing Division or his delegates by telephone, provided always that the communication is confirmed in writing, delivered by hand, electronic means or facsimile in accordance with rule 2.21, such written communication to follow promptly after the telephone communication.
Where the GEM Listing Rules require documents to be sent or submitted to the Exchange, they must be sent or delivered to the Listing Division in accordance with rule 2.21, unless otherwise stated in the GEM Listing Rules.
Where the GEM Listing Rules require a certain number of copies of a document to be sent or submitted to the Exchange, the Exchange may require the issuer to provide the Exchange with such lesser or greater number of such copies as the Exchange may reasonably determine.
The procedures for delivery of information and documentation to the Exchange and any changes or additions to those procedures may be determined and promulgated by the Exchange from time to time.
The GEM Listing Rules fall into three main parts: Chapters 1 to 9 set out matters of general application; Chapters 10 to 25 set out the requirements applicable to the issue of equity securities; and Chapters 26 to 35 set out the requirements applicable to the issue of debt securities. In addition, there are Appendices to certain of these Chapters.
Material interest in a transaction
Where a transaction or arrangement of an issuer is subject to shareholders' approval under the provisions of the GEM Listing Rules, any shareholder that has a material interest in the transaction or arrangement shall abstain from voting on the resolution(s) approving the transaction or arrangement at the general meeting.
Note: For the avoidance of doubt, any provision in the GEM Listing Rules requiring any other person to abstain from voting on a transaction or arrangement of an issuer which is subject to shareholders' approval shall be construed as being in addition to the requirement set out in rule 2.26.
For the purpose of determining whether a shareholder has a material interest, relevant factors include:(1) whether the shareholder is a party to the transaction or arrangement or a close associate of such a party; and(2) whether the transaction or arrangement confers upon the shareholder or his close associate a benefit (whether economic or otherwise) not available to the other shareholders of the issuer.
There is no benchmark for materiality of an interest nor may it necessarily be defined in monetary or financial terms. The materiality of an interest is to be determined on a case by case basis, having regard to all the particular circumstances of the transaction concerned.
Note: The references to "close associate" shall be changed to "associate" where the transaction or arrangement is a connected transaction under Chapter 20.
The issuer must, to the extent that it is aware having made all reasonable enquiries, include in the listing document or circular:(1) a statement as at the date by reference to which disclosure of the shareholding is made in the listing document or circular as to whether and to what extent any shareholder who is required to abstain from voting under the GEM Listing Rules controls or is entitled to exercise control over the voting right in respect of his shares in the issuer;(2) particulars of:(a) any voting trust or other agreement or arrangement or understanding (other than an outright sale) entered into by or binding upon any such shareholder; and(b) any obligation or entitlement of any such shareholder as at the date by reference to which disclosure of the shareholding of any such shareholder is made in the listing document or circular,whereby he has or may have temporarily or permanently passed control over the exercise of the voting right in respect of his shares in the issuer to a third party, either generally or on a case-by-case basis;(3) a detailed explanation of any discrepancy between any such shareholder's beneficial shareholding interest in the issuer as disclosed in the listing document or circular and the number of shares in the issuer in respect of which he will control or will be entitled to exercise control over the voting right at the relevant meeting; and(4) steps undertaken by the shareholder (if any) to ensure shares being the subject of the discrepancy referred to in rule 2.28(3) are not voted.
Fees and other charges
Of relevance to issuers, the details of the initial listing fee, annual listing fee, subsequent issue fee and other charges, together with details of the brokerage charge, transaction levies and trading fees on new issues are set out in Appendix 9.
Chapter 3 Composition, Powers, Functions and Procedures of the GEM Listing Committee, the GEM Listing Review Committee and the Listing Division
3.17A(1) The Commission shall have the right to request in writing a review of any disciplinary decision of the GEM Listing Committee by the GEM Listing Review Committee under this rule.(2) In reviewing a matter, the GEM Listing Review Committee shall have due regard to the rights and interests of all third parties who would be directly affected by the further review of the matter.(3) The Commission may request written reasons for a decision of the GEM Listing Committee or the GEM Listing Review Committee if no written reasons were provided in the decision of the relevant Committee and if the relevant party does not request written reasons under rule 3.14. The Commission will make such a request within seven days of the expiry of the time stipulated for request of written reasons under rule 3.14. Where the relevant party requests written reasons, the written reasons provided to the relevant party will be provided to the Commission and the Listing Division. Similarly, written reasons provided to the Commission pursuant to the Commission’s request will also be provided to the relevant party and the Listing Division.(4) If the Commission decides to request a review of a matter, it will do so within seven business days after receipt of the relevant decision or, if either the Commission or the relevant party requests written reasons for the decision, those written reasons.(5) The GEM Listing Review Committee and/or its Chairman may prescribe the procedures for reviewing a matter under this rule as they may think fit.(6) The relevant party, the Listing Division and the Commission will have the right to make written submissions to the GEM Listing Review Committee, and the GEM Listing Review Committee shall take into account all such written submissions when reaching its decision. This applies to both a review requested by the Commission and any further and final review requested by the relevant party pursuant to rule 3.17A(7).(7) Where the GEM Listing Review Committee overturns, modifies or varies the decision subject to review, the relevant party shall have a further and final right to seek a review of the decision by a second GEM Listing Review Committee. Subject to the facts and circumstances arising in the earlier meeting(s) in each case and subject further to the absolute discretion of the proposed Chairman of the GEM Listing Review Committee, all of the members present at the further and final review shall be persons who were not present at the earlier review hearing of the GEM Listing Review Committee. In the event there are insufficient persons available to make up the required quorum for the GEM Listing Review Committee, the proposed Chairman of the GEM Listing Review Committee shall direct the Secretary to select sufficient additional members to make up the required quorum by such method as the proposed Chairman considers appropriate in the proposed Chairman’s absolute discretion.