|
Note to subscribers for the amendments to
the rules governing the listing of securities on the Growth Enterprise Market
("GEM Listing Rules")
Update No. 10
26 September 2001
Dear Sirs,
Amendments to the GEM Listing Rules
We enclose reprinted pages of the GEM Listing Rules incorporating amendments
to the GEM Listing Rules in relation to the items listed below, together with filing instructions.
The major amendments to the GEM Listing Rules are highlighted as follows:
Moratorium Period for Initial Management Shareholders
An amendment is made to Rule 13.16 to reduce the moratorium period for initial management
shareholders to 12 months from the listing date, or 6 months from the listing date where the shareholder's relevant securities represent
no more than 1 per cent. of the issued share capital of the new applicant as at the listing date.
Where an issuer commenced dealings on or before 30 September 2001 and did not previously apply
for a waiver of the requirements of Rule 13.16 and its initial management shareholders are subject to a 24-month moratorium period, the new
provisions will apply with effect from 1 October 2001 such that the moratorium period will be automatically reduced. Nevertheless, if any of
its initial management shareholders intend to dispose of shares before the expiry of the original moratorium period (i.e. 24 months), such
issuer should publish an announcement on or before the date of such disposal to inform investors of the disposal.
Definition of Initial Management Shareholders for the Purpose of Lock-up
An amendment is made to the definition of initial management shareholders in Rule 13.15(2) to
include the following three categories of persons: a) a member of the senior management of the issuer, including but not limited to any person
identified as senior management in the issuer's initial listing document; b) a director of the issuer; and c) a shareholder of the issuer who
is represented on the board of directors of the issuer, including but not limited to an investment fund.
Interpretation of "Disposal" by Initial Management Shareholders
Amendments are made to exclude the following two types of transactions from the definition of disposal
in Rule 13.15(5) for the purpose of lock-up: i) any stock lending arrangement with an underwriter of the initial public offering of the new applicant's
securities which satisfies the conditions set out in Rule 13.15(5)(a); and ii) any placing and issue of securities pursuant to a placing and top-up arrangement
during the second 6-month period after listing which satisfies the conditions set out in Rule 13.15(5)(b). Amendments are also made to the definition of relevant
securities in Rule 13.15(4) such that any securities received pursuant to these transactions will be included as relevant securities and be subject to the lock-up
provisions.
Share Issues by Issuers within 6 Months of Listing
An amendment is made to Rule 17.29 to allow an issuer to issue shares or convertible securities within the first 6 months
of the date on which it commenced dealings of its securities on GEM if securities are issued to acquire assets which will complement the issuer's focused line of business
and certain other conditions, including as to the size of the acquisition, the size of the securities issue and the prior approval of independent shareholders on the share
issue and the acquisition, are met. In addition, any person who subscribed for the securities will be subject to a lock-up arrangement similar to that for an initial management
shareholder or significant shareholder, as applicable, for the remaining duration of the lock-up period. An amendment is also made to the definition of relevant securities in
Rule 13.15(4) such that the securities subscribed for will be included as relevant securities and be subject to the lock-up provisions.
Period of Active Business Pursuits and Accountants' Report
An amendment is made to Rule 11.12 to introduce a new category of entry requirements for new applicants meeting certain size and public
following requirements to apply for listing if they have at least 12 months of active business pursuits as at the date of their application for listing. Amendments are also made to
Rules 7.03 and 11.10 to require such new applicants to have an accountants' report covering at least the 12-month period from the commencement of their active business pursuits.
In addition, an amendment is made to Rule 11.12 to require new applicants to have active business pursuits of at least 24 months as at
the date of their application for listing. Amendments are also made to Rules 7.03 and 11.10 to make it clear that a new applicant with an active business pursuits period of 24 months
must have an accountants' report covering active business pursuits of at least 24 months. Such 24-month period need not cover 2 complete financial years.
Share Option Schemes
Amendments are made to the requirements for share option schemes set out in Chapter 23. Some restrictions have been relaxed, such as the number
of options that can be granted under share options schemes, the maximum limit on options that can be granted to an individual participant and the identity of participants of share options
schemes. At the same time, stricter requirements have been imposed in other areas, such as the granting of options to connected persons, the exercise price of options and the disclosure of
information relating to options in annual reports and half-year reports.
Offering Mechanism
An amendment is made to Rule 13.02 to restrict the issue of securities on a preferential basis to employees and related parties to 10 per cent. of the
securities being marketed for which listing is sought. In addition, amendments are made to Rules 11.23 and 25.08 to exclude employees of the new applicant and their associates from the definition of
members of the public in determining the minimum public float at the time of listing. As employees may also subscribe for shares under the public tranche at the time of listing, issuers should ensure
that sufficient information is obtained for determining whether the minimum public float requirement is met.
Amendments are also made to Rule 10.12(4) and Form 5D to require issuers to disclose, at the time of the initial public offering, details of the placing,
including the level of interest in the placing, the distribution of the placing shares and an analysis of the distribution and concentration of the placing shares in the results of allotment announcement.
Minimum Public Float
Amendments are made to Rules 11.23 and 25.08 to require the minimum prescribed percentage of securities in issue in public hands to be 25 per cent. for issuers
with a market capitalisation not exceeding HK$4 billion and, for issuers with a market capitalisation over HK$4 billion, the higher of the percentage that would result in the market value of the securities
in issue in public hands being equal to HK$1 billion (determined as at the time of listing) and 20 per cent..
GEM listed issuers which commenced dealings of their securities on GEM before 1 October 2001 will continue to follow the existing public float requirement.
The rule changes will come into effect on 1 October 2001.
Yours faithfully,
For and on behalf of
The Stock Exchange of Hong Kong Limited
Karen Lee
Head of Listing, Regulation and Risk Management
|