Note to subscribers for the amendments
to the rules governing the listing of securities on the Growth Enterprise Market
(the “GEM Listing Rules”)
Update No. 51
January 2016
Dear Sirs,
Amendments to the GEM Listing Rules relating to the Corporate Governance Code and Corporate Governance Report, the Environmental, Social and Governance Reporting Guide, and minor Listing Rule amendments
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| We enclose reprinted pages of the GEM Listing Rules and the filing instructions. The reprinted pages incorporate amendments to implement proposals in: (i) the "Consultation Conclusions on Risk Management and Internal Control: Review of the Corporate Governance Code and Corporate Governance Report" published in December 2014; and (ii) the "Consultation Conclusions on Review of the Environmental, Social and Governance Reporting Guide" published in December 2015. The reprinted pages also incorporate minor amendments relating to the terms of office of GEM Listing Committee members and the composition of the Listing Nominating Committee. |
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We have amended the GEM Listing Rules to: |
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| Amendments to the Corporate Governance Code and Corporate Governance Report ("Corporate Governance Code") |
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incorporate risk management into the Corporate Governance Code where appropriate; |
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define the roles and responsibilities of the board and management; |
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clarify that the board has an ongoing responsibility to oversee the issuer's risk management and internal control systems; |
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upgrade the provisions on the annual review of the effectiveness of the issuer's risk management and internal control systems, and related disclosures in the Corporate Governance Report, from Recommended Best Practices ("RBPs", i.e. voluntary) to Code Provisions ("CPs", i.e. subject to "comply or explain"); |
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revise and upgrade the provision on issuers' obligation to review the need for an internal audit function on an annual basis if they do not have one from an RBP to a CP; |
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Amendments to the Environmental, Social and Governance Reporting Guide ("ESG Guide") and related GEM Listing Rules |
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require issuers to state in their annual reports or ESG reports whether they have complied with the "comply or explain" provisions set out in the ESG Guide for the relevant financial year; and if they have not, to give considered reasons in their ESG reports; |
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revise the introductory section of the ESG Guide to provide more guidance on reporting and to bring it more in line with international standards; |
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re-arrange the ESG Guide into two Subject Areas: A. Environmental and B. Social; |
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upgrade the General Disclosures under each Aspect of the ESG Guide from recommended disclosures (i.e. voluntary) to "comply or explain" provisions; |
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revise the wording of the General Disclosures (where relevant) to be consistent with the directors' report requirements under the Companies Ordinance (Cap. 622 of the Laws of Hong Kong), which have been incorporated in the Rules for financial years ending on or after 31 December 2015; |
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upgrade the Key Performance Indicators ("KPIs") in the "Environmental" Subject Area of the ESG Guide from recommended disclosures to "comply or explain" provisions; |
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revise the wording of the recommended disclosures of the ESG Guide to bring it more in line with international standards of ESG reporting by incorporating disclosure of gender diversity; |
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| Minor amendments relating to the terms of office of GEM Listing Committee members and the composition of the Listing Nominating Committee |
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provide that GEM Listing Committee members will be appointed for a term of approximately one year and vacate office at the end of their term, unless they are re-appointed; and |
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correct a printing error in the GEM Listing Rules to reinstate the reference to the Chairman of the Securities and Futures Commission as a member of the Listing Nominating Committee, in line with the Main Board Listing Rules. |
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| Coming into effect |
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| The amendments come into effect as follows:- |
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the amendments to the Corporate Governance Code come into effect for accounting periods beginning on or after 1 January 2016; |
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the amendments to the ESG Guide and related GEM Listing Rules will come into effect in two phases: |
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| (i) |
the GEM Listing Rule amendments and the upgrade of the General Disclosures in the ESG Guide from recommended disclosures to "comply or explain" provisions, as well as the revised recommended disclosures, are effective for issuers' financial years commencing on or after 1 January 2016; and |
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the upgrade of the KPIs in the "Environmental" Subject Area of the ESG Guide from recommended disclosures to "comply or explain" provisions will be effective for issuers' financial years commencing on or after 1 January 2017; and | |
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the minor amendments relating to the terms of office of GEM Listing Committee members and the composition of the Listing Nominating Committee will take effect on 1 January 2016. |
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| Please click HERE to see the amendments to the Corporate Governance Code. |
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Please click HERE to see the amendments to the ESG Guide and related GEM Listing Rules. |
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Please click HERE to see the minor amendments relating to the terms of office of GEM Listing Committee members and the composition of the Listing Nominating Committee.
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Yours faithfully,
For and on behalf of
The Stock Exchange of Hong Kong Limited
David Graham
Chief Regulatory Officer and Head of Listing