Summary of HKEx's GEM Listing Reforms

The Stock Exchange of Hong Kong Limited (HKEx) has finalised and will implement significant reforms to the Growth Enterprise Market (GEM) listing rules, effective 1 January, 2024. These reforms, which received overwhelming support during the consultation process, aim to enhance the market's attractiveness for small and medium-sized enterprises (SMEs) and high-growth companies, particularly those investing heavily in research and development (R&D).

Key Changes:

1.⁠ ⁠New Financial Eligibility Test:

• Introduction of the "market capitalisation/revenue/R&D test" to allow high-growth firms with substantial R&D investments to qualify for GEM listings.

2.⁠ ⁠Streamlined Transfer Mechanism:

• A simplified process for GEM issuers to transfer to the Main Board without the need for a sponsor or extensive documentation, promoting easier transitions for growing companies.

3.⁠ ⁠Reduced Post-IPO Lock-Up Period:

• The lock-up period for controlling shareholders has been shortened to 12 months, enhancing liquidity and flexibility in the market.

4.⁠ ⁠Adjusted Continuing Obligations:

• Removal of mandatory quarterly reporting and alignment of other compliance requirements with Main Board standards, reducing the regulatory burden on GEM issuers.

Overall, these reforms are designed to foster a more dynamic and accessible market for SMEs and growth companies, while still ensuring adequate investor protection and maintaining high market standards. The changes reflect a commitment to supporting innovation and development within Hong Kong's financial ecosystem.