Hong Kong Capital Markets Update – Issue 7, September 2023

On 26 September 2023, the Stock Exchange of Hong Kong Limited (the “Exchange”) published a consultation paper (“Consultation”) seeking market feedback on proposed changes to the GEM Listing Rules.  

Since 2019, the number of new listings and funds raised on GEM have significantly declined and there were no new GEM listings in 2022. The Exchange believes that the COVID-19 pandemic and alternative SME listing venues in the Chinese Mainland are the factors that contributed to this decline. As facilitating SME listings is a key priority for the Exchange, which is committed to providing a supportive environment where SMEs can thrive and ultimately contribute to the continued prosperity of both Hong Kong and the global economy, it has engaged with a broad range of stakeholders to hear their concerns regarding GEM and develop proposals to address those concerns.

To address the key issues identified during the stakeholder engagement, including the feedback on the importance of investor protection, the Exchange has developed proposals for GEM reforms. The main proposals are summarised below.

1. Propose a new alternative eligibility test - “Market capitalisation / Revenue / R&D test”;
2. Remove the mandatory quarterly reporting requirement; and
3. Streamline the transfer mechanism

The deadline for submissions is 6 November 2023.