GEM (Growth Enterprise Market) was established as an alternative market to the Main Board in November 1999 to provide capital formation opportunities for growth companies. Amendments to the GEM Listing Rules which took effect on 1 July 2008 introduced a streamlined process for GEM listed companies to transfer to the Main Board, thus repositioning GEM as a stepping stone to the Main Board. As GEM is a listing venue for smaller, growth companies, the listing eligibility criteria are lower than for the Main Board. The continuing obligations of GEM listed companies are however virtually identical to those of Main Board listed companies.


The main requirements for GEM listing are summarised below. The Exchange retains an absolute discretion to accept or reject applications for listing and compliance with the relevant conditions will not necessarily ensure that a listing will be granted. The requirements set out below are not exhaustive and the Exchange may impose additional requirements in any particular case.


The Exchange will accept companies incorporated in Hong Kong, Bermuda, the Cayman Islands and the PRC (“Recognised Jurisdictions”) for listing on GEM. It will also accept companies incorporated in any other jurisdictions where the standards of shareholder protection are at least equivalent to those provided in Hong Kong.

Approved Jurisdictions

The Exchange has approved the following twenty-one “Acceptable Jurisdictions” of incorporation for listed issuers: Australia, Brazil, the British Virgin Islands, Canada (Alberta), Canada (British Columbia), Canada (Ontario), Cyprus, France, Germany, Guernsey, the Isle of Man, Italy, Japan, Jersey, the Republic of Korea, Labuan (Malaysia), Luxembourg, Singapore, the United Kingdom, and the states of California and Delaware in the United States.

Dual Primary Listings

An overseas company which is already listed on another stock exchange can apply for a dual-primary listing on GEM which will require it to comply with the full requirements of the Hong Kong Exchange and those of the overseas exchange. Secondary listings are not possible on GEM, but are allowed on the Main Board of the Exchange.

Suitability for Listing

Both the issuer and its business must, in the opinion of the Exchange, be suitable for listing. The Exchange may, in its discretion, refuse a listing of the securities of an overseas issuer if it believes that it is not in the interest of the Hong Kong public to list them.

Cash Flow Requirement

A new GEM applicant or its group (excluding any associated companies, joint ventures and other entities whose results are recorded in the issuer’s financial statements using the equity method of accounting or proportionate consolidation) is required to have a positive cash flow from operating activities in the ordinary and usual course of business before changes in working capital and taxes paid of HK$20 million in aggregate for the 2 financial years immediately preceding the issue of the listing document.

Operating History and Management 

The Exchange requires GEM applicants to have a trading record of at least 2 financial years with: management continuity throughout the 2 preceding financial years; and, ownership continuity and control throughout the preceding full financial. In both cases, continuity must continue until the date of listing.

Trading Record Period of Less Than Two Years

Under Rule 11.14, the Exchange may accept a trading record period of less than 2 financial years (and an accountants’ report covering a shorter period) and waive or vary the ownership and management requirements:

for newly-formed “project” companies (for example a company formed for the purposes of a major infrastructure project);

for natural resource exploitation companies; and

in exceptional circumstances under which the Exchange considers it desirable to accept a shorter period.

Where the Exchange accepts a trading record of less than 2 financial years, the applicant must nevertheless still meet the cash flow requirement of HK$20 million for that shorter trading record period.

Minimum Public Float

At least 25% of the issuer’s total issued share capital must be held by the public at all times (Rules 11.23(7)). At the time of listing, the market capitalisation of the publicly held shares must be at least HK$30 million.

The Exchange has a discretion under Rule 11.23(10) to accept a lower percentage of between 15% and 25%, if the issuer has an expected market capitalisation of over HK$10 billion at the time of listing and the Exchange is satisfied that the number of securities concerned and the extent of their distribution will enable the market to operate properly with a lower percentage, and on condition that the issuer will make appropriate disclosure of the lower prescribed percentage of public float in the initial listing document and confirm sufficiency of public float in successive annual reports after listing (Rule 17.38A). In addition, where securities are to be marketed both in and outside Hong Kong, a sufficient portion, which must be agreed in advance with the Exchange, must normally be offered in Hong Kong.

Business Competition

A new applicant will not be rendered unsuitable for listing on the grounds that any director or shareholder has an interest in a business which competes or may compete with the new applicant’s business (Rule 11.03).


A new applicant seeking a listing of equity securities on GEM must appoint one or more sponsors to assist with its listing application. To be eligible to act as the sponsor of a new applicant, a firm must be licensed by the Hong Kong Securities and Futures Commission to conduct sponsor work.

Each sponsor is required to give an undertaking and statement of independence to the Exchange in the form of Appendix 7K to the GEM Rules at the time of submission of the listing application. As soon as practicable after the Listing Division’s hearing of the listing application but on or before the date of issue of the listing document, sponsors must submit to the Exchange a Sponsor’s Declaration (in the form of Appendix 7G) giving specific confirmations as to the applicant’s compliance with the conditions for listing, the sufficiency and accuracy of information in the prospectus and as to the adequacy of the applicant’s systems and its directors’ experience and understanding of the Listing Rules to ensure the applicant’s compliance with the Listing Rules post-listing (Rule 6A.13).

Sponsors are required to conduct reasonable due diligence inquiries in order to put themselves in a position to give the Sponsor’s Declaration (Rule 6A.11(2)). The responsibilities and obligations of sponsors in relation to a new listing application (including as to due diligence) are set out in paragraph 17 of the SFC’s Code of Conduct for Persons Licensed by or Registered with the SFC. Certain typical due diligence steps which the Exchange expects of sponsors of initial listing applications are also set out at Practice Note 2 to the GEM Rules. Sponsors are required to document their due diligence planning and significant deviations from their plans and to keep records of their work on listing applications.

A sponsor’s main responsibilities to a new applicant are:

  • to be closely involved in the preparation of the applicant’s listing documents;.
  • to conduct reasonable due diligence inquiries to put itself in a position to give the Sponsor’s Declaration required by Rule 6A.13;
  • to submit the listing application and all supporting documents on behalf of the applicant;
  • to ensure that there is no unauthorised publication or leakage of publicity material or price sensitive information about a new applicant prior to the hearing of the Listing Division;
  • to use reasonable endeavours to address all matters raised by the Exchange in connection with the listing application;
  • to accompany the applicant to meetings with the Exchange unless otherwise requested by the Exchange; and
  • to comply with the terms of the undertaking and statement of independence given to the Exchange pursuant to Rule 6A.03 (Rule 6A.11).

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