Market Turnover
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Major Features of GEM

The Major Features of GEM

The rules and requirements of GEM are designed to foster a culture of self-compliance by listed issuers and sponsors in the discharge of their respective responsibilities. The major features of GEM are as follows:

Greater, More Frequent and Timely Disclosure

GEM requires a listing applicant to disclose in detail its past business history and its future business plans which are key components of the listing documents. After listing, a GEM issuer is required to make half yearly comparison of its business progress with the business plan for the first 2 financial years, publish quarterly accounts in addition to half yearly and annual accounts and a shorter period is allowed to make available these information to the public. To allow market participants easy access to information, the Exchange’s website provides comprehensive information covering all aspects of the market including company announcements and other information of listed issuers, trade prices and market statistics.

GEM Sponsor Scheme

In recognition of the pivotal role that a GEM sponsor plays in the listing process, a GEM sponsor is required to satisfy a set of detailed eligibility criteria and assume clear responsibilities in the discharge of its duties. Amongst its duties, a GEM sponsor is required to conduct due diligence and to satisfy itself, to the best of its knowledge and belief and having made due and careful enquiries, that proper disclosures have been made.

Corporate Governance

From the time of listing, an issuer is required to establish a strong corporate governance base to facilitate its compliance with the GEM Listing Rules and adherence to proper business practices. These measures include the appointment of a qualified accountant to supervise its finance and accounting functions, designating an executive director as the compliance officer, appointment of 3 independent directors and the establishment of an audit committee and a remuneration committee. In the first 2 years after listing, a GEM issuer is also required to retain a compliance advisor to advise and assist the company and its directors in the discharge of their listing obligations.

Role of the Exchange

At the time of listing the Exchange reviews the listing documents of an applicant to ensure that they comply with the requirements of the Companies Ordinance, the Companies (Winding Up & Miscellaneous Provisions) Ordinance and the GEM Listing Rules. However, the Exchange does not assess the commercial viability of any applicant. The Exchange similarly reviews all public announcements made by an issuer after it has been listed. However, the responsibility for the correctness, quality and sufficiency of the disclosed information made by an issuer rests ultimately with the issuer and its directors.

In addition, the Exchange actively monitors the trading of securities on GEM and the compliance with the GEM Listing Rules by issuers and sponsors. It will undertake strong enforcement and institute appropriate disciplinary actions if necessary where breaches of the GEM Listing Rules are identified.