HKEx announces New Board

19 January 2018

By Anntice Lai

In mid-2017 the Stock Exchange of Hong Kong Limited (SEHK) issued two consultation papers to review the current listing regime by introducing a New Board Concept and reviewing the current Growth Enterprise Market (GEM) and Main Board (MB) Listing Rules. SEHK released the consultation conclusions in December 2017.

Executive summary of the consultation conclusions

New Board Concept

  • Instead of setting up two New Boards, SEHK will extend the existing listing regime by introducing two more chapters to the existing MB Listing Rules.
  • The two chapters allow: (a) pre-revenue Biotech issuers to be listed with a minimum expected market capitalization of HK$1.5 billion at the time of listing; and, (b) Emerging and Innovative sector’s issuers with weighted voting right (WVR) structure to be listed subject to additional disclosures and safeguards.
  • Biotech issuers must be primarily engaged in research and development, have unique features of innovation or intellectual property, and have at least one product that has proceeded beyond the concept stage. At this stage, only Biotech issuers are allowed to be listed on a pre-revenue basis. SEHK will determine if other types of new economy companies could use the same basis at a later stage.
  • Emerging and Innovative sector’s issuers with WVR structure should have the following characteristics:

- The applicant must be an innovative company.

- The applicant has a track record of high business growth, and the growth is considered to be continuous.

- Each WVR holder has an active executive role within the business and has been materially responsible for the growth of the business due to their skills, knowledge and/or strategic direction. Each WVR holder is or would assume the role of director of the issuer at the time of listing.

- The applicant has received meaningful third party funding from sophisticated investors.

- Minimum expected market capitalization at the time of listing for companies with WVR structure is HK$10 billion. For companies with WVR structure with minimum expected market capitalization less than HK$40 billion, additional revenue requirement of HK$1 billion in the full financial year before listing is applied. Additional safeguard will be put in place.

  • The SEHK proposes to establish a new concessionary secondary listing route for Emerging and Innovative sector’s issuers to be listed in SEHK.
  • Formal consultation on the above proposed amendments to the MB Listing Rules is expected to be released in the first quarter of 2018.


Amendments to the MB and GEM Listing Rules

  • Streamlined process for transfers from GEM to MB will be removed with transitional arrangements in 3 years upon the amendments to the MB and GEM Listing Rules become effective.

New Board Concept Paper consultation conclusion1 

  • A transitional period of three years starting from 15 February 2018 will be given for eligible issuers to submit their transfer applications. Transitional arrangements are as follows:

New Board Concept Papers consultation conclusion 2

  • Eligible issuers refers to all issuers listed on the GEM, and all GEM applicants who have submitted a valid listing application for listing on the GEM on or prior to 16 June 2017 (except for infrastructure, mineral or investment companies to which any of the MB Listing Rules 8.05B(1) & (2), Ch. 18 & 21 apply).
  • GEM listing admission requirements will be amended as follows:

New Board Concept Papers consultation conclusions 3

  • GEM open market requirements will be amended as follows:

New Board Concept Papers consultation conclusions 4

  • Strengthen post-IPO lock-up requirements: GEM’s controlling shareholder is not allowed to dispose any equity interest in the first year of listing and dispose any interest in the subsequent year that results in losing controlling status.
  • MB listing requirements will be amended as follows:

New Board Concept Papers consultation conclusion 5

  • The new listing requirements will be effective on 15 February 2018. Any MB or GEM listing application submitted on or before 14 February 2018 will follow the existing requirements.


Anntice Lai is the technical and regulatory director of Baker Tilly Hong Kong. 

The information contained in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Information offered or used in this article is current to the date of the article.


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