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Listing on the GEM of the Hong Kong Stock Exchange

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Listing on the GEM of the Hong Kong Stock Exchange

V. APPLICATION PROCEDURES AND REQUIREMENTS

The Role of the Sponsor and Form 5A

For new applicants, the sponsor is responsible for lodging the application for listing, together with all supporting documents, and for dealing with enquiries from the Exchange. A chart summarising the process for a listing application for shares on GEM is set out below.

A new applicant must apply for listing by submitting Form 5A, a substantially complete draft of the listing document (the Application Proof) and all other relevant documents, together with the initial listing fee. The listing application form must include a draft timetable, which is subject to the approval of the Exchange. A listing application must be submitted at least two months after the date of the sponsor’s formal appointment,5 or if there is more than one sponsor, at least two months after the date of formal appointment of the last sponsor to be appointed (Rule 6A.02B). The completed Form 5A is valid for 6 months; if an applicant delays its proposed timetable beyond 6 months from the date of its submission, a new Form 5A must be lodged with the Exchange and a further initial listing fee will be payable. Where an applicant changes its sponsor(s) (including by adding or removing a sponsor), the applicant is obliged to submit a new listing application form with a new listing timetable to the Exchange, accompanied by a further initial listing fee.

Discretionary Powers of the Exchange

It should be noted that the Exchange retains the power to refuse a listing application or to alter the timetable for listing. Additionally, the requirements discussed here are not exhaustive and the Exchange may demand that an applicant for listing provide such other documentation or information as it sees fit.

Publication of Application Proof on the GEM website and requirement for information to be “substantially complete”

The Application Proof of the listing document is required to be published on the GEM website. The information contained in the Application Proof, the Form A5 and other documents submitted with Form A5 is required to be substantially complete, except for information that, by its nature, can only be finalised and included at a later date. If the Exchange does not consider the information to be substantially complete, it will return the listing application and all other documents to the sponsor. If an application is returned, the Exchange will publish on the GEM website the names of the listing applicant and its sponsor(s) and the date of its decision to return the listing application (“Return Decision”). It will also refund the initial listing fee unless it returns the listing application after issuing its first comment letter, in which case the initial listing fee will be forfeited. The applicant can resubmit the Form A5 and a new Application Proof, but cannot do so until 8 weeks after the date of the Return Decision to return the listing application.

The Listing Division’s decision to return a listing application on the ground that the listing application is not “substantially complete” can be reviewed by the Listing Committee. If the Listing Committee endorses the decision of the Listing Division to return the listing application on the ground that the listing application is not “substantially complete”, the decision of the Listing Committee can be reviewed by the Listing (Review) Committee The decision of the Listing (Review) Committee on the review is conclusive and binding on the listing applicant and the sponsor.

Exchange’s Power to Delay the Hearing

During the review process, if the Exchange forms the view that any of the following will not be achieved by the applicant at least four business days before the provisional hearing date, it may delay the hearing:

  1. the submission of the revised proof of the listing document containing sufficient and appropriate disclosure of all information required under the Listing Rules;
  2. the submission of any outstanding documents requested by the Exchange; and
  3. the Exchange’s queries and comments being satisfactorily addressed in a timely fashion.

The Exchange notes that while the review process is ongoing, the sponsor(s) should not revise the contents of the listing document in a fragmentary, bit-by-bit manner. A revised proof of the listing document must completely address all the Exchange’s comments on the previous proof. Otherwise, the Exchange may refuse to review the revised proof.

If any document is amended subsequent to its submission, a corresponding number of further copies marked up to show all changes are required to be submitted to the Listing Division for review.

The listing document cannot be made public until the Exchange informs the issuer that it has no further comments to make on the document, although new applicants are permitted to release a draft or preliminary listing document, clearly marked as such, in order to assist in the underwriting procedure.

Publicity Material

The Exchange must be given the opportunity to review all publicity material (which must conform to statutory requirements) made available in Hong Kong in relation to an issue of securities by a new applicant and such material cannot be released until the Exchange has stated that it has no comment to make on the material. If the Exchange believes information regarding a new applicant’s listing has been leaked, it will normally delay the application process. For these purposes, publicity material does not include material whose purpose is to promote the issuer, its products or business rather than the promotion of the securities to be issued.

Other documents which can be published without review by the Exchange are:

  • an Application Proof published on the GEM website;
  • a Post Hearing Information Pack (PHIP) published on the GEM website;
  • a statement by the applicant (and published on the GEM website) that no reliance should be placed on media reports on the applicant subsequent to the publication of the Application Proof or PHIP which is in the standard form set out in Enclosure 3 of Guidance Letter HKEx-GL57-13; or
  • the invitation or offering document, and drafts of agreements to be entered into in connection with the issue of securities (as long as any obligations they impose are conditional upon listing being granted).

The consequence of any material relating to a proposed listing by a new applicant being made public without prior review by the Exchange before the hearing, is that the Exchange may delay the hearing by up to a month.

Release of Price Sensitive Information

Listed issuers have a statutory duty to keep all details of the proposed listing confidential before it is announced.

Dealing in the Securities of the Applicant

There must be no dealing in the securities to be listed by any connected person from 4 clear business days before the expected hearing date until listing is granted. The directors of the issuer seeking to list the securities in question have a duty to inform the Exchange of any such dealing or suspected dealing which comes to their knowledge. The application may be refused if any directors or their associates are discovered to have taken part in such dealing.

Listing Process for GEM

The following chart summarises the process for a listing application for shares on GEM:

Process

Appointment of Sponsors

  • Appointment of a sponsor at least 2 months before submission of an application and to notify the Exchange

Submission of the Listing Application

  • Submit listing application Form A1, Application Proof (AP) and all other relevant documents under GEM Rule 12.09
  • Information must be substantially complete

Detailed Vetting

Qualitative assessment

  • Eligibility
  • Suitability
  • Sustainability
  • Compliance with Listing Rules, Companies Ordinance and Securities and Futures Ordinance
  • Material disclosure deficiencies

Application may still be returned by SFC or HKEx for not being substantially complete

Timing of Comments

  • First round of comments – within 10 business daysfrom receipt of application
  • Second and further rounds of comments (if any) within 10 business daysfrom receipt of reply to previous comment letter
  • Expect replies from sponsor to be full and complete, otherwise the Exchange will not start to vet (e.g. will not accept replies such as “to be provided in due course”)(except updated financial information under Guidance Letter GL6-09A)
  • Competent persons report is reviewed by an external mining consultant selected from a panel. Although nearly all consultants agreed to the streamlined process, there may be cases where some delay may be expected

Expected Hearing Timetable

Depending on the sponsor’s response time and quality of response

Assuming sponsor takes 5 business days to respond to each of the two rounds of comments, an application can be presented to the Listing Committee in around 40 business days from the date of listing application

In the case where only one round of comments is raised and sponsor takes 5 business days to respond, an application can be brought to the Listing Committee in around 25 business days

  • From 1 April 2014 – Publication of AP-Publication

Accelerated review process

  • Available for reviewing the Listing Division’s decision to return a listing application
  • Applicant and sponsor(s) has the right to have a Listing Division’s decision to return an application (Return Decision) and Listing Committee’s decision that endorses the Return Decision reviewed

Two levels of review:

  • a review of the Return Decision by the Listing Committee
  • a review of a Listing Committee’s decision endorsing a Return Decision by the Listing (Review) Committee

Hearing

8 weeks moratorium

(after any accelerated review process)

Post-Hearing Information Pack (PHIP)

  • Please view the Guidance on logistical arrangements for publication of Application Proofs, Post Hearing Information Packs and related materials on the Exchange’s website for listing applicants

Dealing of Shares Commences


5 The date of a sponsor’s formal appointment will normally be the date of the engagement letter. However, if the Exchange considers that a sponsor has not notified it in writing of its appointment as soon as practicable as required under Rule 6A.02(1), it may treat the date of notification as the date of formal appointment when determining whether the two month requirement is met. The Exchange normally expects notification of a sponsor’s appointment within five business days from the date of the engagement letter. (Question 5 of the Exchange’s FAQ Series 24).

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Posted on

2014-06-14