INTRODUCTION
GEM, or GEM Board, is the Growth Enterprise Market of the Hong Kong Stock Exchange (HKEX). Launched on November 30, 1999, GEM provides access to the capital market for innovative and entrepreneurial companies. GEM is listed and traded on the same exchange as the Main Board of Hong Kong. Today, GEM comprises many stocks, including established, innovative and IPO stocks, all of which are dual listed in Hong Kong and offshore. GEM stocks can be traded through local stockbrokers who are members of the Hong Kong Exchange.
MAIN BODY
GEM’s main objective is to support the capital requirements of young, high-growth companies in the early stages of their development. GEM listings allow companies to raise funds that can strengthen their business structures and enable them to expand operations. Companies may also use these funds to finance mergers and acquisitions or technology investments. In addition, GEM facilitates increased liquidity and general marketability.
Hong Kong’s GEM board has adopted several measures and initiatives to facilitate access and to raise awareness about the GEM board amongst investors. These include frequent investors’ seminars and roadshows, special promotional campaigns and entry fees waivers for IPO sponsors and investment advisors.
Furthermore, for GEM-listed companies, the Exchange carries out the regulatory function of maintaining market order and fairness, the purpose of which is to protect shareholders from possible abuse or mis-information. As part of the Exchange’s commitment to offering appropriate investor protection, it stipulates that all investors must have the necessary financial knowledge and experience in order to ensure prudent investment decisions.
GEM takes a proactive approach to accommodating the needs of start-up companies. The Exchange has developed a unique listing regime which allows stock offerings to take place within the GEM Board market, while maintaining the protection of the smaller-scale investors and the regulatory standards of the Main Board. This facilitates more direct access to capital readily available to young and growing companies. Moreover, these listing procedures are less time consuming and rigorous than applying for a Main Board listing, which allows start-up companies to raise capital quickly and efficiently to avoid further business losses.
In addition, the Exchange’s risk-based listing approval system provides a degree of investor protection. It aims to ensure that companies meet the necessary listing criteria and comply with all applicable regulations. The Exchange also prescribes the minimum disclosure requirements for GEM-listed companies. Furthermore, trading costs and account setup charges of GEM-listed companies are much lower than Main Board companies.
CONCLUSION
The HKEX-GEM Board provides access to capital for high-growth and innovative companies that are unable to qualify for a Main Board listing. GEM-listed companies benefit from numerous incentives and systems which facilitate start-up capital raising quickly, reliably and cost effectively. GEM eliminates the time-consuming and rigorous listing procedures associated with Main Board companies and provides a degree of investor protection. Through GEM, Hong Kong Stock Exchange is committed to providing an efficient, effective and reliable access to capital for high-growth companies in the early stages of their development.
