Small firms claim GEM waiver bias
The stock exchange is showing favouritism in its waiving of the two-year lock-up rule for management shareholders of Growth Enterprise Market (GEM) companies, some bankers and listing candidates complained.
'Only sizeable companies or well-backed companies such as Tom.com and Far Eastern receive this waiver [shortened share lock-up period],' an executive at the sponsor of a listing candidate claimed.
'The exchange believes these companies will help to boost the new market.' An executive at another sponsor said: 'For small companies like ours, we don't even dare to apply for a waiver.' Executives at some small GEM companies have been crying foul since last week, when it became known the stock exchange had allowed Tom.com to shorten the moratorium period for initial management shareholders to six months from the two-year lock-up period, as required by listing rules.
The exchange has also granted Far Eastern Polychem Industries a waiver from the rule since November, when the Securities and Futures Commission said the listing committee had full discretionary power to grant moratoriums.
Peter Wong Shiu-hoi, managing director at Tai Fook Securities Group and a member of the GEM listing committee, denied the body had a bias towards the market's larger companies.
'This is a misunderstanding,' he said. 'We grant waivers to companies on their merit. Companies have to prove to us they will remain committed.' Nonetheless, Edward Chow Kwong-fai, chairman of the corporate governance working group of the Hong Kong Society of Accountants, urged the stock exchange to waive the two-year lock-up period for all companies.
'It would be unfair if the waiver was granted only to select companies,' he said.
Mr Chow said the stock exchange should amend GEM-listing rules to shorten the lock-up period to six months.
'What we [GEM listing committee] really want is to amend the listing rules that suits the market needs,' the GEM listing committee's Mr Wong said.
The exchange spokesman said some GEM listing rules would be amended after it conducted a review in the second quarter.
The stock exchange yesterday approved to relax restrictions on employee share-option schemes for both main-board and GEM companies, according to a council member.
The amendment would mean all listed companies could issue share options for their staff up to 50 per cent of the issued capital, up from 10 per cent at present.
The move comes a week after the granting of a waiver to Tom.com to enable it to issue share options to its staff up to 50 per cent of its capital.
The stock exchange council member denied the rule change was tailor-made for Tom.com.
