Hong Kong Exchanges and Clearing, seeking to improve its poorly performing second board, proposes to allow only companies with at least HK$100 million market capitalisation and HK$20 million cash flow to qualify for the Growth Enterprise Market.
The proposals, unveiled yesterday by Richard Williams, the head of the exchange's listing division, will be in a consultation paper to be issued in the next two months and to be introduced next year if it draws no strong opposition from the market.
The GEM accepts applications from companies that have been in operation for a year, while the main board requires companies to have at least a combined HK$50 million profit over three years before the listing and a HK$200 million market capitalisation.
Brokers and directors welcomed the higher entry criteria which they said would help restore the GEM's reputation.
Since its launch in 1999, the small board has faced problems ranging from many companies having poor results to bad corporate governance practices or major shareholders selling out soon after a listing.
There have been no new GEM listings this year while its turnover is less than 1 per cent of the main board's.
