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HK-listed planning
Editor:admin  Date:2014-08-18  Browse:7528 Text Size Print

GEM Market Overview 
GEM market then November 24, 1999 officially launched GEM market is a completely independent board new markets outside the stock market in the listing requirements, trading, regulatory methods and content with the motherboard market is very big difference. Its aim is to have the growth potential of emerging enterprises to provide a channel to raise funds. It creates the Chinese mainland and Hong Kong will have a significant impact on the economy. In the long run, the goal is to develop GEM to become a successful independent market --- Asia NASDAQ. 

GEM market characteristics and the role of 

1 GEM market characteristics compared with existing motherboard market, the GEM market has the following characteristics: a high-growth companies as the goal, focus on the company's growth potential and business prospects; self-regulation and market participants must fulfill its responsibilities spontaneously; buyers at your own risk: the risk of capacity for investors; to information disclosure-based regulatory philosophy; require a highly professional level sponsor and integrity. 

2 GEM's market potential, the company is targeting growth potential, industry and size limitation. The main goal of GEM is to have a lot of potential for growth in business operations in Hong Kong and the Mainland to provide convenient and efficient channels to raise funds to expand their businesses. 

3 GEM GEM trading and operations will use a set of advanced trading systems and electronic information distribution system, to reduce the cost of participants, increase investor confidence. Investors can directly enter the trading system of the Stock Exchange trading via telephone, Internet and home computer, directly off the disc. Single price bid for the sale of the implementation of the transaction were segmented, each time using the auction approach, the transaction price and the transaction commission decided to provide investors with a fair and effective way to trade. 

GEM requirements for listed companies 

1 GEM initial listing requirements for initial listing on GEM conditions are generally less stringent than existing motherboard market, in terms of business records, it is no minimum profit requirement, there is no need to make a profit forecast, only the "business objectives statement," clearly use main business direction for approximately three years and the company's set of funds, as well as show the company for two years engaged in "active business activities" recorded by the accountant reporting financial results before the market for two years; minimum capitalization requirements, its business minimum capitalization requirements of the Listing HK $ 46 million; no underwriting requirements, when the initial public offering, the minimum public holding of HK $ 30 million or 20% of the issued share capital - more than 25%, the number of shareholders of more than 100 people. Allows business competition, the controlling shareholders of listed companies and listed companies as competition with any business, must be fully disclosed. 

2 GEM's distribution methods on the Stock Exchange will set up an independent committee to consider GEM GEM listing application. Committee members include market participants entrepreneurship and technology development organizations who brokerage, accounting profession, the legal profession and so on. GEM Listing Committee will retain the absolute right to reject any application for listing on the matters in violation of the Listing Rules to investigate and take disciplinary action to ensure the smooth operation of the market. 

3 GEM corporate governance requirements of the GEM market has more stringent than the motherboard market corporate governance measures to encourage listed companies to comply with the Listing Rules and comply with appropriate business practices. GEM listed company must appoint two independent non-executive directors, the appointment of a full-time qualified accountant responsible for overseeing the finance, accounting and internal control functions, designate an executive director of the compliance officer, urging the company and its directors to comply with the Listing Rules, the establishment of the Audit Committee review of the internal control issues will be an independent non-executive director as chairman, the majority of its members should be independent. Company management shareholders and financial shareholders when the company listed are required to hold at least 35% of the Company's issued share capital. 

After the IPO, shall continue to employ at least two full fiscal sponsor, the sponsor shall be in an advisory capacity to assist issuers to comply with the Listing Rules. Shares held by management shareholders within two years, the financial shareholders within six months does not allow the transfer. 

4. listing information disclosure requirements are more frequent than the motherboard market, detailed and accurate, in addition to implementing the provisions of the existing motherboard market, additional disclosures GEM listing requirements include: quarterly and half-year results report (not subject to audit) within 45 days after the end of the relevant period of the announcement, the end of the audited annual results report shall be published within three months after the year end, within the first two financial years after listing, every six months should the business objectives and the subsequent development speed to make a comparison, the comparison report shall be published in the interim Report and Annual. The company's only shareholders through the distribution plan, no other conditions. 
   
Operational strategies of private enterprises listed in Hong Kong 
 
Despite the integration issues such as financial, tax and other aspects, but the pace of development of private enterprises listed overseas are still fairly quickly. Among them, the Hong Kong due to geographic proximity, and the subsequent issuance of the advantages of easier and become the first choice for mainland private enterprises listed overseas. At present, the 1014 Hong Kong-listed companies, about 240 mainland enterprises, accounted for nearly 30% market value, accounting for 40% of the stock in circulation. 
Motherboard comparison with the mainland, in Hong Kong-listed features are: price-earnings ratio is lower than the initial public offering of the mainland market, but as long as regulatory compliance, several times a year can allotment and issuance of shares to obtain funds. Secondly, they meet the basic requirements listed company, working pre-IPO generally not more than one year, listing costs are predictable. Third, can greatly improve the visibility, branding conducive to overseas development, to develop the international market. Finally, the entrepreneur's property can be effectively protected. 
In order to facilitate overseas listing and other capital operation, Mainland enterprises in Hong Kong or Bermuda, the Cayman Islands, a holding company is necessary, as a major shareholder Mainland Overseas Shareholders holding company, and come up with 20-30% 
  
  Of the shares to attract foreign investors, while the mainland companies overseas holding company was changed to affiliated companies, must comply with the laws and regulations for foreign investment in the Mainland: As Hong Kong's main board, the profits of foreign-owned mainland companies to comply with the standard three-year 50 million Hong Kong dollars, or else must be approved by H shares or red chips listed on the form, while H shares and red chips by the mainland securities sector regulation more limited, basically only the state-owned holding enterprises adopt. 
Direct costs Mainland enterprises listed in Hong Kong GEM approximately between HK $ 800-1500 million and includes underwriting fees, accountants, lawyers and financial consultants and other expenses. If the company's main business market is vast, profitable and stable, in line with market focus, the relevant finance companies financial arrangements can be thought of some listed companies do before, such as part of the costs can be paid after the listing. But no matter what, companies must pay at least HK $ 2 million of its own funds to do this work. 
Backdoor / RTO (Back Door Listing), applicable to corporate capital accumulation has been a considerable scale, there are tens of millions of cash on hand owners of large enterprise groups, the size should be large enough to fund the acquisition of listed companies relative controlling interest (triggered in Hong Kong full acquisition ratio of 30%), the benefits of this method is that fast, unlike publicly traded like to go through layers of checkpoints, relatively more lenient corporate financial disclosure. Now the long-term stock price hovering at 0.50 Hong Kong dollars less than about 200 Hong Kong-listed company, as the Hong Kong Stock Exchange no delisting system, the performance of listed companies engaged in the trading of these, toys, clothing and other traditional industries continue to back, or even debt. 
Using these shell resources for Mainland enterprises, it is a shortcut overseas financing. If normal operation can achieve win-win results, but buyers and sellers because of information asymmetry, it is difficult to complete the acquisition of one-time shell resources, more effective way is to take two steps: first, to make the assessment of both assets and audited by a certain percentage of the equity swap, both as a minority shareholder equity of each other, such as the proportion of 20-40% of the shares and lock these shares; both sides can agree: China does not participate in the management of foreign and dividends, but China can not sell shares held (shares in Hong Kong are tradable), nor through the acquisition of the company's stock to become the largest shareholder. Then through offshore financial consultant arrangements, by private placement, rights issue and other forms of financing, and finally reach the second step completed the acquisition purposes. In this process, the two companies have for some time due to mutual understanding, and can solve the problem of information asymmetry, to avoid potential financial black holes and other problems, and can cost less to achieve the purpose backdoor listing as well as financing. 
Equity / asset swap (Share Swap) trading ideas and way above similar, but action is usually the dominant party is a listed company, as a listed company can issue new shares to the acquisition of high-profit companies. Many listed companies listed in Hong Kong Holdings under constant search for quality companies to the mainland or research institutions, in order to enrich its technological content and profit levels. For example, Tom.com opportunity to use the media industry downturn, has acquired more than a dozen magazines and outdoor media companies in the Mainland and Taiwan. 
These methods should be integrated in the operation of different financial instruments and programs will involve a lot of domestic and international professional organizations, regulatory agencies, companies generally do not have such talent. Therefore, Mainland enterprises must establish mutual trust since the relevant investment banks and other professional institutions and before the operation, mutual understanding of the relationship, in order to effectively achieve the purpose of the listing.

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