Second Board Market -- Emerging Opportunities for Startups

Author: Wang Wei
Publisher:
Publish Date: 1999-05-01
Features: Due to the high-risk, small-scale, and short-establishment characteristics of high-tech enterprises, they generally find it difficult to enter a country's securities "main board" market. To promote the development of high-tech enterprises and provide an "exit" for venture capital, many Western countries have established a "second board" market outside the main board market based on their national conditions. Compared to the main board market, enterprises listed on the second board market have relatively lower listing standards and conditions, making it easier for small and medium-sized enterprises to go public to raise funds for development. The second board market is hailed as the cradle of high-tech enterprise growth.
Book Description: Due to the high-risk, small-scale, and short-establishment characteristics of high-tech enterprises, they generally find it difficult to enter a country's securities "main board" market. To promote the development of high-tech enterprises and provide an "exit" for venture capital, many Western countries have established a "second board" market outside the main board market based on their national conditions. Compared to the main board market, enterprises listed on the second board market have relatively lower listing standards and conditions, making it easier for small and medium-sized enterprises to go public to raise funds for development. The second board market is hailed as the cradle of high-tech enterprise growth.
Table of Contents:
Chapter 1: A Gathering Storm //
Section 1: The Financial Storm Sweeping Asia
Section 2: The Call of the Knowledge Economy
Chapter 2: A Long-Awaited Opportunity – The of the Hong Kong GEM //
Section 1: Early Planning
Section 2: Positive Public Response
Chapter 3: A Detailed Analysis – An Insight into the GEM Rules //
Section 1: The Market Positioning of the GEM
Section 2: Main Content of the Listing Rules (Omitted)
Preface: The enthusiasm for the "second board market" stems from a conference held in July 1998, where experts from the Hong Kong Securities and Futures Commission and the Stock Exchange came to Beijing to host an "Enquiry Conference on Financing and Listing of Mainland SMEs on the Hong Kong Second Board Market." During the conference, both sides strongly advocated for the establishment of the second board market. On December 1 of that year, the Hong Kong Stock Exchange approved the plan to establish the Hong Kong GEM, the "second board market," and scheduled the launch of a batch of companies in the fourth quarter of 1999. (Excerpt from the Preface)
Excerpt:
III. Post-Listing Requirements
1. Corporate Governance: After listing, the issuer must establish rigorous corporate governance measures to ensure compliance with listing rules and appropriate business practices. Appoint at least two independent non-executive directors. Engage a full-time joint accountant to oversee financial, accounting, and internal control functions. This accountant must be a certified joint accountant recognized by the Hong Kong Institute of Certified Accountants (or a similar accounting professional body recognized by the Hong Kong Institute of Certified Accountants). Appoint an executive director as the Compliance Officer to ensure that the company and its directors comply with the GEM listing rules. Establish an audit committee to review matters related to internal control and pre-approve increases in director compensation. The committee should be chaired by an independent non-executive director, with most members being independent. If the compensation increase method for directors is not specified in the listing documents, the compensation increase must be pre-approved by the audit committee. Similarly, when appointing new directors, their compensation must be pre-approved by the audit committee, and the increase in director compensation must be disclosed in the annual report. (Excerpted from pages 59-60)