The prerequisites for listing equity securities on the Main Board are:

1. Both the issuer and its business must, in the opinion of the Stock Exchange, be suitable for listing. An issuer (other than an investment company) whose assets consist wholly or substantially of cash or short-term securities will not normally be deemed suitable for listing, except where the issuer is solely or mainly engaged in the securities brokerage business.
2. A new applicant must satisfy either one of the following tests:

The profit test
A new applicant must have an adequate trading record under substantially the same management and ownership. It must have a trading record of not less than three financial years, during which the profit attributable to shareholders must, in respect of the most recent year, be not less than HK$20 million and, in respect of the two preceding years, be in aggregate not less than HK$30 million; or

The market capitalization/revenue/cash flow test
A new applicant must have an adequate trading record under substantially the same management and ownership. It must have a trading record of not less than three financial years; a market capitalization of at least HK$2 billion at the time of listing; revenue of at least HK$500 million for the most recent audited financial year; and a positive cash flow from operating activities that are to be listed of at least HK$100 million in aggregate for the last three financial years; or

The market capitalization/revenue test
A new applicant must have an adequate trading record under substantially the same management and ownership. It must have a trading record of not less than three financial years (unless otherwise waived by the Stock Exchange in accordance with the relevant provisions of the Main Board Listing Rules); a market capitalization of at least HK$4 billion at the time of listing; revenue of at least HK$500 million for the most recent audited financial year; and at least 1,000 shareholders at the time of listing.

Note: The new applicant has to demonstrate to the satisfaction of the Stock Exchange that its directors and management must have sufficient and satisfactory experience of at least three years in the line of the business and industry of the listing applicant; and that it is under substantially the same management for the most recent audited financial year.

3. The expected market capitalization of a new applicant at the time of listing must be not less than HK$200 million and the expected market capitalization of its securities held by the public at the time of listing must be not less than HK$50 million.
4. To ensure an open market in the securities for which listing is sought:

• at least 25 per cent of an issuer's total issued share capital must at all times be held by the public. The Stock Exchange may, at its discretion, accept a lower percentage of between 15 per cent and 25 per cent in the case of issuers with an expected market capitalization of over HK$10 billion at the time of listing, on condition that the issuers will make appropriate disclosure of the lower prescribed percentage of public float in the initial listing document and confirm sufficiency of public float in successive annual reports after listing;
• in the case of a class of securities new to listing, there must be a minimum of 300 shareholders. For new applicants to be listed under (ii)3 above, there must be at least 1,000 shareholders;
• the top three public shareholders cannot hold in aggregate more than 50 per cent of the public float at the time of listing; and
• a new applicant must have available sufficient working capital for at least the next 12 months from the date of the listing document.
• The applicant must make all necessary arrangements so that its securities for which listing is sought are accepted as eligible by HKSCC for deposit, clearance and settlement in CCASS.

The above initial listing criteria takes effect on 31 March 2004. New applicants that submit their listing application (Form A1) after this date, and new applicants that have submitted their Form A1 before this date but remain unlisted three months afterwards, must comply with the new initial listing criteria.

This is only a brief summary of some of the basic conditions to be met by applicants seeking a listing on the Stock Exchange. Special or additional conditions apply to infrastructure project companies, mineral companies, overseas issuers and mainland issuers seeking a listing. Please refer to the Listing Rules for details.

The basic listing requirements of GEM are as follows:

1. GEM does not have a profit record requirement but the company must have had active business pursuits for the 24 months before listing application (a 12 months active business pursuits is acceptable for companies that can meet certain conditions on their size and public shareholding).
2. The company must have a focused line of business but peripheral businesses to support the focused line of business will be allowed.
3. During the 24 months before listing application (or 12 months for companies that meet certain conditions of size and public shareholding), the company must have been under substantially the same management and ownership.
4. The company must appoint a sponsor to assist in preparing and to lodge the listing application. In addition, the company must engage a sponsor, in an advisory capacity, at least for the two full financial years after listing.
5. The company must comply with the corporate governance requirements by appointing independent non-executive directors, a qualified accountant and a compliance officer and establishing an audit committee.
6. For companies with a market capitalization not exceeding HK$4 billion, the minimum public float will be 25 per cent subject to a minimum of HK$30 million. For companies with market capitalization exceeding HK$4 billion, the minimum public float will be the higher of HK$1 billion or 20 per cent of the issued share capital. Companies listed before 1 October 2001 are subject to the minimum prescribed percentage at the time of their listing, which is slightly different.
7. The company must have an adequate spread of public shareholders and, as a guideline, the shares in public hands should, upon listing, be held by at least 100 persons.
8. The company must be incorporated in one of the following jurisdictions: Hong Kong, China, Bermuda and the Cayman Islands.

Difference of Basic Listing Requirements of Main Board and GEM

1. Main Board companies must have a track record of at least three years (with exceptions in certain circumstances). In the case of new applicants to be listed under the "profit test", the new applicants must have recorded a profit of HK$20 million in the most recent financial year and an aggregate profit of HK$30 million in the two preceding financial years. In the other cases where new applicants are to be listed under "the market capitalization/revenue test" or the "market capitalization/revenue/cash flow test", the new applicants must comply with the alternative financial standards tests (including revenue requirement, such as the new applicants must be able to generate substantial revenues for the most recent audited financial year). GEM does not have a profit record or revenue or other financial standards requirements but companies must have had active business pursuits for the 24 months before listing application (a 12 months active business periods is acceptable for companies that can meet certain conditions of size and public shareholding).
2. There is no specific requirement for Main Board companies to have a focused line of business, but GEM companies must have a focused line of business.
3. The Main Board requires the business to be under substantially the same management throughout the three-year track record period (with some exceptions), but GEM companies are required to be under substantially the same management and ownership during the 24 months before listing application (or 12 months, see 1 above).
4. Requirement to have a sponsor ends once a company lists on the Main Board (However, an H-share issuer must retain a sponsor for at least one year after listing). GEM companies must appoint a sponsor as their adviser at least for two full financial years after listing.
5. Both Main Board and GEM companies are required to appoint at least three independent non-executive directors, and at least one of the independent non-executive directors must have appropriate professional qualifications or accounting or related financial management expertise. In addition, both Main Board and GEM companies are required to appoint a qualified accountant on a full time-basis and establish an audit committee. A GEM company must appoint a compliance officer.
6. The minimum public float of a Main Board company must be HK$50 million and 25 per cent of the issued share capital (this can be lowered to not less than 15 per cent at the discretion of the Stock Exchange if the issuer's market capitalization exceeds HK$10 billion). For GEM companies with a market capitalization not exceeding HK$4 billion, the minimum public float will be 25 per cent subject to a minimum of HK$30 million. For companies with a market capitalization exceeding HK$4 billion, the minimum public float will be the higher of HK$1 billion and 20 per cent of the issued share capital. Companies listed before 1 October 2001 are subject to the minimum prescribed percentage at the time of their listing, which is slightly different.
7. A Main Board company must issue its annual report at least 21 days before the date of its AGM and within four months after the end of the financial year. The company must also compile an interim report for the first six months of each financial year and distribute the interim report within three months after the interim period ends. After listing, GEM companies are required to publish their annual reports within three months after the financial year end date and the half-yearly reports and quarterly reports within 45 days after the end of each such period.