Accounting firm BDO Ltd. has urged authorities to require a portion of shares to be listed on the Growth Enterprise Market to be sold to the public.
The suggestion is aimed at increasing the shareholder base of companies newly listed on the GEM board and reducing the exposure of individual investors to the secondary market following the listings, the Hong Kong Economic Journal reported on Wednesday, citing the firm’s partner Andrew Lam.
Lam proposed that the GEM board adopt an open offering and retrospective mechanism that will ensure at least 10 percent of the stocks are open for public subscription.
It has been observed that the current system has allowed a single shareholder to acquire 80 percent of newly listed stocks, potentially causing volatility in the secondary market.
Thirty stocks have been listed on the GEM board so far this year by way of introduction, distributing the shares to a limited number of investors. On average, the stocks surged 8.32 times on debut.
Lam acknowledged that the suggestion may increase listing costs and reduce the number of listing applicants.
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