Applicants would only need to show records of active business for the company's major business for the past two years. In contrast, the main board would require companies to produce a three year record of performance with profits. Stock prices may undergo frequent and sharp movements. Market liquidity may be slim and bankruptcy risk can be relatively high. The GEM may be more suitable for professional investors.
Investment risk is emphasized and buyers have to take special care.
Disclosure requirement is more stringent than the main board's. For instance, quarterly reports and comparison between business progress and objectives stated during initial floatation are required. Furthermore, tighter requirements on quality and greater undertaking are set for sponsors. Although the GEM is hosted by the Stock Exchange of Hong Kong like the main board, the two are independent from each other. There are separate rules for listing, trade and information dissemination.