Advisory for GEM

What is the GEM Board?

Growth Enterprise Market Board is a listing platform aimed at facilitating growth-oriented businesses, whether small medium or green field businesses to raise capital to fund their growth and expansion plans.

GEM Board vs Main Board

Only Information Memorandum (IM) is required A full prospectus is required
Code of Corporate Governance is applicable as per approval of SECP Code of Corporate Governance applies
Only eligible investors can participate General public can invest
Initial listing fees capped at PKR 50,000 Initial listing fees capped at PKR 1.5 million
All TREC Holders can act as Advisor to the issue Only approved TREC holders by the SECP can act as Advisor on the issue
Minimum post issuance paid-up capital of PKR 25 million Minimum post issuance paid-up capital of PKR 200 million
Appoints Abbasi and Co. as Your Advisor Your company chooses and advisor, who does the initial due diligence in regards to financials, corporate structuring, legal and regulatory requirements etc and formulates your company's business plan moving forward.
Business Plan Evaluation The business case is evaluated by the consultant using different methodologies and its demand is gauged for the "Final Offer Structure" to get maximum values of the shares to be offered.
Finalization of Underwritings (Fixed Price) After the term of underwriting has been finalized, bankers to the issue and share registrar are appointed. The Central Depository Company (CDC) checks for eligibility and induction into their virtual share depository system. Finalize pre-listing investors with the help of your consultant.
Regulatory Filings Submit requisite regulatory documents for PSX and SECP and obtain the necessary approval.
Marketing Conduct road-shows investor’s presentations and other marketing and sales events to create awareness about the upcoming events.
Subscriptions and Balloting Share registrar and balloter collect subscription results from all bankers to the issue.
Post IPO Clearance The bank will transfer the money from the subscriber to the issuers. The company's equity securities can be traded on the GEM Board.
  1. The company has to be registered as public entity.
  2. Minimum post issuance paid up capital of PKR 25 million with no upper limit cap to the amount raised.
  3. Audited Financial Accounts for at least 2 proceeding years by QCR (Quality Control Review) rated audited firm. Not applicable for green field projects.
  4. Company website should be available.
  5. Company must issue at least 10% of the post issue paid up capital.
  6. Securities can be offered through fixed price method. Where the issue size is fully under written.
  7. Securities can also be offered through book building with eligible investors where the issue size is not more than 5 million shares or PKR 50 million.
  8. An information memorandum will be prepared and circulated.
  9. The code of corporate governance will be selected, applicable on companies as approved by the commission.
  10. Sponsors will have to retain 100% of their shareholding in the issuer and their subsequent right and bonus share issued for a lock in period of not less than a year.
  11. Sponsor will hold at least 25% of the post issue paid up capital of the issuer for a lock in period of not less than 3 years.
  12. Minimum number of subscriber required is 5.
  13. There is no profitability requisite for GEM Board.
  1. Compliance Relaxation
    • Companies need not to comply with the provision of chapter 5 of PSX rule book, which applies only to main board.
    • Within two years of listing, the company shall comply with the following code of corporate governance.
  2. Requirements
    • Audit committee comprising independent directors.
    • Female representation on board.
    • Minimum numbers of independent directors as per CCG Regulations
Only eligible investors are authorized to invest and trade shares in the GEM board, which includes institutional investors and individual investors.
  1. Institutional Investors includes:
    • Financial Institutions
    • Company as defined in the Companies ACT
    • Insurance Companies
    • Trust
    • Securities Brokers
    • Funds
    • Foreign Investors
    • Any other entity as specified by commission
  2. Individual investors are persons registered with NCCPL having net assets of PKR 15 million other than residential property
  1. Initial Listing Fee:
    • 0.05% of post paid-up capital.
    • Capped at PKR 50,000
    • PKR 50,000 on paid-up capital up to PKR 50 million.
  2. Annual Listing Fee:
    • PKR 100,000 on paid-up capital between PKR 50 million to 100 million.
    • PKR 200,000 on paid-up capital exceeding PKR 100 million.
  • Draft information memorandum with consultant with the issuer
  • Submit listing applications to the exchange on behalf of the issuer
  • Conduct Board shows and pitch the issuer to the eligible investors
  • Business activities of the issuer
  • Details regarding board of directors
  • Past financial information (Not applicable for the Greenfields project)
  • Management details
  • Capital Structure
  • Shareholding details
  • Name of Group and Associated Companies
  • Information Memorandum
  • Half yearly progress providing the status of the commitment mentioned in the information memorandum etc
Exchange needs to be informed of every non public material information such as:
  1. Directors of its Board of Directors relating to :
    • Cash Dividend
    • Bonus Issue
    • Right issue or
    • Any other entitlement or corporate action
  2. Change of management
  3. Significant change in its financial condition
  4. Expected business performance

Other Relevant Points

  1. Advisors the issue include all Consultants to the issue and Security Brokers licensed by the SECP, including Banks, Audit Firms and the Company itself.
  2. Any issuer may issue equity securities at premium to the par value.
  3. Anyone holding more than 10% shares of a GEM listed company can sell them to an eligible investor on condition that the offer size of capital shall not be less than PKR 50 million.
  4. If the issuer violates any provision of GEM regulations, the Exchange may take any disciplinary action such as:
    • Imposing a fine
    • Placing issuer in the defaulters’ segment
    • Suspend trading etc
  5. Trading shall takes place through KATS (Karachi Automated Trading System).

Migration to Main Board

The issuer may migrate to the Main Board after fulfilling criteria prescribed by PSX Rile Book Chapter 5 including:
  1. Minimum post issue paid-up capital of PKR 200 Million.
  2. Prospectus needs to be prepared.
  3. Compliance with complete code of Corporate Governance.