HKSI Paper 1 Accessing public capital question: GEM cash flow test vs the Main Board

HKSI Paper 1Accessing public capital

Tai Po Robotics Ltd has a two-year trading record under the same management and owners. It made losses in both years, but operating cash flow before working capital changes and taxes totalled HK$38 million, and expected market capitalisation is HK$200 million. If all else is met, where can it list?

A On neither board, because both require a profit in the latest financial year
B On either board, because positive operating cash flow satisfies both rule books
C On GEM under the cash flow test, but not on the Main Board
D On the Main Board under the market capitalisation/revenue/cash flow test

Show the answer and explanation

Answer: C. On GEM under the cash flow test, but not on the Main Board

GEM Rule 11.12A(1) sets the cash flow test: a trading record of at least two financial years with positive operating cash flow of at least HK$30 million in aggregate for those two years, plus ownership continuity for the latest full year and management continuity for two years. GEM Rule 11.23(6) requires an expected market capitalisation of at least HK$150 million. Tai Po meets both. The Main Board needs a trading record of at least three financial years under every test in Rule 8.05 and a market capitalisation of at least HK$500 million (Rule 8.09(2)); its cash flow test also needs HK$2 billion market capitalisation, HK$500 million revenue and HK$100 million cash flow. Neither board makes a profit compulsory under every test. Source: GEM Listing Rules r.11.12A(1), r.11.23(6); Main Board Listing Rules r.8.05, r.8.09(2) (as at October 2026).

Common mistake

Assuming any company with positive cash flow can use the Main Board cash flow test. That test needs three years, HK$2 billion market capitalisation and HK$500 million revenue.

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Original study material mapped to the public HKSI Paper 1 syllabus. Unofficial, not endorsed by HKSI Institute or the SFC. Verify figures and rules against current guidance before relying on them.