SHANGHAI, March 24: China’s securities regulator has unveiled draft rules for a long-awaited Nasdaq-style secondary board for start-up companies with a lower threshold for listings, state media reported on Monday.
“The new board will serve growth enterprises and focus on extending support to firms capable of independent innovation,” the China Securities Journal reported, citing the country’s securities regulator.
Previous reports have suggested the board could be established by June, probably in the southern boom city of Shenzhen.
The board is likely to provide more access to the capital market for China’s start-up companies, which often find it more difficult to obtain bank loans than larger companies, many of them state-owned.
Big enterprises often get preferential treatment, not just because they are financially stronger and have a better credit record, but also because they may have better connections to the management of state-controlled banks.
“The establishment of the growth enterprise market will help ease the financing problem for small- and mid-size enterprises, especially small and mid-size high-technology firms,” the regulator said on its website.
The listing requirements for the growth enterprise board will be looser than for the existing exchanges in Shanghai and Shenzhen.
Companies hoping to list on the growth board should be profitable in the previous two years with net profits totalling no less than 10 million yuan, according to the draft rules.
By contrast, candidate companies for listing in the main boards in Shanghai and Shenzhen are required to post net profit of at least 30 million yuan in the previous three
years.
State media also reported on Monday that China plans an over-the-counter stock exchange in the northern port city of Tianjin, likewise meant to support companies that have limited access to funds.—AFP
