| China to launch Nasdaq-style second board |
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| Tuesday,March 31,2009 Posted: 21:14 BJT(14 GMT) |
| From:China Daily; Xinhuanet Article type:Redistributed |
China's planned trading board for start-ups moved a step closer to creation after regulators approved listing rules for companies.
Companies that seek listing at the new Nasdaq-like second board should have net assets of at least 20 million yuan and be open for business for more than three years, the country's securities regulator said in a set of guidelines that was made public in the small hours Tuesday and take effect on May 1.
The China Securities Regulatory Commission also requires the issuer stay in the black for the recent two consecutive years with combined profits of at least 10 million yuan ($1.5 million), or report profits of at least 5 million yuan for the most recent year on revenues of at least 50 million yuan, with annual revenue growth of at least 30 percent in the recent two years.
In comparison, the rules for China's main-board IPOs in the eastern Shanghai Stock Exchange require companies to make consecutive profits over the past three years, with combined net income of no less than 30 million yuan.
The main-board rules also have other restrictions such as companies must have an accumulative net cash flow of at least 50 million yuan over the past three years and accumulative operational income of at least 300 million yuan.
Premier Wen Jiabao said last year he wants to set up a bourse similar to the Nasdaq Stock Market for start-ups, to facilitate fund-raising by small businesses as banks focus on lending to large state-owned enterprises. The plan has been on hold since China's stock market plunged 65 percent last year.
Regulators have completed preparations for a start-up board, Ouyang Zehua, vice director of the watchdog's supervision department, said on March 4 in Beijing. The board will list more than eight companies when it goes into operation, Chen Dongzheng, president of the Shenzhen Stock Exchange, said on March 8.
To meet the fund-raising demand by start-ups as its economy expanded rapidly, China launched the Small and Medium Enterprise Board on the Shenzhen bourse in 2004, which now has over 200 companies listed. It has looser regulations than the main board but stricter ones than the coming second board.
Small and medium-size enterprises have long been a pillar in China's economy, which has grown to the world's third largest.The urgency for China to establish a second board gained momentum in 2008 when the global financial crisis slowed the economy sharply, and worries over defaults and consequent rises in non-performing loans made Chinese banks increasingly reluctant to lend to small companies.
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