On February 26, SZSE officially issued the Measures of Shenzhen Stock Exchange for Transferring the Listing of Companies on National Equities Exchange and Quotations to the ChiNext Board (Provisional) (hereinafter referred to as the “Transfer Measures”), setting forth the rules for transfer and regulating the transfer. This is an important measure for SZSE to implement the decisions and plans made by the CPC Central Committee and State Council and comprehensively deepen capital market reforms. This will help diversify the paths for listing of NEEQ companies, pave way for the growth of SMEs, strengthen the organic relations in the multi-tiered capital market, and enable the finance sector better serve the real economy.

According to the general requirements in the Guiding Opinions of China Securities Regulatory Commission on Transfer to Another Board for Listing of Companies on the National Equities Exchange and Quotations and on the basis of fully drawing on relevant rules for IPO on the ChiNext Board, the Transfer Measures sets out specific requirements in the aspects of conditions for transfer, review of transfer for listing and ongoing regulation and transaction continuation after transfer taking into account the particularity of entities to transfer to another board for listing and procedures.

First, conditions for companies to transfer to ChiNext. Such conditions are generally consistent with those for IPOs on the ChiNext Board. The companies planning to transfer are required to meet the positioning and IPO conditions of the ChiNext Board and the listing criteria stipulated in Rules Governing the Listing of Shares on the ChiNext Board. Besides, the companies shall also meet the following conditions: Having been listed on the NEEQ “select tier” for more than one year in a row, minimum of 1,000 shareholders and cumulative trading of no less than 10 million shares within 60 trading days before the announcement of a resolution on transfer to another board for listing reached by the board of directors.

Second, review of the transfer listing. Registration is not required in the review process as the transfer doesn’t involve new share offering. The issuance and listing review institution of SZSE is responsible for reviewing transfer applications, issuing a review report and submitting the applications to the ChiNext Board Listing Committee for deliberation. Compared with IPO, the transfer listing review time is reduced to two months and the effective period of decision on approving the transfer listing is reduced to six months, further improving efficiency. The review focuses on whether the companies to transfer meet relevant conditions and their information disclosure meets relevant requirements.

Third, transitional arrangements for lock-up periods. The lock-up period applicable to the controlling shareholders and de facto controllers of companies to transfer to another board is reduced to 12 months after the transfer listing. The share lessening within 6 months after lifting the restrictions shall not lead to control change. The restricted period is 12 months for the shares held by directors, supervisors and senior management members. The shares that are restricted at the time of applying for transfer, if their restricted periods have not expired at the time of transfer listing, will remain restricted within the remaining restricted period after the transfer listing. The restrictions on the shares held by relevant personnel of unprofitable companies after transfer are consistent with those on the IPO of unprofitable enterprises.

Fourth, trading mechanism coordination. For shares of companies after transfer, their trading, margin trading and short selling, stock pledged repurchase, agreed repurchase transaction and investor suitability management are kept in line with the IPO of shares under the registration-based IPO system of the ChiNext Board. Shareholders that have not activated the authority over trading on the ChiNext Board may either continue holding or sell the shares of the companies having transferred to the new board. The opening prices for reference on the first trading day of transfer listing are the closing prices on the last trading day when the companies traded on the NEEQ “select tier”.

Remaining committed to transparency, SZSE publicly solicited opinions from market players regarding the Transfer Measures from November 27 to December 11, 2020. Overall, the Transfer Measures was well received by market players, with the opinions mainly related to transfer conditions and process, responsibilities of intermediaries and supporting rules. SZSE highly valued and carefully studied the feedback of market players, and took reasonable advice to further refine relevant provisions of the Transfer Measures. First, the time offered to the companies to transfer to ChiNext and intermediaries to reply is extended to three months, conducing to higher information disclosure quality. Second, the calculation of trading indicator conditions is specified to count only the stocks trading via bidding method on the “select tier”. Third, the circumstances where transfer applications will be rejected are specified with reference to the IPO review rules. Fourth, it is stated that on-site supervision is not included in the time for review by SZSE and for issuers and intermediaries to reply.

According to the arrangements of the CSRC, SZSE will uphold the underlying principle of pursuing progress while ensuring stability, take solid steps in preparations for transfer including supporting business rules and technical system, and earnestly coordinate acceptance, review, listing and regulation to ensure stable implementation and orderly progress of transfer.