Listing Q&A


1. What is multi-tier capital market? What types of enterprises are the SME Board and ChiNext targeted?

 

The multi-tier capital market is designed for enterprises at different stages of growth and of different quality and risk profiles. It aims to satisfy the capital-raising needs of enterprises and different risk appetites of investors. The multi-tier market system helps maximize market efficiency, facilitates risk control and sound development of the capital market. So far, China has developed a relatively complete multi-tier capital market, comprising SSE and SZSE Main Board markets, SME Board market, ChiNext market and OTC market.  

 

The SME Board market was established in May 2004. It is positioned to serve enterprises in relatively mature stage of development and with stable profitability. Of all the companies listed on the SME Board, manufacturers account for 75%. SME Board is considered as a barometer of China’s manufacturing sector.

 

ChiNext was launched in October 2009. The market primarily targets innovative growth enterprises with profitability. ChiNext reflects innovative efforts in both technology and business models in China’s enterprises. ChiNext has helped encourage entrepreneurship, inspire creativity and popularize innovative business models. Nevertheless, ChiNext is not a “mini-board”. It is open to enterprises of all sizes so long as they meet the listing criteria. While financial requirements are relaxed, quality requirements remain or even strengthened in some respects. Moreover, ChiNext supports innovation in wide areas including technology, management, processes, business models, etc. For this reason, ChiNext is not a “tech board”.

 

2. What are the differences between the SME Board and ChiNext?

 

Indicators

SME Board

ChiNext

Legal basis

The Measures on the Administration of Initial Public Offerings and Listings of Shares effective as of May 18, 2006

The Interim Measures on the Administration of Initial Public Offerings and Listings of Shares on the ChiNext effective as of May 1, 2009

Purpose

To provide a direct financing platform for SMEs with well-defined core business,  growth potential and hi-tech contents

To promote the development of innovative enterprises and other growing start-ups

Profitability

Profitable in the last three consecutive financial years, with aggregate net profits more than RMB 30 million;

The aggregate operating cash flow for the last three consecutive financial years exceeds RMB 50 million; or the aggregate operating income over the last three financial years exceeds RMB 300 million.

Profitable in the last two consecutive years, with aggregate net profits no less than RMB 10 million and in continued growth;

Or

Profitable in the latest year with net profits no less than RMB 5 million. The revenue for the latest year is not less than RMB 50 million, with the income growth rate no less than 30% for two years.

 

Net assets

 

Net assets as at the end of the latest reporting period no less than RMB 20 million

Share capital

The pre-IPO share capital is not less than RMB 30 million and the post-IPO share capital is not less than RMB 50 million.

The post-IPO share capital is not less than RMB 30 million.

Years for review of operation

 

In the last three years, there has been no significant change in the principal business, directors and senior management, nor any change of the de facto controller.

In the last two years, there has been no significant change in the principal business, directors and senior management, nor any change of the de facto controller.

Intangible assets as at the end of the last reporting period (after deducting land use rights, aquaculture rights, mining rights, etc.) as a  percentage to the net assets  

No more than 20%

No specific requirement

Use of the proceeds

There shall be specific purposes for the proceeds which, in principle, shall be used for its principal business.

Proceeds raised by the issuer shall be used for its principal business and have specific purposes.

Sponsorship period

For IPO and listing on the Main Board, the continuous supervision and guidance period refers to the remaining of the year of IPO and the subsequent two full financial years. For further offering of shares or issuance of convertible bonds by the Main Board-listed companies, the continuous supervision and guidance period refers to the remaining of the year of listing of such shares or convertible bonds and the subsequent one full financial year.

For IPO and listing on the ChiNext, the continuous supervision and guidance period refers to the remaining of the year of IPO and the subsequent three full financial years. For further offering of shares or issuance of convertible bonds by the ChiNext-listed companies, the continuous supervision and guidance period refers to the remaining of the year of listing of such shares or convertible bonds and the subsequent two full financial years.

 

Review

The issuer’s application documents are reviewed by Main Board public offering review committee which is composed of 25 members.

The issuer’s application documents are reviewed by ChiNext public offering review committee which is composed of 35 members.