In April 2020, the Central Committee for Deepening Overall Reform approved the Overall Implementation Plan for the Reform of the ChiNext Board and the Pilot Project of the Registration-based IPO System, marking the official launch of the reform of the ChiNext Board and the pilot project of the registration-based IPO system. At the historical intersection of achieving the “Two Centenary Goals” (to complete the building of a moderately prosperous society in all respects by the centenary of the Communist Party of China in 2021 and to build China into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful by the centenary of the People’s Republic of China in 2049), the key stage when the new round of scientific and technological revolution and industrial transformation is accelerating, and the critical moment of coping with the impact of COVID-19 and promoting economic recovery, firmly advancing the reform of the ChiNext Board and the pilot project of the registration-based IPO system has fully reflected the great attention and expectation of the CPC Central Committee and the State Council regarding the reform and development of the capital market and underscored the important role of the reform of the ChiNext Board in supporting technological innovation and innovation-led high-quality development.

Under the strong leadership of China Securities Regulatory Commission (“CSRC”), SZSE has implemented the principles of “system building, non-intervention, and zero tolerance” and the working requirements of “revering the market, revering the rule of law, holding high professionalism, staying alert to risks, and obtaining support from various parties across the board”. On 24 August 2020, with the great support of market participants, the reform of the ChiNext Board and the pilot project of the registration-based IPO system was launched. And the first 18 enterprises got listed, marking a solid step toward the registration-based IPO system reform of the capital market. Today, the reform of the ChiNext Board and the pilot project of the registration-based IPO system has operated steadily for a year. In the year, 728 IPO applications from more than 50 industries were accepted and reviewed; 184 new companies were listed, sending the total number of listed companies to 1,000 plus. With a distinct innovation attribute, a rich variety of industries and rapid market development, the ChiNext Board has effectively supported the development of enterprises from strategic emerging industries, high-tech enterprises, and specialized, sophisticated, featured and novel small and medium-sized enterprises, enhanced market participants’ sense of gain and injected new energy into the real economy.

The working philosophy of being open-minded, transparent, honest and strict has been adopted as always. SZSE has, following the three principles of the registration-based IPO system reform and adhering to the working philosophy of being open-minded, transparent, honest and strict, promoted the coordinated development of the market and spared no effort to build quality reform projects. First, being open-minded. Being market-oriented and sticking to the positioning as a market organizer and service provider, SZSE has fully listened to market opinions and advice, winning market support with an open mind. Second, being transparent. SZSE has made the whole review procedures public and stock issuance market-oriented, and eliminated “pocket policy” and “invisible threshold”, gaining market trust with transparent mechanisms. Third, being honest. SZSE has kept the bottom line of integrity checked and established an all-round registration-based clean governance supervision system, ensuring market fairness with a clean style of regulation. Fourth, being strict. SZSE has enforced strict discipline over the capital market and adopted the “zero tolerance” policy over acts in violation of laws and regulations, to truly protect investors’ legitimate rights and interests and maintain market order with strict standards.

Remarkable results have been made in serving innovation-driven development. The ChiNext Board actively serves the companies of innovation, creativity and originality, serves traditional industries that are deeply integrated with new technologies, new industries, new business formats and new models, and serves the national innovation-driven development strategy, by providing strong direct financing support to high-tech enterprises, enterprises in strategic emerging industries, and innovation-oriented enterprise and startups with growth potential. Currently, nearly 50% of the companies on the ChiNext Board are from new-generation IT, bio-pharmaceuticals, new materials and high-end equipment industries, including a group of quality enterprises with core technologies and innovation capability, showing clear industry cluster effect. Under the registration-based IPO system, the total IPO financing of the new listed companies on the ChiNext Board recorded CNY 142.1 billion and their total market capitalization CNY 1.9 trillion. Among them, over eighty percent are high-tech enterprises and 28 companies are specialized, sophisticated, featured and novel small and medium-sized enterprises. The performance in 2020 shows that over sixty percent of the new listed companies achieved growths in both operating income and net profit, demonstrating strong growth potential and profitability.

The formation of an innovation capital center has been accelerated by the reform. The ChiNext Board has set diversified listing standards and simplified issue conditions. With further improvement in inclusiveness and coverage, the ChiNext Board has provided efficient and convenient financing support to various innovation-oriented enterprises. By refining the refinancing and M&A and reorganization service system, SZSE has supported listed companies in continuously increasing R&D input and pursing innovation-driven development, and improved the formation efficiency of innovation capital. SZSE has put in place supporting measures for the reform, successfully incorporated the SZSE Main Board and the SME Board, formed a “Main Board+ChiNext Board” market system with clear layers and distinctive features, and further strengthened the role of the ChiNext Board as the main platform in serving the innovation-driven development strategy. SZSE has effectively motivated social capital such as PE and VC to invest in technology companies and support technological innovation, and guided innovation resources to gather in strategic emerging industries and specialized, sophisticated, featured and novel fields, contributing to the high-level circulation of technology, capital and the real economy and promoting the building of a dynamic ecosystem of innovation capital.

System operation has stood the test of quality and efficiency through innovation. SZSE has advanced a series of reforms of basic regulations for the ChiNext Board such as regulations on issuance & underwriting, listing, trading, continuous regulation, delisting and investor protection, which has produced remarkable initial results. In the review process, SZSE has strengthened the quality control of review, made public the standards, progress, opinions and regulation of review, and implemented intelligent review, to fully improve the quality and efficiency of review. In the issuance process, SZSE has basically established the enquiry, pricing and placing mechanism with institutional investors as the mainstay, and continuously promoted normal issuance and improved market-based issuance. In the trading process, SZSE has eased the price limit, optimized the temporary trading halts mechanism, and established the “price cage” mechanism, making market game more sufficient. In the process of continuous regulation, SZSE has implemented the registration-based IPO system in the existing business market synchronously, and further optimized the quick micro refinancing mechanism. As a result, the whole process from acceptance to registration takes only eight days at the soonest, a significant improvement in review efficiency and predictability. In the delisting process, SZSE has decided to delist seven companies from the ChiNext Board since 2020. The mechanism for the survival of the fittest has gradually improved.

The market ecosystem has gradually improved. The market investor structure of the ChiNext Board has been further refined, with the proportion of institutional investors steadily increasing, the scale of foreign investors continuing to grow and the value investment idea further popularized and deepened. With relevant judicial guarantee measures for the registration-based IPO system of the ChiNext Board gradually implemented and taking effect, the legal environment is becoming better. Meanwhile, SZSE has guided and urged market entities such as intermediaries and issuers to fulfill their duties. The turnover and trading activities of the ChiNext Board have further improved. Since the reform, the ChiNext Index has risen by over 20%. The market has become more dynamic and resilient. All of those facts have fully shown domestic and foreign investors’ high recognition of SZSE’s innovation.

The reform of the ChiNext Board and the pilot project of the registration-based IPO system is exploration and practice to drive the existing business reform of the capital market through the incremental business reform. It has laid a foundation for the building of a more dynamic and more resilient institutional system for the capital market and accumulated experiences for the implementation of the registration-based IPO system across the whole market. SZSE will continue to practice the principles of “system building, non-intervention, and zero tolerance” and the requirements to revere the market, revere the rule of law, hold high professionalism, stay alert to risks, and obtain support from various parties across the board. We will continue the reform, keep in mind national strategies, and apply the new development philosophy completely, accurately and fully. We will make them our top priorities to support technological innovation, serve specialized, sophisticated, featured and novel enterprises, and assist in high-quality economic development. We will stick to the positioning of the ChiNext Board of serving companies of innovation, creativity and originality, and traditional industries that are deeply integrated with new technologies, new industries, new business forms and new models, put forth effort to maintain the high-quality operation of the registration-based IPO system on the ChiNext Board, and forestall and defuse major risks. We will actively support the development of the Guangdong-Hong Kong-Macao Greater Bay Area and the pilot demonstration zone of socialism with Chinese characteristics and the pilot project of comprehensive reform of Shenzhen, and strive to build a quality innovation capital center and world-class exchange that will serve national strategies and the real economy in deeper levels and more fields, actively contributing our bit to the building of a modern socialist country in all respects.