China to Launch Growth Enterprise Board on May 1, 2009
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This article gives a legal review of the China Securities Regulatory Commission’s (CSRC) (中国证监会) announcement on March 31, 2009 regarding the launch of China’s growth enterprise board (创业板) on May 1, 2009.
On March 31, 2009, the CSRC issued the “Provisional Regulations on IPO and Listing on the Growth Enterprise Market” 《首次公开发行股票并在创业板上市管理暂行办法》 regarding the launch of China’s growth enterprise board on May 1, 2009.
The CSRC commented in its press conference on March 31 that the launch of the growth enterprise board would perfect the structure and expand the width and depth of China’s capital market, and provide a capital market for the numerous innovative and growth enterprises within the territory.
It is expected that the growth enterprise market would provide an attractive exit for private equity/venture capital investments made in China.
The Provisional Regulations detail the requirement of listing conditions, listing process, information disclosure, supervision and legal liability. The Provisional Regulations will come into force on May 1, 2009.
Under Chapter 2, Article 10 of the Provisional Regulations, companies seeking to list on the growth enterprise board must be companies limited by shares having operated for at least 3 years, and with net assets of at least RMB 20 million (US$2.94 million).
Further, the company must have in the 2 years before listing generated a profit of at least RMB 10 million; or have a profit of at least RMB 5 million and revenue of at least RMB 50 million in the year before listing, and an annual revenue growth of at least 30% in the 2 years before listing.
After listing, the company must have a share capital of not less than RMB 30 million.
The CSRC will in due course release the relevant listing rules, specific transaction requirements and other relevant matters. Until then, the CSRC will begin to accept listing applications from companies.
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