The Beijing Stock Exchange (BSE) is likely to start trading on November 15 as 10 regulations were released on October 30, said experts. The BSE is seen as a game-changer for technologically advanced small and medium-sized enterprises (SMEs). The new bourse released four business regulations on its website, concerning stock listings, revisions, issuances for investors and company restructuring. Another six regulations were released as well, covering management of sponsors, underwriters, issuance of preferred stocks and convertible bonds. The regulations will take effect on November 15. This appears to suggest the BSE will commence its formal operations on November 15, industry insiders said.
The new exchange will initially be built upon the NEEQ Select, the highest tier of the eight-year-old National Equities Exchange and Quotations (NEEQ) system. Draft listing rules were released on September 5 to solicit public opinion. In the revised version released on October 30, the BSE said companies will not be allowed to go public if they have not released annual or interim reports 36 months before their listing applications. Supervision by sponsors over initial public offerings (IPO) and company restructuring is set at three years and two years, respectively. Companies’ stock incentive plans implemented at the NEEQ can be resumed after listing on the BSE. Meanwhile, oversight of auditing reports of BSE-listed companies will be tightened.
There are 68 NEEQ Select companies, which will be directly transferred to the BSE. Another 14 companies may complete subscription to the NEEQ Select before November 15. In all, there may be 82 listed companies when the BSE debuts in the middle of this month, said Zhou Yunnan, Founder of Beijing Nan?shan Jingshi Investment. Dong Qi, Chief Analyst of Guotai Junan Securities, said the registration-based IPO system and the corporate system will be further optimized after the launch of the Beijing bourse, which will lead to more diversified services becoming available in the Chinese capital market, the China Daily reports.
China in early September announced plans to set up the Beijing Stock Exchange to complement the other two bourses in Shanghai and Shenzhen, and to create a main venue for innovative SMEs. The 68 companies on the selection tier of the New Third Board are mainly in the sectors of medicine, mechanical equipment, new materials and information technology. The third-quarter financial reports showed that 66 out of the 68 companies reported profits, and 45 had net profits of more than CNY30 million. The establishment of the Beijing Stock Exchange is expected to alleviate the problem for innovative SMEs to raise funds, Chen Ke, Partner of Beijing Chang'an law firm, told the Global Times.
The launch of the Beijing Stock Exchange will encourage innovation-driven companies to seek a domestic listing, instead of a U.S. listing, experts said. “Most Chinese companies choose a U.S. listing because of the lower threshold and listing requirements. Therefore, if the new exchange can fully meet the development requirements of those innovative enterprises, they will naturally choose to list at home,” Chen said. More than 200 enterprises are preparing for a listing on the NEEQ selection layer, a reserve for the new stock exchange. “The number of listed companies on the Beijing Stock Exchange will soon narrow the gap with the STAR board and ChiNext, supporting the nation's economic transformation and industrial upgrading, especially for the development of the high-tech industry,” Dong Dengxin, Director of the Finance and Securities Institute of Wuhan University, told the Global Times.
