Shanghai Stock Exchange releases finalized regulations for new tech board

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The Shanghai Stock Exchange released a finalized set of regulations late last week for its new tech board, expanding upon the draft introduced on Jan. 30.

“Red-chip companies”—China-based firms incorporated and listed outside the mainland, especially in Hong Kong—with rapid growth, self-developed and cutting-edge technologies, and competitive advantages in its segment are allowed to list on the new tech board, according to the new regulations.

The rules also provide a number of other standards for firms that wish to go public on the new board, stating that companies need to meet at least one to qualify.

The loosest standards include an expected market capitalization of no less than RMB 1 billion (around $150 million), positive net profit margins in the two years prior to listing, and a total net profit margin of no less than RMB 50 million (around $7.5 million) during the same period.

Companies with a market capitalization of no less than RMB 1 billion, positive net profit margin over the past year, and revenue of no less than RMB 100 million (around $15 million) during the same period are also qualified to apply.

Also eligible to list are companies with an expected market capitalization of no less than RMB 1.5 billion (around $224 million), revenue of no less than RMB 200 million (around $30 million), and a total R&D expense of no less than 15% of their total revenue over the past three years.

Chinese President Xi Jinping first announced the board, which is seen as China’s answer to the tech-focused Nasdaq, during a trade expo in Shanghai last year. The move is aimed at implementing policies to make China a more attractive place for the country’s tech startups to go public. Officials hope for it to provide an alternative to international bourses like the New York Stock Exchange and Nasdaq.

The board also aims to boost China’s technical know-how by giving promising, but potentially loss-making firms, access to additional capital. The move falls in line with the country’s ambitions to become a tech powerhouse by 2030 through a focus on artificial intelligence and higher-value manufacturing industries.

With contributions from Chris Udemans