China’s securities watchdog announced last Friday that it would launch a pilot program for innovative firms to issue stocks and Chinese Depository Receipt (CDR).
This pilot program represented a major breakthrough in China’s IPO system.
It targeted innovative firms with a core competitive edge, a high degree of market recognition and a certain scale in a specific range of high-tech and emerging sectors.
For this pilot program, eligible players could fall into three categories.
The eligible candidate could be an overseas-listed red-chip with a market capitalization of no less than RMB 200 billion.
It could also be an innovative firm not yet listed abroad, either a red-chip or a domestically registered firm, which had an operating revenue of no less than RMB three billion for the latest year and a valuation of no less than RMB 20 billion.
A company with a surging income, a global leadership status for its independently developed technology, and a relevant dominance over its competitors could also be eligible subject to specific thresholds to be defined by the securities watchdog.
The China Securities Regulatory Commission (CSRC) would set up a committee of experts to select eligible firms for this pilot program.
Under this pilot program, red-chips would be allowed to issue CDRs or stocks at home based on their own choices and compliance with the IPO requirements. Other innovative firms could apply to issue their stocks.
The existing securities laws and regulations would regulate the issuance, listing and trading of these CDRs and stocks.
Under this pilot program, investors would receive the same level of protection as other investors on the A-share market.
In a pilot company without a record of profitability, the controlling shareholders, actual controllers, directors, and senior managers should not reduce their holding of shares in it until profit was seen.
A company issuing CDRs should give its domestic holders the same rights and interests as those holding its overseas common stocks.
This pilot program represented a major breakthrough in China’s IPO system.
It targeted innovative firms with a core competitive edge, a high degree of market recognition and a certain scale in a specific range of high-tech and emerging sectors.
For this pilot program, eligible players could fall into three categories.
The eligible candidate could be an overseas-listed red-chip with a market capitalization of no less than RMB 200 billion.
It could also be an innovative firm not yet listed abroad, either a red-chip or a domestically registered firm, which had an operating revenue of no less than RMB three billion for the latest year and a valuation of no less than RMB 20 billion.
A company with a surging income, a global leadership status for its independently developed technology, and a relevant dominance over its competitors could also be eligible subject to specific thresholds to be defined by the securities watchdog.
The China Securities Regulatory Commission (CSRC) would set up a committee of experts to select eligible firms for this pilot program.
Under this pilot program, red-chips would be allowed to issue CDRs or stocks at home based on their own choices and compliance with the IPO requirements. Other innovative firms could apply to issue their stocks.
The existing securities laws and regulations would regulate the issuance, listing and trading of these CDRs and stocks.
Under this pilot program, investors would receive the same level of protection as other investors on the A-share market.
In a pilot company without a record of profitability, the controlling shareholders, actual controllers, directors, and senior managers should not reduce their holding of shares in it until profit was seen.
A company issuing CDRs should give its domestic holders the same rights and interests as those holding its overseas common stocks.
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