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The 18 tech-related companies -- all based in Beijing's Zhongguancun technology district, the so-called Chinese Silicon Valley -- have reached required standards to float shares on China's Nasdaq-style second board for stocks in Shenzhen.|
The pioneers include Beijing Time Group, Beijing Atom HighTech Co, Beijing Beilu Pharmaceutical Co, Beijing Huahuan Electronics Co, Beijing Modern Agricultural Equipment Co and Beijing Hengye Century Technology Co. They are among 55 firms which are now trading via a special system for non-listed companies, Securities Times, the mouthpiece of Shenzhen stock exchange, reported Wednesday.
China announced last month it would launch the long-awaited second board on May 1 as a new direct financing platform to help cash-strapped small companies raise funds and facilitate restructuring.
Actual initial public offerings on the new board, which is tentatively named the Growth Enterprise Board, is expected to take place after August because a period of about three months is needed for listing application and approval procedures, various state media have reported.
Listed companies on China's Nasdaq must satisfy a China Securities Regulatory Commission rule that requires the issuer to stay in the black for the two most recent consecutive years with combined profits of at least 10 million yuan ($1.5 million). If not, issuers must have profits of at least 5 million yuan ($0.7 million) for the most recent year on revenues of at least 50 million yuan ($7.3 million), plus an annual revenue growth of at least 30% in the recent two years.
In addition, companies are required to have net assets of at least 20 million yuan ($2.9 million) and should have operated for more than three years, pursuant to the rules released by the securities watchdog in early April.
China has been planning to establish a second board for more than a decade. To test the market and investors' appetite, a mini second board for small and medium-size enterprises was set up at the Shenzhen Stock Exchange in 2004.
Based on the experience of the mini second board, Shenzhen's real Growth Enterprise Board is unlikely to be as significant a benchmark as Nasdaq anytime soon. Nor will it have a material impact on the main board of the Shanghai and Shenzhen bourses, as its capital-raising capability remains to be tested.