GEB to Shore up Small Businesses
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China's long-awaited growth enterprise board, the Nasdaq-like stock exchange which will start operation May 1, will help cash-strapped small companies raise funds and facilitate restructuring amid the economic slowdown.
The new share bourse, which connects bright but money-tight companies, is a stock exchange designed for emerging companies and small businesses to raise money from the capital market.
It will be the third share bourse in China behind the bigger Shanghai and Shenzhen markets.
Companies that seek listing will be required to have net assets of at least 20 million yuan (US$2.94 million) and should have operated for at least three years before listing, the China Securities Regulatory Commission (CSRC) said.
The CSRC will require the listing candidates to stay in the black for the two consecutive years with combined profits of at least 10 million yuan, or report revenue for the most recent year of at least 50 million yuan.
Requirements for listing on the Shanghai and Shenzhen bourses are much higher. Companies should be profitable for three straight years and make at least 30 million yuan in total profit during the past three years. The total revenue during that period should be at least 300 million yuan.
"The growth enterprise board will play an important role in stimulating private investment, advancing industry upgrading, and promoting employment. It will also allow the capital market play its fundamental role in allocating market resources in a better way," the CSRC said on its website.
"It is absolutely very good news for China's small enterprises as the board opens a new channel for financing, especially amid the economic downturn," said Pi Jianjun, board member of the Beijing-based Time Group Inc., a mid-sized company that produces testing instrument in China.
He said the company was busy preparing to be listed on the new board. He did not say how much the company intended to raise.
Small and medium-size enterprises have long been a pillar in China's economy.
Zhongguancun, where Pi's company is based, has more than 20,000 high-tech enterprises. Limited financing access has long restricted their development as Chinese banks prefer to lend to larger companies.