The regulations for a Nasdaq-style innovation board that promises to smoothen the way for Chinese technology IPOs has been published by China. If deemed successful, it could raise the profile of Shanghai as a capital-raising competitor to New York and Hong Kong.
Late last Friday, the stock market regulator published the rules for the tech board after considering the opinions from the public on the draft regulations that were introduced on the 30th of January. They immediately took effect.
China pushed through the final regulations for the new stock-trading venue in Shanghai as it attempts to encourage more technology firms to go public.
The listings on the new board will be done according to a registration system that limits the official powers to control the timing of IPOs. In addition, some firms that are not yet profitable will also be allowed to go public.
The provisions alleviate the two major impediments to firms that are seeking to tap the existing equity capital markets in China.
According to the rules from the Shanghai Stock Exchange that were released last Friday night, China’s Science and Technology Innovation Board will remove the limits on price and debut gains, and allow unprofitable frims to go public, however, it will not allow same-day buying and selling of stocks,
The country has long aspired for its tech champions to list closer to home, however, many of the best-known Chinese technology companies, including Tencent Holdings and Alibaba Group Co Ltd chose to raise funds in international markets.
Hong Kong and New York accounted for almost 70 percent of the money that was raised through Chinese IPOs in 2018.
In another sign, plans for the new board are progressing. Caixin, the financial news website, reported that the Shanghai Stock Exchange had completed the recruitment of employees for the board and they were slated to start work this month.