The Growth Enterprise Market (GEM) may be facing a setback in the wake of a decision by the China Securities Regulatory Commission (CSRC) to revise regulations allowing mainland companies to seek a listing on the new market. The stock exchange is slowing down approvals while it awaits the commission's decision on whether to ratify a listing by Yuxing Infotech Holdings, according to GEM sponsors. Yuxing was scheduled to begin trading yesterday, but the company stopped the listing two weeks ago after the commission said it had not followed procedure. Yuxing apparently did not seek the commission approval to list on the new market after it became a Cayman Islands-registered company two months before submitting an application to the stock exchange, according to sources. One source said the commission was unhappy at Yuxing's actions. 'The CSRC sees Yuxing as a mainland company, and therefore needs the commission's approval,' he said. 'But it didn't.' Yuxing lawyer Xu Yuewu admitted the company did not follow procedures. However, the commission's high-profile challenge to the legality of Yuxing's listing has aroused confusion over the interpretation of 'mainland companies', some GEM listing candidates and sponsors said. 'This is a grey area,' a sponsor said. 'It's easy to get around the CSRC's regulation by forming a joint venture with a foreign company or registering overseas.' The sponsors said cases such as China Agrotech Holdings and the mainboard's newly listed Yixing Xinwei Holdings were successfully listed as overseas shell companies without the commission's intervention. Anthony Neoh, chief adviser to the commission, had said mainland approvals were necessary for any company seeking to list its mainland-based assets on an overseas market no matter where the company was domiciled. However, sponsors said they were putting their clients' listing applications on hold while waiting for the commission's clarification on the definition of 'mainland companies'. No GEM candidate has received approval from the listing committee since the Yuxing challenge. One source said the commission was drafting detailed rules to govern private companies on the mainland using overseas shell companies as a means to list. A source said the commission tended to grant overseas status to those companies which can prove an injection of overseas funding or had registered overseas for at least three years. Last week, Mr Neoh said the commission was likely to announce detailed implementation rules in two months. 'The GEM board is stuck in a traffic jam, if Yuxing doesn't move, we can't move either,' a GEM listing candidate said.