Beijing is expected to unveil finalised rules governing the second board this week, signalling a countdown for the long-awaited Nasdaq-style stock market. The China Securities Regulatory Commission was likely to start a review of listing applications from dozens of small firms in one or two months, said a source. The CSRC would also set up a separate review committee for applications from start-up firms. The move implies fresh efforts by the CSRC to divert investor attention from the declining stock market, which would set off a flight of billions of yuan from existing shares, analysts said. Companies reporting a combined 10 million yuan (HK$10.97 million) of net profit in the past two financial years are qualified to apply for a listing on the second board, according to the new rules. Even those that did not post a profit may apply if their revenue in the past financial year exceeded 30 million yuan and year-on-year sales growth topped 30 per cent. 'The listing threshold is not high,' said Lu Liang, a manager at Hotung Venture Capital. 'The market will prosper in terms of liquidity and variety when it is launched.' To qualify for the main board, companies must report profits for three consecutive years. The central government started studying a fund-raising platform for technology companies more than a decade ago. The establishment of the second board on the Shenzhen Stock Exchange is in line with CSRC chairman Shang Fulin's vision of a capital market with multiple tiers. A Shenzhen exchange spokesman said officials were doubling efforts to educate investors on risks and rules related to the market. With the launch of this new tier, the Shenzhen exchange will be transformed into a second-board market. The southern exchange has been preparing for the move since May 2004, when Beijing created a technology board as a rudimentary form of the Nasdaq-style market. Sources said some of the 200 companies traded on that board would be transferred to the newly created second board. Only firms with small capitalisation and listing volumes of below 100 million shares will be allowed to list on the second board. Almost 200 firms have expressed interest in listing on the second-board market, according to Caijing magazine. Initially, at least 60 companies would be traded on the growth market, the magazine reported. Sources said the market would see active trading because the regulator would select firms with solid earnings to begin the market. In August last year, the State Council endorsed draft rules on the growth market and the CSRC began to solicit public opinion.