China's new 'third board' offers alternative financing to start-ups
Lower listing threshold of electronic equity transfer system proves attractive to more than 740 small firms in need of new funding sources
China's newly established electronic equity transfer system is likely to steal the limelight from the stock exchanges as the authorities loosen regulations on the over-the-counter market to offer millions of small businesses a financing alternative.
The National Equities and Exchange Quotations has attracted more than 740 start-ups since its official inauguration at the end of last year and the number is expected to surpass 1,000 in August.
The China Securities Regulatory Commission (CSRC) has given full play to market forces to foster the growth of the so-called third board, and the low listing threshold has ushered in a flood of small firms on to the market.
"The third board heightened our hopes for a better business environment," said Liu Jingdong, a chief technology officer with an online consultancy due to list on the market. "At least, it gave us a feeling that hard work would eventually pay off."
No profit or other financial requirements are needed for applications to the market. Companies just need to publish their audited earnings in the previous two years before listing on it.
CSRC vice-chairman Yao Gang told a forum recently that the increasing financing demands from the country's millions of small businesses amid a problematic banking system prompted the regulators to drastically develop a new fundraising platform for cash-hungry outfits.
About 2,500 companies are listed on the Shanghai and Shenzhen stock exchanges, compared to 14 million firms nationwide.