Yao Gang, Vice Chairman of the China Securities Regulatory Commission (CSRC), said in a CCTV interview yesterday that on the whole, the financing size of enterprises listed on the Growth Enterprise Board (GEB) should decrease by about 40% on the basis of the current size of enterprises listed on the small and medium board, so a single enterprise’s raised funds would be limited to be about RMB100 million or even lower than RMB100 million. Even if 100 enterprises are listed in one year, the total financing amount would not exceed that of one company listed on the main board. Therefore, on the whole, the GEB will not have substantial effect on the main board in the aspect of capital. He also said that with completion of a series of fundamental work, the listing of enterprises on the GEB would be possibly realized after August.
Yao explained, with the official issuance of IPO management measures on the GEB, the China Securities Regulatory Commission (CSRC) would carry out a series of activities of investor education, and several measures would be published; in addition, the Shenzhen Stock Exchange would publish some relevant regulations (For instance, amending the sponsoring system, modifying the special sponsoring system for the GEB, establishing a separate public offering review committee and amending the current system of the public offering review committee). After May 1, according to these effective measures, the CSRC would issue a series of new supporting systems related to the GEB.
“After completion of all the aforesaid work, the applications of enterprises could be accepted”, he said. The period of examining an enterprise is 3 months at least. Especially, there exist low stabilities and high risks in small-and-medium-sized enterprises, so the examination work should be conducted more cautiously. It also needs more time to study some new industries. “So, there should be a process to complete all the work. After that, the enterprises could be listed officially”, Yao continued.
When referring to the hot problem among the investors, i.e., whether the GEB would divert the capital of the main board or not, Yao calculated especially for the reporters and concluded that in the aspect of capital, the GEB would not have great effect on the main board; what’s more important, the capital to be contributed to the stocks of the GEB is not necessarily taken from the main board. Therefore, the basic trend of the main board would remain unchanged.
As to the question of understanding the requirements of the two sets of requirements of issuance and listing in the “Interim Measures”, Yao said that although the two sets of requirements are lower than those of the main board, both indicate that an enterprise could enter the capital market only if it is growing all the time. “The entrance mark falls in the aspect of profit index, while the entrance mark goes up in the aspect of growth”, he said. During the period of soliciting opinions, there were a lot of opinions on listing requirements. Upon serious investigation and study, the CSRC finally keeps the aforesaid two sets of quantitative standards for issuance and listing in the Draft for Comment, because the first set indicates the requirement of growing trend, and the second set gives a limit to the business income though it loosens the level on making profits. However, there is no index as required for the growth of an enterprise on the main board.
With regard to the problem of investment in the stocks of the GEB, Yao persuaded that the GEB might bring great income, while the risks are much higher than those on the main board, and investors might even lose all their money. “Firstly, one should have the ability of basic judgment on an enterprise, instead of making impulsive investment as soon as he/she hears rumors; secondly, one should have the risk tolerance capacity. Perhaps, an enterprise will become a great enterprise and brings good income for investors, but it might be successful just for a while and will be inexistent after delisting. Therefore, investors should be able to assume certain risks.” Yao said that the CSRC would require the business departments of securities companies to take some risk prevention measures for investors, such as signing the risk disclosure statement to make investors fully realize the risks of investment, requirement of certain investment experiences, etc. The investors who meet these requirements could trade through the business departments.
For preventing overstatement in the market, Yao said that the CSRC would deal with it in several ways: it would strengthen the supervision, and stock exchanges should have a complete set of system to monitor the purchase and sale in the market and appoint specific personnel to take charge of this job; in the transaction regulations, some specific arrangements should be made to deal with the increase of the stock price and other unusual circumstances on the first day of listing. All of the above would be embodied in the listing and transaction regulations of the GEB. Relevant regulations would be issued in succession.
Although the financing size of enterprise on the GEB is limited, Yao stressed that the financing is very important to the development of small-and-medium-sized enterprises. In view of the relationship between the GEB and the main board, Yao said that at present, the main board mainly serve for mature enterprises which are dominant in the growth of national economy, while the GEB serves for the enterprises which do not meet the requirements of the main board but have had a certain scale, certain capability of making profits continuously, certain duration and are in the stage of building their businesses. Therefore, the GEB and the main board are complementary for each other.
As to whether the GEB can be upgraded to the main board or not, Yao said that perhaps innovation enterprises and small-and-medium-sized enterprises still does not meet the requirements of the main board in the aspect of profitability, with the low stabilities compared with the enterprises on the main board. However, among the aforesaid enterprises, there might be some enterprises representing new industries and new growth directions in the future. Actually, the GEB is a board set up additionally under the main board to service for these enterprises. It is expected that these enterprises would become better ones by going through stronger supervision, better information disclosure and culling mechanism in the capital market. These enterprises might be upgraded to those on the main board in the future as well.