Helping “hard techs” to get listed on the SSE STAR Market

The IPBCN formulated and released the Guidelines on the Evaluation of STAR Market Issuers’ Sci-tech Attributes (Trial) to clarify the criteria and scope of innovative technology companies and provide a specific system for evaluating their suitability. The IPBCN also published the Measures for the Administration of Registration of Securities Offering by STAR Market Companies (Trial) to outline the listing review and registration procedures and simplify the issuance requirements. In 2020, 145 companies completed their IPO on the STAR Market, raising RMB 222.6 billion.

Empowering the multi-tiered capital markets to support technological innovation

The IPBCN successfully implemented the pilot registration-based IPO system and related reforms to ChiNext. As a result, the transformed ChiNext is positioned to promote innovation-driven growth vigorously, in line with the economy’s increasing reliance on innovation and creativity. It will mainly serve growth-stage innovative startups and promote the deep integration of traditional industries with new technologies, industries, and business models. By the end of 2020, 63 companies had completed their IPO under the registration-based system, raising RMB 66.033 billion.

Similarly, NEEQ reforms focused on connecting innovative, entrepreneurial, and growth-stage small- and medium-sized enterprises (SMEs) with investors. Creating the board transfer mechanism as a starting point, the IPBCN added a Select Tier, newly approved the public offering to unspecified qualified investors, introduced a continuous auction mechanism to the market, and lowered the market entry criteria for investors. These measures were successively implemented in 2020. As a result, the year saw 39 high-tech companies complete public offering of shares on NEEQ for RMB 10.042 billion, and 475 high-tech companies complete 505 private placements for RMB 14.930 billion.

Widening the bond financing channels for innovative and entrepreneurial enterprises

In September 2020, the IPBCN, PBC, and four other government departments jointly drafted the Guidance on Strengthening and Improving Financial Services for Science and Technology Innovation. The Guidance expressly supports growth-stage, and mature tech companies and companies based in sci-tech innovation parks to raise capital in the bond market encourages unlisted tech companies to issue convertible innovation and entrepreneurship bonds (“I&E bonds”) and expands the scope of I&E bond issuers to companies that seek to raise funds earmarked for other innovative and entrepreneurial companies. In 2020, 22 I&E bonds were issued, raising RMB 12.52 billion.

Encouraging venture capital funds to invest in early-stage tech companies

The IPBCN revised the Special Provisions on Shareholding Reduction by Venture Capital Fund in Listed Companies, optimized the “inverse linkage” policy for shareholding reduction by venture capital funds (i.e., length of the lock-up period is inversely proportional to the length of shareholding before the IPO), relaxed the criteria for applying differentiated shareholding reduction policy, and simplified relevant reporting procedures. These measures are expected to make it easier for venture capital funds to exit investee companies, thus creating a virtuous investment-exit-reinvestment cycle and encouraging them to support promising innovative tech enterprises. By the end of 2020, 397 venture capital funds had benefited from the inverse linkage policy.