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China releases NASDAQ-style draft rules

China's securities regulator has unveiled draft rules for a long awaited NASDAQ-style secondary board for start-up companies with a lower threshold for listings, state media reported yesterday.

"The new board will serve growth enterprises and focus on extending support to firms capable of independent innovation," the China Securities Journal reported, citing the China Securities Regulatory Commission.

The securities regulator will be soliciting opinions from the public over the coming week and earlier reports have suggested the board could be established by June, probably in the southern boom city of Shenzhen.

The board is likely to provide more access to the capital market for China's start-up companies, which often find it more difficult to obtain bank loans than larger companies, many of them state-owned.

Big enterprises often get preferential treatment, not just because they are financially stronger and have a better credit record, but also because they may have better connections to the management of state-controlled banks.

"The establishment of the growth enterprise market will help ease the financing problem for small and mid-size enterprises, especially small and mid-size high-technology firms," the agency said in a statement on its Web site.

The listing requirements for the growth enterprise board will be looser than for the existing exchanges in Shanghai and Shenzhen.
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