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Enterprise board rules detailed

FIRMS listed on China's growth enterprise board will be delisted if they fail to meet requirements of the stock exchange.

The Shenzhen Stock Exchange, where the new financing platform for start-up firms will be based, yesterday issued drafted details of the board to seek public opinion by May 22.

Under the rules, listed firms will be delisted if they can't make improvements within a limited period to fulfill requirements, including reporting a negative net asset and turnover lower than 1 million shares for 120 straight trading days.

However, companies listed on the main boards will be transferred to an over-the-counter market for only institutional investors when they fail to meet the requirement, and they still have a chance to return to the main boards.

"Firms listed on GEM usually have strong potential but high risks, so we must implement a strict delisting system," a Shenzhen bourse spokesman said.

The rules also state that shareholders can't transfer their holdings within three years of listing on the GEM.


China's securities watchdog on May 1 implemented guidelines that pave the way for the new board but didn't offer a timetable of the launch.

Companies seeking a listing must have been in business for more than three years and hold net assets of at least 20 million yuan (US$2.9 million). And share capital must exceed 30 million yuan after listing.

Candidates also need to show profits for two consecutive years, with combined earnings of at least 10 million yuan, or have revenue of at least 50 million yuan and a profit of at least 5 million yuan for the latest fiscal year.

Shares sold to the public must account for more than 25 percent of the company's total shares and for companies with share capital exceeding 400 million yuan, public offerings must exceed 10 percent.


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