China to launch stock exchange for smaller companies
China will launch a long-awaited stock exchange for smaller companies on May 1,to promote more innovative industries, the government announced Tuesday.
The Growth Enterprise Board will accept companies with smaller assets and annual profits than are required by China's current exchanges in Shanghai and the southern city of Shenzhen, the China Securities Regulatory Commission said.
Authorities have promised for several years to create such an exchange to nurture smaller and private companies that struggle to raise money in a system where state-owned banks lend mostly to big government companies.
Still, companies that list on the new board must already be profitable, in contrast to similar growth markets in the United States and elsewhere.
Companies can list on the new board with annual net profits of at least 10 million yuan ($1.5 million) in the previous two years, or 5 million yuan ($700,000) for one year with sales of at least 50 million yuan ($7.3 million), the CSRC said.
Companies on the Shanghai and Shenzhen exchanges must have net profits of at least 30 million yuan ($4.4 million) in the previous three years or total sales above 300 million yuan ($43.9 million).
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