What Is a Net Listing?

The third board market originated from the "shareholding agency transfer system" in 2001. The earliest undertaking of the two networks and delisting companies was called the "old three board". In 2006, Zhongguancun Science and Technology Park unlisted joint-stock company entered the agent transfer system to transfer stock quotes, known as the " New Third Board " ^[1] . With the gradual improvement of the New Third Board Market, China will gradually form a multi-layered capital market system including the Main Board, the Growth Enterprise Market, the OTC OTC network and the property rights market.

New Third Board Listing

The first board market usually refers to the main board market (including small and medium boards), and the second board market refers to the GEM market. Compared to the first board market and the second board market, some people in the industry refer to the OTC market as the third board market. The development of the third board market includes two stages: the old three board market (hereinafter referred to as the "old three board") and the new third board market (hereinafter referred to as the "new three board"). The old third board is the "Agent Transfer System" established on July 16, 2001; the new third board is the "Zhongguancun Science Park Unlisted Joint-Stock Company Entering the Agent Transfer System" based on the old three board.

The new third board listing standards should meet the following conditions ^[2]

I. Different service targets: The positioning of the national stock transfer system is mainly innovative, entrepreneurial, and growing small, medium and micro enterprises.

2. Different investor groups: The investor structure of the stock exchange is mainly small and medium investors. The national stock transfer system has implemented a stricter investor suitability system.

Third, the main purpose is different: the national stock transfer system is a service medium for small and medium-sized enterprises and industrial capital, mainly for the development of enterprises, capital investment and withdrawal services, not the main purpose of transactions.

So-called

The process of applying for listing on the New Third Board:

To apply for the NEEQ listing process, it is necessary to sign a recommendation listing process agreement with the sponsoring securities firm, and recommend the NEEQ listing process to the association as its recommended sponsoring brokerage firm. The application process for listing on the New Third Board mainly includes:

New Third Board Listing Process 1. The limited company to be listed undergoes a shareholding system reform, and it is generally changed to a joint stock company. The subject of the NEEQ listing process application for listing on the NEEQ must be an unlisted company limited by shares. Therefore, the company that is still in the stage of the company limited company needs to start the share reform process. Shares were changed to a joint stock company.

NEEQ listing process 2. The host broker conducts due diligence on the company to be listed, compiles the recommended listing filing documents, and assumes the recommendation responsibility. When sponsoring brokers recommend non-listed company shares to be listed on the New Third Board, they should conduct due diligence diligently and conscientiously, carefully prepare filing documents for recommendation listing, and assume the responsibility for recommendation. When conducting the due diligence of the securities firm, a special project team shall be set up for each joint-stock company to be recommended. The project team should coordinate with the intermediary agencies such as accounting firms and law firms, and after completing the corresponding audit and legal investigations, according to the Guidelines for the Due Diligence of Sponsoring Brokers, such defects as investment in the history of the proposed NEEQ listed company Propose solutions to major issues such as related party transactions, inter-bank competition, and produce filing materials such as filing documents.

NEEQ listing process 3. The sponsoring broker shall set up a core agency responsible for reviewing the filing documents. The hosting broker should not only set up a special project team responsible for due diligence, but also set up a core agency to review the filing documents and issue review opinions. Based on the core opinions, the sponsoring brokerage firm decides whether to recommend the company's new third board listing to the association. If a decision is recommended, a recommendation report (including due diligence, core opinions, recommended opinions, and reminders to investors) shall be issued, and the filing documents shall be submitted to the association.

NEEQ listing process 4. After passing the kernel, the sponsoring broker will submit the filing documents to the China Securities Association for review. The China Securities Association is responsible for reviewing the filing documents submitted by the sponsor and making a decision on whether or not to file them. If the securities industry association decides to accept the case, it will issue a notice of acceptance and review the filing documents. If there is an objection, it can submit written or oral feedback to the sponsoring broker, and the sponsoring broker will respond; Confirmation of the existence of the case.

The listing of the New Third Board has a lot of benefits. For non-listed high-tech joint-stock companies with high technological content and strong independent innovation capabilities in the early stage, listing on the New Third Board can bring the following benefits:

Benefits of the New Third Board Listing 1. It is beneficial to broaden the company's financing channels.

Benefits of the New Third Board Listing 2. Improve the company's capital composition.

Benefits of the New Third Board Listing 3. Guide the company to standardize operations.

Benefits of the New Third Board Listing 4. It is conducive to improving the liquidity of the company's shares and bringing positive wealth effects to the company.

Benefits of the New Third Board Listing 5. It is conducive to increasing the company's possibility of listing.

The new third board may bring huge wealth, but it may also expose investors to risks: in the face of the new third board listing assessment, the potential risks of the new third board expansion. The companies listed on the New Third Board before the evaluation are mostly high-quality companies with relatively small investment risks. The companies listed on the New Third Board after evaluation have uneven quality and high investment risks. China only requires that companies listed on the New Third Board can make assessments by referring to the information disclosure standards of listed companies and voluntarily make more adequate information disclosure. In other words, China s requirements for information evaluation of NEEQ companies are less restrictive, more flexible, and have greater investment risks. China s current NEEQ stock exchanges use collective bidding to conduct centralized matching transactions, which may result in investors facing the problem of not being able to buy or sell Out of stock risk.

General Manager Xie Geng of the National SME Share Transfer System Co., Ltd. disclosed at the Chongqing Financial Opening Forum that the national SME share transfer system has completed industrial and commercial registration. It will open the market system to investors before the end of the year and implement it in accordance with the new system. By then, the original NET system, STAQ system, and brokerage agent

The listing time of the New Third Board is about 3-6 months. The specific time for listing depends on the processing speed of the brokers and agents. The three-year qualification requirement has been changed to a two-year qualification.

(1) Qualified investors

1. Natural person

(1) The total value of assets (including funds, securities, funds, and securities company's wealth management) at the end of the previous trading day in the customer account is above 5 million;

(2) More than two years of securities investment experience (including NEEQ trading experience).

2.General legal person

A legal person with a registered capital of more than RMB 5 million or a partnership with a total paid-up capital of more than RMB 5 million.

3. Special legal person

Collective trust plans, securities investment funds, wealth management products of banks or securities dealers, products or assets approved by other regulatory authorities.

(II) Restricted investors

The company's former shareholders, shareholders holding company shares, and shareholders who have participated in the NEEQ.

Costs and preferential policies for listing of NEEQ

Compared with the main board, small and medium-sized board and the ChiNext Board, the cost of applying for listing on the New Third Board is much lower. The cost is generally around 1.2 million yuan (floating up and down according to the specific conditions of the project and the difference between the main board and the securities dealers). The operating cost after listing on the New Third Board Market is less than 30,000 yuan per year. According to the "Administrative Measures for Funds for the Reform and Listing of Zhongguancun National Independent Innovation Demonstration Zones", enterprises can apply for restructuring subsidies, each enterprise supports 200,000 yuan, and enterprises entering the stock quote transfer system can receive 500,000 yuan of funding support. After the park enterprise recommended by the sponsoring brokerage obtains the "Confirmation Letter of Recording of the Quotation Document of China Securities Industry Association", each brokerage firm can receive 200,000 yuan in funding support.

NEEQ listing process and time cycle

According to relevant laws ^[5]

Detailed steps of the new third board listing operation

I. Interventional Field ^[6]

1. The intermediary agency conducts due diligence. The three-party intermediary agency, the brokerage firm, the accountant, and the lawyer respectively reach the cooperation intention of listing on the New Third Board with the applicant for listing. After signing the "Confidentiality Agreement" and the intermediary agency service contract, they enter the company's financial status and ongoing operations. Conduct due diligence on legal compliance matters such as capacity, corporate governance, history, assets, business qualifications, and other important issues, and then determine whether the company meets the requirements for listing on the New Third Board and formulate plans for corporate reorganization, overall restructuring and listing. The time should be about 1 month.
2. Restructuring of a limited liability company into a company limited by shares If the current company is a limited liability company, it needs to be restructured to become a company limited by shares. The restructuring process needs to ensure that the company maintains the same corporate body in terms of shareholding structure, main business and assets, etc., and transforms the entire limited liability company into a joint stock company with a change in organizational form.
During the restructuring, the company needs to convene a board of directors and shareholders meeting to audit and evaluate the company's net assets in accordance with laws and regulations such as the Company Law of the People's Republic of China, and a joint-stock company founding meeting, board of directors, board of supervisors, and election of company directors, supervisors and senior officers The management personnel shall handle the change registration of industry and commerce and obtain a new business license. The time should be 1-2 months.
3. The intermediary agency prepares the listing application documents. To realize the listing of the company on the NEEQ, the sponsoring brokers must produce public transfer instructions and sponsoring brokers' recommendation reports, the company accountants must produce audit reports, and the company's lawyers must produce legal opinion and other application documents. Time is about two months.
4. After passing the resolutions of the listed board of directors and shareholders meeting as a whole, the company's board of directors convened a meeting to form a resolution on the proposed application for listing of the shares in the national SME stock transfer system and public transfer. The resolution was submitted to the shareholders' general meeting for consideration and the shareholders The conference authorizes the board of directors to handle related matters. At the general meeting of shareholders, the general meeting of shareholders made a resolution approving the company's application to enter the "National SME Share Transfer System for Public Transfer", formulated the minutes of the meeting, and signed by the shareholders (including shareholder agents) present at the meeting.
The board of directors and shareholders meeting is a necessary procedure for the company to list on the NEEQ. It takes about one month, but it can be carried out simultaneously with other operating processes.
5. After the third-party intermediary agency of the brokerage firm produced the initial draft of the application documents for stock listing, the lawyer issued a Legal Opinion (Kernel Draft), the accountant issued an Audit Report (Kernel Draft), and the sponsored brokerage firm produced on the basis of the work of lawyers and accountants A complete set of listing application documents, including the Public Transfer Specification (kernel draft), Due Diligence Report (kernel draft), and Due Diligence Work Draft (kernel draft).
The brokerage project team will submit the company's stock listing application document (kernel draft) to the brokerage kernel conference for review. After the kernel meeting was held, the project team conducted additional investigations and clarifications based on the feedback from the kernel meeting, and submitted the response to the feedback from the kernel meeting to the kernel commissioner for review. After the kernel commissioner passed the review, issued a supplementary review opinion and agreed to recommend the proposed listing The company entered the national SME stock transfer system.
The sponsoring brokerage company issues the "Recommended Sponsoring Agent Report" and agrees to recommend the company to be listed on the National SME Share Transfer System for listing and public transfer. The duration of this working phase mainly depends on the internal processes of various brokers, and the basic time is about half a month.
6. The review and approval of the National SME Share Transfer System Company and the CSRC's sponsorship of the project team of the securities dealers shall submit the application documents for the listing of the shares to the National SME Share Transfer System Company. The National SME Share Transfer System Company responded to the application documents, and the project team responded and answered the feedback until the complete set of listing application documents was finally sealed and filed. The National SME Share Transfer System Company issued a "consent to review the listing". ^[7]