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China: IPO Rules for Growth Enterprise Market

(Apr. 21, 2009) The China Securities Regulatory Commission (CSRC) released rules on initial public offerings for the Growth Enterprise Market (China GEM) on March 31, 2009. The rules will enter into effect on May 1, 2009. This means that the China GEM, which is comparable to the U.S. NASDAQ and the Hong Kong Growth Enterprise Market, may be expected to formally commence operations on May 1, after being in preparation for more than a decade. The new board is designed to help small start-up enterprises, especially in high-growth, high-technology fields, to raise funds. (China to Establish Stock Market for Growth Enterprises, XINHUANET, Mar. 5, 2008, available at st-language: ZH-CN”>

The six chapters and 58 articles of the new rules provide detailed regulations for issuance conditions, procedures, information disclosure, supervision and regulation, and legal liabilities for enterprises that intend to list on the China GEM. Among other qualification requirements, entry requires RMB20 million (about US$2.9 million) in net assets. (Shouci gongkai faxing gupiao bing zai chuangyeban shangshi guanli zanxing banfa [Tentative Measures for the Administration of Initial Public Offerings of Shares and the Listing Thereof on the Growth Enterprise Market], CSRC website, Mar. 31, 2009, available at; full-text English translation available in Lawinfochina online subscription database, (last visited Apr. 13, 2009).)