Shanghai STAR Market Board Sees Barring of Real Estate and Financial Companies, Restrictions on Listing of Fintech Concerns

China’s securities regulator has made major amendments to its guidelines for the listing of companies on the NASDAQ-style STAR Market Board of the Shanghai Stock Exchange that are set to have an impact on the IPO prospects of up-and-coming fintech firms.

The China Securities Regulatory Commission (CSRC) announced on 16 April that it had made major amendments its “STAR Market Property Evaluation Guidelines” (科创属性评价指引).

Li Weiyou (李维友), CSRC Deputy Chair, said that the amendments further strengthen the tech emphasis of the STAR Market Board, and comprise a “major systems adjustment.”

Under the amendments fintech companies will be categorised as “restricted” when it comes to listing on the STAR Market Board, while real estate companies and companies that engage primarily in finance and investment operations will be barred from listing outright.

Li highlighted amendments in four areas in particular:

1. The addition of the new “standard index” that research and development personnel comprise over 10% of staff.
2. The establishment of a negative list system based on the categories of “supported,” “restricted” and “prohibited.” The STAR Market will seek to support and encourage the listing of companies in industries such as new information technologies, high-end manufacturing and new materials. Fintech companies are placed in the restricted category, while real estate and finance companies are categorised as prohibited.
3. Improvements to the experts used for the science and tech consultation committee, and increases in the number of science, tech and scientific research personnel.
4. Greater focus on the whether the “self-assessments of issuers are objective” when it comes to IPO reviews, and whether sponsors have made comprehensive assessments of the scientific value of companies.

According to CSRC more than 250 companies have listed on the STAR Market Board, in sectors including new materials, integrated circuits, high-end manufacturing and pharmaceuticals.

The average R&D investment ratio of STAR companies is 12%, while the average R&D investment amount is 117 million yuan, and the average number of patents held is 75.