ATF – The Shanghai Stock Exchange and Shenzhen Stock Exchange are to implement rules that originated with the State Council in 2019 for the “Healthy Development of Venture Capital."
The China Securities Regulation Commission (CSRC) regulator said on its website the new provisions, due at the end of the month, would improve the exit channels for venture capital funds. They would "promote the formation of venture capital, and better leverage the role of venture capital in supporting entrepreneurship and innovation for SMEs, and science and technology enterprises," through private equity and venture capital.
The first of the new provisions define what type of firms receive beneficial policy support – “early-stage enterprises", "small and medium-sized enterprises", and "high-tech enterprises”.
These can enter the listing process if venture capital investment is more than 50%.
The second provision revises the implementation rules of the stock exchange, “improving the anti-linking policy of the block trading link, and eliminating the restriction on the transferee's lock-up period”.
This reverses an earlier provision where linked block trading was disallowed.
The third revision is to increase focus on long-term investment funds, giving preferential investment horizon of more than five years to venture capital funds after the expiration of the lock reduction ratio without restrictions.