Re­gional equity rules en­hanced

China Daily (Canada) - - TOP NEWS - By ZHANG YUE and HU YONGQI in Bei­jing

China is en­hanc­ing reg­u­la­tions for the re­gional equity mar­ket to boost its role in di­ver­si­fy­ing fi­nanc­ing chan­nels for the coun­try’s small, medium- and mi­cro-sized busi­nesses and to en­cour­age pri­vate in­vest­ment.

Up­dated reg­u­la­tions were ap­proved on Wed­nes­day by a State Coun­cil ex­ec­u­tive meet­ing presided over by Pre­mier Li Ke­qiang.

The new reg­u­la­tions make clear the need for the re­gional equity mar­ket as a fi­nanc­ing chan­nel for lo­cal small busi­nesses, and they pro­vide more spe­cific re­quire­ments for mar­ket op­er­a­tors and in­vestors.

“A well-reg­u­lated re­gional equity mar­ket is fun­da­men­tal to nur­tur­ing a mul­ti­layer cap­i­tal mar­ket. It will also con­trib­ute sig­nif­i­cantly in sup­port­ing small, medium- and mi­cro­sized busi­nesses and delever­ag­ing ef­forts,” Li said.

The re­gional equity mar­ket of­fers fi­nanc­ing flex­i­bil­ity for small busi­nesses and tech­no­log­i­cal in­no­va­tion. While such en­ter­prises tend to be fi­nan­cially vul­ner­a­ble and carry greater risks, they are ex­pected to play an im­por­tant role in driv­ing eco­nomic tran­si­tion and boost­ing so­cial in­vest­ment by in­tro­duc­ing new busi­ness mod­els and in­dus­tries.

By Novem­ber, 40 re­gional equity mar­kets had been set up across the coun­try, with more than 15,900 com­pa­nies.

The mar­ket also faces such chal­lenges as a lack of wellde­fined le­gal sta­tus, un­de­vel­oped man­age­ment and un­der­de­vel­oped mar­ket func­tions. A bet­ter-reg­u­lated re­gional equity mar­ket is a press­ing item on the re­form agenda.

Un­der the new reg­u­la­tions, re­gional equity mar­kets will mainly pro­vide fi­nanc­ing ser­vices for small, medium- and mi­cro-sized busi­nesses only within the pro­vin­cial-level bound­aries of a sin­gle ad­min­is­tra­tive divi­sion. A dead­line for do­ing so will be set for those cur­rently op­er­at­ing in more than one such divi­sion. Lo­cal gov­ern­ments will be re­spon­si­ble for man­ag­ing lo­cal equity mar­kets.

The reg­u­la­tions also stip­u­late that each re­gional mar­ket will be al­lowed to have only one op­er­at­ing agency, and those that now have mul­ti­ple agen­cies will be re­quired to con­sol­i­date them.

Re­quire­ments for in­vestors will also be clar­i­fied. Only le­gal en­ti­ties that meet the re­quire­ments, part­ner­ship busi­nesses and in­di­vid­u­als with sound fi­nan­cial back­grounds can join the mar­ket.

Con­tact the writ­ers at zhangyue@chi­nadaily. and huy­ongqi@ chi­

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