What are the listing requirements of B shares?
A prospective issuer must be a joint stock limited company incorporated under the PRC Company Law and have more than five promoters, more than half of which shall have their domicile within the territory of the PRC. In accordance with the State Council's Regulations Concerning the Listing of Foreign Investment Shares inside China by a Joint Stock Limited Company promulgated by the State Council on December 25, 1995, the following requirements must be met for a joint stock limited company established by the means of promotion to apply for issuing B shares:
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The use of the proceeds must be in line with the State industry policy;
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Must comply with the State's regulations concerning the approval of project proposals for fixed asset investment;
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Must comply with the State's regulations concerning the use of foreign investment;
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The total share capital subscribed for by the promoters is no less than 35% of the total share capital that the prospective issuer intends to issue;
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The total amount of the sponsor's capital contributions is no less than RMB 150 million;
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The number of shares to be issued to the public accounts for more than 25% of the total number of shares of the issuers; where the total share capital to be issued exceeds RMB 400 million, the ratio of the shares that prospective issuer intends to issue to the public must be more than 15%;
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With respect to an existing enterprise restructured into an issuer, or a State-owned enterprise acting as the main promoter of the issuer, it must not have committed any material illegal acts during the last three years;
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With respect to an existing enterprise restructured into an issuer, or a State-owned enterprise acting as the main sponsor of an issuer, it have profits for the last three consecutive years.
In addition to the above-stated requirements, the prospective issuer must meet the requirements as specified by the CSRC. For example, the prospective issuer must be independent of the promoters in terms of assets, employees, accounts, organization, and business operations; the substantial shareholders/promoters with a 5% or more interest in the prospective issuer must undertake not to compete with the core business of a prospective issuer; and any connected transactions must be approved by independent directors and shareholders and properly disclosed in the listing documents.
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