Study Of The Third Board Market Legal System

The third board market is defined as an aggregation of capital markets in whichthose stocks, which cannot reach the standards of the main board market and thesecond board market, are issued, transferred and supervised. On one hand, the thirdboard market is the footplate of the main board and second board markets by way ofnurturing those stocks companies who wants to come into the those two markets. Onthe other hand, the third board market provides a route of retreat for those sharesousted from the main board and second board market. The third board market andmain board as well as the oncoming second board market comprise a layered, flexiblemarket system in China.Chinese third board market is formally called "Commissioned Shares TransferSystem". The system gradually has three functions during its development:1.providing a transferring market for those directional raising corporations;2.takingon the stocks of those corporations ousted from main board;3.accepting Zhong GuanCun High Tech companies quote and transfer in it.By comparing with foreign mature third board markets, we can find out theshortages of Chinese third board market. First of all it was born defective, for it isn'tmention in the Security Law and no administration authorities enacts any regulationon it. All it running rules are set down by Chinese Securities Association, a self-discipline union. Secondly, third board market is deprived of the function of raisingmoney, thus current OTCBB legal system has no issuing system. Thirdly, the currentcentralized competition price system is not beneficial in protecting the investors'interests. Fourth, the supervision of Chinese Securities Association (SAC) ispowerless. So we can brook no delay in perfecting the third board market's legalsystem.Although the governing authorities have kept in mind what the third board marketfuture status and functions are, no regulation is enacted to govern this market. Evenlittle research has been done on the third board market in law field. I try to analyzeChinese third board market's future status and explore legal system by using casestudying, comparing and history-analyzing methods to analyze nowadays third boardmarket rules of China, America and other countries. Finally I put forward suggestionsfor setting up the market's legal system with its specific legal principles as well ascertain detail improvement suggestion.