Legal System Of China's Three New Board Market

The New Third Board Market is the basis of multi-level capital market, and its function is to provide an effective financing platform for the innovative and growth-oriented SMEs. It can cultivate more eligible public companies for the Main Board Market and Growth Enterprise Market by virtue of information disclosure, self-supervision and other systems.The New Third Board Market is an emerging capital markets which developed from the Old Third Board Market, but they are different in function, listing subject, investors, exchange mode, information disclosure system and so on. The New Third Board Market, the Main Board Market and Growth Enterprise Market are situated in different places in the multi-level capital market system, and they differ in issuance system, exchange system, information disclosure system and so on.The New Third Board Market has established relevant legal system during the pilot period in Zhongguancun Science and Technology Park, but there are still many defects. For instance, the legal system and regulatory system are not complete, and they cannot effectively guarantee the New Third Board Market to run stably and healthily. Listed enterprises in the New Third Board are limited to the companies which registered in Zhongguancun Science and Technology Park. It imposes close restraint on investors, and there are shortcomings in the exchange system. All the defects confine the liquidity of the New Third Board Market, and they are not conducive to the prosperous development of the market. In addition, there is no rational oriented-increase system or the transfer-board system, limiting the financing channels of listed enterprises and is not conducive to the New Third Board Market to play its role as the "incubator" and "reservoir" of the Main Board Market and Growth Enterprise Market.Therefore, it is necessary to reform the current legal system of the New Third Board Market. Firstly, it should establish a complete legal system as soon as possible. The Sate Council of China should issue administrative regulation to establish the legal status of the New Third Board Market, and the Securities Regulatory Commission of China should lay down relevant rules. Secondly, it should expand the scope of listed enterprises from Zhongguancun Science and Technology Park to all the national-level hi-tech industrial zone of China. It also should appropriately expand the scope of personal investors and clear the scope of institutional investor. Thirdly, it should perfect the exchange system of the New Third Board, reduce the lowest exchange limit, appropriately shorten stock limited sales period and change the existing exchange patterns, and it can also break through the limit that the shareholders of listed enterprises shall not exceed 200. Fourthly, it should perfect supervisory system of the New Third Board Market, establish a dual monitor mode which based on self-supervision of China Securities Association and supplemented by the administrative supervision of the Securities Regulatory Commission of China. Finally, it should construct oriented-increase system and transfer-board system which are suitable for the characteristics of the New Third Board, so as to promote the New Third Board Market to completely play the financing function and the role as the "reservoir" of the public companies.