Construction Of Related Legal System To Cope With The Transferring Obstacles On The New Third Board

Since the opening of the National Equities Exchange and Quotations(“NEEQ”) in 2013, the New Third Board listed companies and volume of transactions increase rapidly. The active trading has effectively solved the financing difficulties of small and medium-sized enterprises. At the same time, it also has improved the enterprise awareness, standardized the internal corporate governance structure, and played an important role in promoting enterprise development. However, there are still many enterprises temporarily listed on the New Third Board to avoid the blockage of IPO. This kind of enterprises have met or will soon meet the listing conditions, so they have the needs to transfer to a higher board. The New Third Board has high threshold for individual investors, incomplete trading system, relatively weak PE ratio and financing ability compared with the A-share market. Lacking effective cooperation with other boards limits the development of these enterprises. To solve this dilemma, the regulatory authority has introduced into the market-maker system, and been researching on the appropriate “green channel” to transfer. Under the background of the reform of the registration system, “establishing a separate layers and supporting the temporarily unprofitable Internet and high-tech enterprises to list on the Growth Enterprise Market after listing on the New Third Board for one year later” have boomed board transferring.Through the analysis of the necessity of board transferring between different plates, the author thinks that the system for the New Third Board transferring to the Growth Enterprise Market, Small and Medium Enterprise Board and the Mainboard is the core content of the board transferring mechanism. In order to be more pertinent, after referring to the eight New Third Board listed companies having successfully transferred to higher market, the author decides to take Growth Enterprise Market as an example to research the board transferring. Compared with the Growth Enterprise Market, the New Third Board lacks enough attention and liquidity, the board transferring has a large expected impact on enterprises and capital market and the reducing transaction cost become enterprises’ motivations to positively transfer to the Growth Enterprise Market.The motivations will necessarily promote the active board transferring of the New Third Board listed enterprises once they are in accord with listing conditions or meet good opportunity. However, the board transferring currently still have the theoretical obstacle and the practical obstacles, such as lacking of specialized channels. And the causes of these obstacles mainly include: the attention of management is not enough and the interest gaming between different boards exists. But under the background of the reform of registration system, board transferring and registration system advancing side by side will achieve a win-win situation.Finally, according to the current situation of the development of the New Third Board market in China, the author puts forward the following improving measures to promote the board transferring better. The measures mainly include two aspects.Firstly, establish related legal system for the board transferring mechanism. It is mainly embodied in: First, legislative confirmation of the New Third Board and the direct board transferring, clarification of the legal status of the New Third Board market and so on. Second, improve the supervision system matching with the board transferring mechanism, advocating moderate regulation and the self-regulation of NEEQ. Third, improve the information disclosure system. It is suggested to take the "significant" standard as the principle of information disclosure, and reflect the difference with Ashare corporations. But it should be connected with the differential treatment of board transferring. In other words, if the companies listed in the New Third Board market have a perfect information disclosure system, the procedure for their direct board transferring can be moderately simplified to regulate the behavior of enterprises in the New Third Board market.Secondly, the concrete construction of the "green channel" of directly transferring to the Growth Enterprise Market. It is mainly reflected in improving the procedure and conditions of board transferring. For example, when transferring to the GEM through "green channel", the regulatory authorities should provide procedure simplification and maintain the listed conditions to avoid more serious consequences. Establish the internal hierarchical structure, not only convenient for regulation but also conducive to the pertinent board transferring of the enterprises.The development of the board transferring system cannot be separated from the supporting system of the New Third Board market and the Growth Enterprise Market. The development of the market maker system, the implementation of the reform of the registration system and improvement of the information disclosure system are all “good news” for the board transferring system. There is no denying that the New Third Board market is booming, but the construction of multi-level capital market is not the independent progress of various boards but it more needs the unblocked transferring among them. Only liquidity and competitive power can promote the improvement of each board’s service, and then finally make the listed companies obtain the expected fundraising. Promoting the sustainable development of the Chinese enterprises should be the ultimate purpose of the capital market.