Research On Due Diligence Elements Of H Securities Company For New Three Board Listed Companies

As an important reformatory practice, New Three Board promotes the adjustment of industrial structure in our country and provides financial support for many high-tech enterprises. Its platform funds had achieved rapid growth since the market established. The quantity of listed company was only 6 when Zhongguancun share transfer pricing system of non-listed shares of the company launched in 2006, but the number of listed company soared to 5129 in 2015 after first pilot scope expansion in 2012 and second expansion in 2013. With vast multitudes of human and capital surging into New Three Board, the investment risk of listed company is also expanding rapidly. According to National Equities Exchange and Quotations regulatory information, Modern Agriculture Equipment and Shen Xian Yuan are investigated by China Securities Regulatory Commission for financial frauds, and many host brokerages are named and shamed by officials for less standard behaviors in due diligence. Therefore, establishing a set of perfect due diligence system becomes the most important research for security companies.Researches on New Three Board enterprise’s risk control in due diligence phase are helpful to perfect multi-level capital market in China and relevant regulations system. As the number of New Three Board listed companies increase, capital market inverted pyramid structure in our country start to change. Thus, our country capital market system is perfected. The present problems existing in company’s operation are bound to be found in due diligence phase, so the research on New Three Board enterprise’s risk control can provide specific ideas or methods for problem solving and play a guiding significance on improving the companies wanting to be listed corporate governance standards and operating performance. Since the scope of New Three Board market expanded, the profit from New Three Board listing companied had become a new growth point of securities companies. More and more securities companies are seeking target companies all across the nation, they are enthusiastic about reserving project resources for the next period of time. But the regulations for securities company behavior in New Three Board become more strictly, according to statistics, twenty three securities companies are taken supervision measures for violating the regulations in New Three Board market.This research adopted four kinds of methods, which were case analysis method, literature theory method, comparative analysis method and field research method, and established a set of essential elements in due diligence phase for controlling risks from New Three Board enterprise. Through reviewing the new three board market research literature and due diligence risk control theory research literature, this paper analyze the reasons why so many companies want to debut on the New Three Board and summarizes the business risk control process and elements of studies. This paper also compares listing requirements of level capital market in our country rather than New Three Board capital market and analyzes different development status and characteristics of enterprise to find and locate the risk area where security companies should pay more additional attentions. This paper explore the construction of perfect system in due diligence phase respectively from the historical experience of reference, analysis of market demand and industry characteristics logical analysis framework, and introduce application in due diligence practice of security companies to verify whether the set of established system in due diligence is effective.This paper studied the elements in due diligence of New three Board market listed companies, overviewed the general situation of development of New Three Board in China in detail and described how securities company conduct investigation on companies wanting to be listed in New three Board market. On the basis of analyzing the development of the due diligence approaches, the dissertation puts forward we must make the risk-oriented due diligence approach. In previous literature, there is no or less research on construct due diligence system of New Three Board listing companies that consist of approval considerations. Based on the main board, the GEM and other level capital market due diligence for reference, investors information demand from market and the enterprise industry characteristics analysis, this paper explores to build a new set of due diligence system for New Three Board market. Because the New Three Board market in China had introduced layered system, National Equities Exchange and Quotations introduced three sets of standard to select out good companies and sorted them to innovation layer. The listing companies in innovation layer are regarded as the best companies in New Three Board market. For the due diligence of New Three Board listing companies in the future, researchers from securities companies must know more specific classification review standards for these companies that can be recommended to innovation layer.In addition, with the scope New Three Board for listing companies expansion, companies that are not belong to high and new technology enterprise can also apply for a quotation in New Three Board market, so industry structure in New three board market is more likely to be similar to the industry structure in main board market. The risk area of investigating object may change, thus the related elements and specific indicators in the due diligence system present need to be adjusted.Based on past relevant experience, the market investors’ demand and industry analysis, this paper developed a set of due diligence system consisting of six items, twenty-three factors and a sequence of indictors. This due diligence system has six big aspects, namely, subject qualification, independence relations of listed company, financial indicators, standardized operation, important matters that investors focused on, industry developed trends and the key resources that target company have. Each aspect has corresponding factors, and each factor has relevant indictors. This developed due diligence system adopted in case analysis can identify the problems existing in the process of debut on New Three Board quickly and efficiently, and work well for controlling the main risks existing in the due diligence phase. This paper puts forward a new investigating content consist of patent technology and research staff in due diligence phase for most New Three Board companies are high-tech enterprises.