Investors can apply to open an account to trade stocks on the growth-enterprise market on July 15, a further step toward the introduction of the long-anticipated Nasdaq-patterned financing platform.
China's securities regulator issued the threshold for investors on Wednesday, regulating that investors who have traded stocks for more than two years need to sign an agreement with the brokerage that they are aware of risks on the new board for start-up firms.
Other investors are required to write a special notice to indicate that they are willing to undertake risks, according to a statement on the Shenzhen Stock Exchange. The rules will take effect on July 15.
High risks exist in the GEM, which is not suitable for all investors, so the brokerages must know clearly investors' identification, assets and income conditions, the China Securities Regulatory Commission said.
"I will buy shares in the growth-enterprise market as high risks can generate high returns, but the threshold for investors is too low," said an individual investor surnamed Lu, who has traded stocks for a decade.
"The regulator should restrict investors who have traded stocks for less than five years and own assets less than 1 million yuan (US$146 million) from opening an account for the new board," he said.
Companies can list on the GEM with annual net profits of at least 10 million yuan in the previous two years, or 5 million yuan for one year with sales of at least 50 million yuan.
In contrast, companies on the main board must have net profits of at least 30 million yuan in the previous three years or total sales more than 300 million yuan.
Companies on the GEM will face stricter disclosure requirements and limits on stock sales than those on the main boards.
Yao Gang, vice chairman of the CSRC, hinted earlier that the GEM would be launched after next month.
(Shanghai Daily July 3, 2009)
