Main boards: first choice for large, medium-sized enterprises

By Zhang Liguo, Grandway Law Offices
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With the introduction of the Beijing Stock Exchange (BSE) and the board transfer system for New Third Board-listed companies, China’s registration system reform has essentially developed a multi-layered capital market to provide financing channels for enterprises of different sizes, development stages and capital needs.

Under the current system, the time-honoured main boards are highly recognised by the market and public investors, inclusive with corporate positioning and mature in terms of rules and standards. Specifically, the author believes that IPO planners should consider the following advantages of the main boards when choosing a listing destination.


Zhang Liguo
Chief Partner
Grandway Law Offices
Tel: +86 10 8800 4200

After the Shenzhen Stock Exchange’s (SZSE) merger of its main board and SME board, the Shanghai Stock Exchange (SSE) and SZSE have respectively formed the board structure of Main Board + Sci-Tech Innovation Board (Star Market), and Main Board + Growth Enterprise Market (GEM).

As the oldest boards in China’s stock market, these two main boards have gathered many large and medium-sized enterprises from various industries, with manufacturers accounting for the highest proportion and substantial market capitalisation.

Main boards have become the “barometer” reflecting society’s overall economic performance. By the end of June 2022, total market capitalisation of the main boards reached nearly RMB70 trillion (USD10.4 trillion). They are the most familiar stock markets to the public and the “pyramid tip” of the multi-level capital market system, with low investment thresholds and more active market transactions.

Objectively speaking, the financial criteria for listing on the main boards are relatively high, with requirements for business revenue scale and net profit level. Listing implies the enterprise has good operational stability and high market recognition, which may facilitate a mature and large-scale brand image.

Therefore, large and medium-sized enterprises with a proven business model, considerable capital scale, stable profits and robust, sustainable management often regard the main boards as their first choice.


With continual improvement of the domestic multi-layered capital market structure, the functional positioning of each board has become increasingly clear.

The main boards focus on supporting financing of relatively mature enterprises; the Star Market centres on the six strategic emerging industries and is committed to demonstrating “hard technology”; the GEM highlights the trend of “innovation, creation and creativity” and integration of “new technologies, new industries, new formats and new models”; and the BSE firmly serves highly specialised and innovative small and medium-sized enterprises.

With the diversified development and synergistic interconnection of these boards, the market offers a wealth of options for enterprises to choose the most suitable for their development, based on their conditions and financing needs.

Regarding industry restrictions, the Star Market, GEM and BSE set restrictions based on their positioning. For example, the Star Market restricts the listing of fintech and model-innovative enterprises, and prohibits listing of enterprises mainly engaged in real estate and financial and investment businesses; the GEM publishes a negative list of 12 industries; and the BSE sets restrictions in the financial industry, real estate, preschool education, academic tutoring and other industries facing overcapacity or elimination.

By comparison, the main boards showcase stronger inclusiveness for industries, except for those restricted by policies such as real estate, gaming and academic tutoring.


The stock issuance approval system, a basic part of stock issuance in China, has been in place for more than 20 years, since its launch in 2001. Retaining the approval system to this day, the main boards have stood the test of time and market in terms of rule design and practical process.

Meanwhile, continual improvement of the market system and review standards, especially successive rules issued by the China Securities Regulatory Commission (CSRC), SSE and SZSE – such as the Certain Questions and Answers on IPO Business, and those on stock issue review – further clarify and unify the review standards of all major boards, essentially eliminating arbitrage opportunities in the review process. Therefore, differences in the issuance systems do not affect the consistency of review standards.

This trend can also be glimpsed in the approval rates. According to Wind statistics, the approval rate of the main boards was 86.73% from January 2021 to June 2022, while approval rates of the Star Market, GEM and BSE were 92.53%, 93.03% and 87.02%, respectively.

Although rates of approval by listing committees of the boards implementing the registration-based system are slightly higher than that of the main boards, considering that more companies fail to pass their subsequent registration process, the approval rates are similar across all boards.


The review period is one of the essential considerations in choosing a board for listing. With the normalisation of IPO review – due to multiple factors such as the transfer of review duties initially undertaken by the CSRC to exchanges after the registration system reform, and the surge in enterprises applying for the Star Market and GEM – the difference in review period of each board is gradually narrowing.

According to the data of enterprises under review on E-Board by the end of June 2022, 218 in total applied for listing on the main boards, 157 on the Star Market, 102 on the BSE, and 411 on the GEM.

In addition, after being approved by the Issuance Appraisal Committee and obtaining the official document, enterprises applying for main board listing can begin arranging the initiation of issue, making the latter part of the process slightly faster than that of registration-based boards. After full implementation of the registration system, the review process and period of all boards are expected to become more consistent in terms of rule design.


Although solving financial predicaments and fostering financial integration are primary goals for enterprises to seek public listing, the restriction of P/E ratio of no more than 23 times offer price has been set under the approval system out of consideration for protecting investors and reducing speculative risks.

Currently, the overall P/E ratio of registration-based boards is remarkably higher than that of the main boards, with a significant differentiation among issuers, which further illustrates the prominent role of the issuance and underwriting mechanism in identifying corporate value under the registration system.

However, as a critical step in the capital market evolution, the market-wide registration system reform will, step by step, neutralise the comparative disadvantages of the main boards in financing caused by the P/E ratio restriction, making them all the more attractive to future issuers.

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