China Third Board Tightens Rules

Third board (NEEQ) companies will be strictly limited in how they can use funds raised in the market. Companies must establish internal controls and all funds must be used for the company's main operations. Only financial companies can use funds for financial assets:

Except for financial enterprises, to raise funds not be used for financial assets held for trading and available for sale financial assets or loans to others, trust management and other financial investments, may not directly or indirectly invest in the trading of securities for the main business of the company and not for stocks and other derivatives, convertible bonds and other transactions; pass pledged, entrusted loans or otherwise disguised change the use of proceeds; raise funds temporarily idle cash management can be carried out by the fulfillment of laws and regulations after regulations, regulatory documents and internal decision-making procedures stipulated in the articles and disclosure, can invest in safety, liquidity and good capital preservation investment products.

Companies must set up internal controls:

Meanwhile, shares transfer system also requires listed companies to raise funds should be established to store, use, internal control and accountability of the control system, a clear classification approval authority to raise funds, the decision-making process, risk control measures and information disclosure requirements. The company raised funds to be deposited in the special account to raise funds, the accounts shall be kept non-raised funds or used for other purposes; former listed company shall, after the issue of the Subscription verification, and hosting brokerage, raised funds deposited in commercial banks signed a tripartite regulatory agreement tripartite regulatory agreement shall be issued in the stock material to be submitted for the record filing.

It seems people in the market, after the market does exist the phenomenon of indiscriminate use of some funds, many listed companies take stock after the financing, and even set up a fund investing in other companies, mutual investment between listed companies are also many phenomena, for funds the use of strict restrictions help standardize company behavior and improve capital efficiency, promote capital flows to the real economy.

EO: 新三板融资最严规定来了 炒股、理财、对赌通通不行