The reform of the ChiNext board is advancing further with the issuance of the "Opinions on Deepening the Reform of the ChiNext Board to Better Serve the Development of New Quality Productive Forces" and its supporting measures on April 10.
A key mechanism involves local governments providing information referrals. Specifically, after an enterprise applies for IPO tutoring and filing but before submitting its listing application, the local government can compile and submit relevant information to the Shenzhen Stock Exchange, with a copy sent to the China Securities Regulatory Commission (CSRC).
This mechanism is fundamentally different from the approval-based system used in the early stages of the A-share market. It is not a return to administrative approval processes. The initiative represents an innovative effort to better integrate an effective market with a proactive government. Local governments, familiar with regional industrial ecosystems and growth potential, can accurately identify high-quality enterprises aligned with national strategies. The provided information serves as a reference during the review and registration process, helping regulators gain a more comprehensive understanding of the company and improving review efficiency and quality. Importantly, this mechanism is not a mandatory step for listing and does not replace the responsibilities of other parties. Companies must still fulfill their information disclosure obligations, and intermediaries must perform their due diligence, balancing government guidance with market autonomy while managing risks.
The mechanism applies only to companies planning to list under the third or fourth set of ChiNext listing standards. Eligible companies must be locally registered and have operated continuously for at least three years, align with the direction of new quality productive forces, and have no record of serious violations such as financial fraud.
Receiving a local government referral does not guarantee listing approval or provide a "fast pass." The CSRC and the exchange have clarified that the referral is for reference only and is not a mandatory procedure. Companies without a referral will still be reviewed under standard procedures. Regulatory standards will not be lowered for referred companies; while inquiries may be streamlined due to more comprehensive initial information, there will be no special treatment regarding review流程 or timelines. Therefore, companies need not feel pressured to seek closer ties with local governments out of fear of being left behind.
The policy specifies that no quotas or targets are set for local government referrals. Governments are not mandated to refer companies and cannot force enterprises to obtain a referral as a listing prerequisite. This design minimizes administrative interference and rent-seeking opportunities.
Since the number of companies qualifying under the specific standards is limited, a surge in applications due to this mechanism is unlikely. Furthermore, new regulations effective February 15, 2025, prohibit local governments from offering rewards based on IPO outcomes, potentially reducing the incentive for governments to prioritize listing numbers as a performance metric.
The roles and responsibilities of intermediaries, as the "gatekeepers" of the capital markets, remain unchanged. The local government referral does not substitute for the due diligence and legal responsibilities of sponsors and other intermediaries. Their core focus should remain on professional judgment, such as thorough investigation and compliance assessment, rather than shifting towards government relations. The policy reinforces the leading role of professional logic by emphasizing intermediary accountability and enhancing the evaluation of sponsor practices.
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