US Corporate Law 20 Episodes (18)
Differences between Chinese and American listings | Main Board, SME Board, ChiNext, Science and Technology Board | NASDAQ, NYSE
The difference between Chinese and American listings|China listing: Main Board, SME board, ChiNext, New Third Edition, Fourth Edition|U.S. listing: NASDAQ, NYSE, AMEX|China-US comparison: time cost, listing threshold, Flexibility, regulatory regime
In the last issue, we introduced the difference between the Nasdaq and the New York Stock Exchange. In this issue, we will talk about the difference between listings in China and the United States.
1. Listing in China
The main board is available on the Shenzhen Stock Exchange and the Shanghai Stock Exchange. Small and medium boards are only available in Shenzhen Jiaotong. The main board and the small and medium board are also called a board.
Below is the Growth Enterprise Market and the Science and Technology Innovation Board. The Growth Enterprise Market is owned by the Shenzhen Stock Exchange, and the Science and Technology Innovation Board is owned by the Shanghai Stock Exchange. In fact, the Growth Enterprise Market was established as early as 2009, while the Science and Technology Innovation Board was established in 2018. In fact, the Growth Enterprise Market and the Science and Technology Innovation Board have their own advantages, but it is generally believed that the Growth Enterprise Market is still more high-end than the Science and Technology Innovation Board. The ChiNext Board and the Science and Technology Innovation Board are collectively referred to as the Second Board.
We won’t say much about the NEEQ, then it’s not called a listing, it’s called a listing, and if it’s listed on the NEEQ, it doesn’t have much liquidity, and it’s basically in vain.
Not to mention four boards.
The third board and the fourth board are all listed, not listed.
2. U.S. listing
Nasdaq (NASDAQ), New York Stock Exchange (NYSE), American Stock Exchange (AMEX). The last of these is the US stock exchange market that you may not have heard of. It is the only exchange that can trade stocks, options and derivatives at the same time, but it is not specialized in trading stocks, so we will see more in China Companies going public in the U.S. still go to the New York Stock Exchange and Nasdaq.
In the last issue, we introduced the differences between the NYSE and Nasdaq in detail, so I won't repeat them here.
3. Comparison between China and the United States
In general, there are several differences between listing in China and listing in the United States:
(1). Time cost
Listing in the United States is a registration system, and it takes less than 10 months to complete a set of procedures. In China, the approval system used to be an average of 30 months. If you are unlucky, it is possible to wait three to five years. Although both the Growth Enterprise Market and the Science and Technology Innovation Board have now become registration-based, it still takes more time than listing in the United States.
(2). Low threshold for listing
Listing in China, whether it is the main board, the small and medium-sized board, the ChiNext or the Science and Technology Innovation Board, all have the requirement to make profits in the last one, two and three years. In the United States, there are no requirements for profitability standards, only stock price, number of shares, and market value. Therefore, it should be said that the listing in China means that your company has succeeded, and the listing in the United States means that your company has the potential to succeed. Especially like many Internet companies now, they have been burning money to hit the market for a long time. It is very difficult for such companies to go public in China, and they often have to choose to go public in the United States.
(3). Flexibility
The United States has always allowed different rights to the same shares. China only began to allow different rights to the same shares in the Science and Technology Innovation Board in 2019, and there are also great restrictions on the different rights of the same shares on the Science and Technology Innovation Board. Judging from the widespread adoption of WVR by a large number of Internet companies in the United States, WVR is the structure that many listed companies want to choose. From this perspective, listing in the United States is more beneficial for companies to control their power in the long run.
(4). Regulatory system
The domestic supervision of listed companies mainly relies on regulatory agencies, while the supervision in the United States mainly relies on shareholders. We often see small shareholder class actions in the United States. Although China's Securities Law also passed the new securities law in 2019, and started a small shareholder class action system, there are still many restrictions in the specific system design, which is not as perfect as the small shareholder class action in the United States. This also leads to the listing in the United States, it is easy to enter the door, but it is even more difficult after entering the door.
Today I introduced some differences between Chinese and American listings. In the next issue, we will discuss WVR.
20 lectures on American company law, focusing on the necessary legal knowledge for startup companies. Thanks for watching, see you next time.
