Why Go Public
Why Going Public
As China becomes the world
commerce member, enterprises should adapt to the international competition,
should make big and powerful, listing is the trend of the times. First, is it
say China the following 10 years to come from macroscopic, be even developed
continuously in longer period, the degree of dependence to the international
capital market will strengthen. Development of the following dozens of years
such as Chinese enterprise one exchange each other with international capital
market and international operation, result that collide, it quite has challenge
to finish this course joined.
In order to meet challenge better, the government and Chinese
capital market, putting out a series of policies promotes enterprises to be
listed, encourage enterprise's overseas listing financing.
(1) The government
encourages and supports: Our country, according to WTO regular demand and
commitment of China's accession to WTO, set up the management system which
accords with the international practice progressively; And according to the
needs of national economic development, are advancing the level opening to the
outside world constantly, two market close to combine together both at home and
abroad, with positive posture, in more extensive field, participate in the
economic globalization process. At present, the government offers positive
encouragement and support no matter in such aspects as policy, fund, listed and
created the stringent environment for enterprises, promote enterprises to be
listed in a more cost-effective manner.
(2) enterprise's overseas
listing is an important step opening to the outside world of capital market of
our country: After joining WT0, the Chinese capital market integrates with the
capital market outside the country, domestic enterprises, through listing
abroad, having offered the information platform for understanding domestic
enterprises in the overseas enterprise, in order to move towards outside the
country in domestic enterprises the capital market has created the good
beginning too. Through listing abroad, enterprises have improved one's own
overseas reputation virtually; create favorable condition for development in an
all-round way of enterprises. Domestic enterprises, through listing abroad,
utilizes and borrows the earning ratio that the capital raises the own fund, it
is a kind of effective financial means.
(3) Realistic meaning listed
that, Chinese enterprises are overseas: Because the overseas capital market is
riper than that of the domestic capital market, the capital supplies more
abundant, the fund cost is relatively low, therefore, enterprises of our country
accelerate abroad listing paces have important realistic meanings. The situation
of the international capital market is more favorable in overseas financing to
enterprises of our country at present, so is it utilize external resource
present of our country important content that commercial affair works one of to
expand; Meanwhile, our country utilize high-level reciprocal visits fully and
how bilateral to get in touch the mechanism and consult the mechanism while
being economic and trade, set up the prestige and image of Chinese enterprises
on the international capital market, support and promote Chinese enterprises to
go on the market overseasly. Enterprise overseas to list most heavy meaning is
it promote enterprise improve to lie in, large-scale state-owned enterprise
overseas to list important impetus to the SOE reform appear day by day already.
The external ripe market has relatively high expectations for listed company,
the listing course is the course of forcing enterprises to reform system,
through listing and accepting more high-quality investors and supervision of
more normal international capital market abroad, the reform, development and
improving to enterprises are of great advantage. Look from this meaning, an
overseas primary purpose that is listed of domestic enterprise, should reform
through the normal company at the request of modern enterprise system, is it is
it socialize produce and require by market, accord with international practice,
have strong strength and develop modern enterprise of vigor to meet to set up.
(4) Overseas listing is an
important channel that Chinese enterprises raise the fund: Chinese enterprises
have entered the international capital market since the beginning of the 1990s
last century, it is in Hong Kong at first, later on reaches North America, the
security market operation norms of these countries and regions, legal system are
ripe, imbued with innovation, has already formed a set of very strict and normal
operation systems, in recent years, several hundred domestic enterprises have
succeeded in being listed in Hong Kong, Singapore, North America, not merely
realize financing, promote the company to perfect the corporate governance
structure, use international advanced management style and experience for
reference and absorb, and distribute the network through world of the exchange,
touch the international market conveniently, have realize the integration with
world, has improved the market influence power and competitiveness of
enterprises.
(5) Enterprise's overseas
and listing transaction cost is reduced progressively: With the change of the
market, supervision environment and system factor, the high-quality large and
medium-sized enterprise will be listed overseasly more convenient, enterprise
connection with overseas market day by day close, enterprise too reducing
thereupon overseas listing transaction cost; Meanwhile, the constant deepening
opening to the outside world makes enterprises have greater independence while
choosing the listing place too, the overseas and listing trend of Chinese
enterprise will be more powerful, especially the medium and small enterprise run
by the local people. Second, speaking from the microcosmic no matter large,
small and medium enterprise, enterprises should make big and powerful,
competitive, can help enterprise's development to attain a yet higher goal after
being listed:
(1) offer mobility, enterprise of share, make shareholder share can buy and
sell and arbitrage;
(2) help enterprises to standardize the structure and management;
(3) enable enterprise fast, easy collected fund and financing;
(4) favorable to enterprise annexation, the rearrangement of assets and
purchasing;
(5) improve enterprise's public image and the prestige to the customer;
(6) contribute to enterprise's winning bank loan;
(7) convenient enterprises issue the welfare stock to the staff, make the
staff's enthusiasm and enterprise's interests get in touch closely.
Brief introduction
of North American Exchanges
Being listed is no doubt a good thing, however,
enterprises are listed and can't chase the star blindly, the trade market is
listed in which you had better be decided according to one's own scale, demand
and listing degree of difficulty. Because different trade markets, its rule,
expenses and final result differ greatly, for example listed on American NASDAQ,
the last expenses are about 13% to 18% of the amount of money of fund-raising,
need between 300,000 dollars and 500,000 dollars at least.
And
Canada, its listing threshold is relatively low.
Just while selecting the exchange in enterprises,
the suitable person selecting oneself to like too in the exchange. Generally to
want management group, achievement, development prospect of listed company value
very much overseas exchange, not having special view to the concrete trade that
the company involves, so long as enterprise's achievement is good, enterprise's
future continuation, stability development are the most important.
In fact, each exchange scale,
achievement to the listed company, etc. are limited, want listing enterprises to
reach the minimum standard stipulated at least.
In several exchanges of North America of our simple
introduction here:
Stock exchange of Toronto (TSX)
and start an undertaking in the exchange in Toronto (TSXV)
Stock exchange and risk
investment exchange of Toronto of Toronto belong to TSX group; the stock
exchange of Toronto is the third largest exchange of North America, and the
seventh major stock exchange in the world too. Because Canada has longer mining
industry develop history, form very complete and advanced Company's financing
system of mining industry. According to statistics, two listed companies of
mining industry that there are exchanges under TSX reach 1089, financing its
hopeless the majority of amount of money use development, mining industry of
Company for, this is driven and pointed for the first time in every large world
exchange. Besides company of mining industry, the company of such resources as
petroleum and natural gas, etc, occupies certain proportion in two exchanges.
Another characteristic of the exchange is the financing of the high-tech
enterprise with starting an undertaking in Toronto in the stock exchange of
Toronto, according to the figure in 2003, there are 135 biological scientific &
technical corporations listed on these two exchanges, market value is 179.6
hundred million dollars, the amount of money of financing is 8.38 hundred
million U.S. dollars, can be rated as the second largest biological capital
market of scientific & technical corporation in the world. Because two
exchanges belong to a group to manage, so the listed company can graduate and
upgrade from level to the stock exchange of Toronto with higher level than the
low risk investment exchange, strive for more financing chances. Another
characteristic of the Canadian stock market is that two grades split up more
obvious. The large-scale financial institutions and companies about 10 account
for a major part of market value on all stock markets; the one left is numerous
small-scale companies.
The capital market of Canada
shows slightly for Chinese company strangely, but seen from distinct
characteristic had by it, the Company of mining industry of China and Hi-Tech
Company should consider Canada carries on the possibility of capital financing.
Besides basic listing demand, the stock exchange of Toronto divides listed
company into three different classifications with the risk investment exchange
of Toronto: Ordinary trade, mining industry, petroleum and natural gas, have
listed the detailed demand respectively.
American Stock Exchange AMEX
American Stock Exchange in the
U.S.A. the second largest field, it and New York card hand in all more than
similar place very. Just because this kind is similar, make the development of
the American stock exchange receive certain restriction. Company that is list
on American stock exchange scale no very much heavy, make its far lag behind
stock exchange and NASDAQ of New York in turnover. One of the greatest
characteristics of American stock exchange is the trade of the financial derived
product, exchange trade fund of the name that for example burns (exchange trade
fund) Centre in here and conclude the business. In order to strengthen the
competition with other stock exchanges, American stock exchange is introducing
the new service constantly too, include each company that is list on American
stock exchange will get one executive that stock exchange appoint especially is
it help company carry on some specific investor brainstorm plan to responsible
for. The executive can offer stock exchange, Company person who control
advisory service of for listed company also. In addition, American stock
exchange is making great efforts to attract the foreign corporation to come here
to list and trade too, China is one of the markets which the American stock
exchange expands especially.
Trade system of NASDAQ
Americans have only inner
feelings to the feeling of the oak, a lot of stories related to oak spread among
the people. Have such an interesting article: There are a stretch of rubber
woods in Silicon Valley of U.S.A., numerous risk investors all squat on the
tree. As someone goes to the rubber woods to shout, I have a good project. Can
always shake and leave several risk investors. After getting support from risk
investment, project these turn products into finally, make risk investor and
developer of project earn basin full all over earthen bowl. This is true
portrayal that the American risk investor of lively period of Hi-Tech and
scientific and technological enterprise cooperated with each other at that
time. NASDAQ played an important role in promoting this kind of circulation,
and because high-tech enterprise increases constantly drive one's own
development, become the second major securities trading system of world
following stock exchange of New York.
In 1961, U.S. Securities & Exchange Commission was entrusted by
US Congress in the over-the-counter market of the investigation. The result
that the American stock exchange committee investigates thinks, the
over-the-counter market of U.S.A. is incoherent, the person who advises
professional develops to automation, urge the American dealer in securities
association (NASD) Responsible for promoting implementation. 1971, 500 of
U.S.A. make computer, city of trader link with central computer of NASDAQ,
formal operation of automatic quotation of NASDAQ of the persons who mark.
1975, the listing standard of NASDAQ regulation, make it distinguish with other
over-the-counter markets.
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China, and listing
difference of North America
The
question listed at home is:
1. With
high costs in earlier stage, it usually costs about 20 million. Ask for help
everywhere, will touch everywhere Wall, bullied everywhere; have consume too
much time, has done too much useless work.
2.
Ability of financing after being listed is bad; a hammer is bought and sold.
3. It
is still confined to the domestic market that the business of the listed company
is influenced; the influence to the outside is difficult to expand.
4. It
is more difficult for the investment capital stock of the big shareholder of
enterprise run by the local people of the company to cash on the secondary
market.
5. The
capital of the enterprise run by the local people will need fettering seriously
overseas investment in the future.
List and have the following
advantage abroad:
1. The formality is simple, so long as the company
has better achievement or has better projects, just accord with the listing
condition. Do not need approval of each.
2. The listing expenses are compared with domestic
and small.
3. Listing time is quick, general enterprises start
the listing procedure, can go on the market in about 8 months. Some need only
half a year.
4. Overseas listing enterprise can offer company
prestige, make enterprise easy financing or loan fast.
5.Overseas and listing enterprises will
internationalize, the brand and trade mark will obtain greater value, having
very great influence, the business to enterprises, especially overseas business
have great facilitation.
6. Primitive investment of shareholder of listed
company easy to cash in the secondary market, the currency cashed has been
changed into the foreign currency; the advantage cashed from the secondary
market can stay abroad, and continue making the investment abroad. This has
offered very great convenience for the fact that the spouse and children in
charge of personnel of enterprises immigrate and study abroad overseasly.
7. After Chinese enterprises are listed overseasly,
the main directors of enterprises can apply for the numerous round jobs visa
abroad, it is very convenient to enter and leave the border.
8. The enterprise run by the local people after
being listed overseasly runs the property with enterprises and is protected
strictly by the law which is listed the country where one stays.
Choose the listing
purpose in North America
Chinese Government has already
joined WTO, this means business opportunity of global economic integration is
influencing Chinese enterprises, since China's reform and opening-up, though
Chinese enterprises are calling the slogan inviting outside investment everyday,
but the result is not very ideal, has even lost a lot of interests, but the
foreign businessman has obtained a great deal of interests. For instance: It is
favorable that the joint venture can enjoy reducing, exempting, refund of tax of
Chinese Government, etc., can obtain loan, Chinese of commercial bank, foreign
businessman can enter China by way of investing in national surplus, out of date
equipment, set up joint venture, has enabled eliminating the equipment from
obtaining use value partly again, foreign businessman in fact set up joint
venture in China with way the above only, even in sell one situation of product
already earn the generous profit, foreign businessman obviously utilize"
Chinese foreign businessman jointly operate law " ,engaged in capital operation
make a profit earlier stage, why Chinese enterprises can beyond go development
not overseas to make a profit operation way when trader in China is same? "
walking out " development strategy spirit put forward according to " 16th
National Congress " of the Central Committee of the Communist Party of China,
Chinese enterprises choose in conformity with reason: Go to GEM of the developed
country or the main board market to list and carry on the operation of the
capital; The backward country is by way of setting up the cooperative enterprise
of the joint-venture while going to develop or than China, engaged in the
operation of the capital in earlier stage, make the production and management
and dominate the market and make a profit on later stage.
Chinese enterprises go to
American NASDAQ, apply for listing financing in Toronto of Canada, the choice of
carrying on operation of the capital is the best identification that Chinese
enterprises realize the developing by integration strategy and policy of global
economy, reflect especially that carries out what " 16th National Congress " of
the Central Committee of the Communist Party of China is put forward: Spirit
that ' Chinese enterprises walk out the rational utilization foreign capitals
develop '. Result and Chinese enterprise one hundred profit its is it hurt to
have, ¡§buy shell¡¨ among them list or is it lists to be fast financing way most
to apply again. Once is it succeed to list, Chinese enterprise one American
person who controls interest of listed company with right titles and proper
words, in this way Chinese enterprises can purchase American listed company
controlling interest with this, finance in a pluralistic way on U.S.A. and
financial market of whole world: Such as issuing stock, bond, applying for the
American bank loan, setting up joint venture and contractual joint venture,
attracting the risk investor, etc., handle time fast ( 3-6 months) ,The
expenses are low ( 1 million dollars) ,There is no risk ( wraps up success, it
is free of charge that unsuccessful) .
NASDAQ of U.S.A. is the largest
electronic stock trade market in the world, she all right for each a per second
one to convey 83 more than 1,300,000 country to trade information that listed
company issue stocks of you through international electronic network at one time
The professional investor is in the brain, an more exciting one is, she has
already cooperated with Internet, make in whole world stock investor no matter
when what can look over stock exchange message to reach you through Internet,
this means once your enterprises are listed on American NASDAQ success, even if
you is it succeed difficult to want, Sohu network, inferior to hold group to
list on American NASDAQ financing successful typical case of China.
In sum:
Chinese enterprise finance difficult at home at present, difficult to go to blue
sky, why change idea is it is it develop to walk out to choose, head direct for
the market for the second board on the country's stock of American NASDAQ and "
buy the shell " or apply for listing financing again? Or go for listing
financing of Canada Toronto Securities Exchange?
Method
and way
Enterprise's listing operation way:
One IPO Listed, namely
is listed through the securities trader issues the new stock
According to putting financing in right place in one step in the company, this
is a better method. But IPO is listed; the cost paid is very high. Company's
listing procedure is very complicated, it is very strict for financial affairs
to examine, spend time to be long. This may be more suitable to some Hi-Tech
companies with very high popularity. The previous expenses are larger to smaller
company. The financing cost is relatively high. The time spent is long, common
people can not bear.
Two Purchase backward (Buy the shell) Listed
Let the
company purchase the shell company already listed on NASDAQ or Canada backward
in North America first, borrow the shell and is listed, then finance. The
previous cost is very low to do it in this way. Listing is fast. The financial
affairs demand not to be so strict either. Begin the financing plan immediately
after being listed. If it is a smaller Hi-Tech company, financing is easier
after listed.
Going public through buying a shell has shells of
NASDAQ, the shell of NASDAQ is mainly OCT.BB (second board market), The Hi-Tech
company hopes to be gone to NASDAQ to list. There is a shell Company of Canada
too, it is mainly a risk market of Vancouver (TSX Venture) Shell Company.
Besides buying the shelly expenses, it is the expenses of financial audit and
lawyer to list the largest expenses. The expenses should be made according to
the attendant¡¦s experience, business relations and ability, there is no certain
price.
What our company here recommended is to use IPO to
issue the new stock and is listed, because have shells of NASDAQ to go public
through buying a shell, the shell of NASDAQ is mainly OCT.BB (second board
market); The Hi-Tech company hopes to be gone to NASDAQ to list. There is a
shell Company of Canada too, it is mainly a risk market of Vancouver (TSX
Venture) Shell Company. Besides buying the shelly expenses, it is the expenses
of financial audit and lawyer to list the largest expenses. The expenses should
be made according to the attendant¡¦s experience, business relations and ability,
there is no certain price. And the shell bought has no background and can be
sought, will bring the unnecessary trouble to the development in the future of
enterprises.
Three Chinese enterprises
can realize being listed through making the shell:
The so-called making the shell is listed, mean that
a paper company is established in Canada at first, on condition the promoter
wants to take out 70,000 Canadian
dollars (equivalent to
37. 50,000 yuan) Capital,
this sum of money is equivalent to buying a ticket which enters the market,
there should be a competitive project and good management organization at the
same time. At this stage, the company should
refer to the commercial prospectus of the project and Company management
organization to conclude such materials as the file, etc. to the exchange. The
exchange will approve of in 2- months after receiving the file. At this moment,
the company can issue stocks publicly. According to the regulation, the issue
price is in 0. 15¡Ð0¡CBetween
03 Canadian dollars, it is can't be less than 200,000 Canadian dollars to raise
the fund, the maximum number does not exceed 500,000 Canadian dollars, stock of
the company needs to have 300 shareholders at least, the public amount of
holding share can't lack 1 million shares. Like this, the company has possessed
the minimum condition listed on Canada, has had the ripe project of looking for
and propagated the fund of the company. After the public publication of the
stock, after 4- months, after the company puts the project into the shell
company, can be listed and listed and traded in the exchange. And the time to go
public through buying a shell is shorter, but the expenses are relatively a bit
higher.
Expenses emerging in the listing
course:
Listed
the difference according to company's business, corporate structure, listing
way, the listing exchange of goal or the quotation system of necessary expenses
and differed widely. Because of the change of concrete conditions, need to
understand the concrete demand of the company and decide through discussion
listing way and course. Basically, the expenses include setting up the expenses
of the North American parent company, accounting and auditing fee, attorney fee,
professional fee, transfer ownership agency fee, material make fee, stock
notarize and print fee, express fee and long-distance telephone rate, fax fee,
etc. incidentals.
Which enterprise
does North American market needs?
As to what kind of enterprise is it get North
America list to suitable for, we analyze from domestic situation and
international market two.
At present, Chinese Government makes a series of
policies, encourages domestic enterprises to be listed; Meanwhile, overseas
market, especially North America, welcome Chinese enterprises to be listed and
traded, its listing condition is not as too high to reach as what we imagined,
but the threshold is relatively low. Facilitate some enterprises to be listed on
North America like this, succeed. Analyze as follows information can help you to
analyze whether your enterprises are suitable for to North America to go on the
marketing:
First, domestic situation the State Council
according to " the State Council raise shares and special regulation of
beginning to merchandize " to June 17, 1996 " about Limited Company securities
commission, have issued and is listed the condition, procedure and necessary
file article which reselect enterprises outside the border about recommending,
card entrust take place [1996] 17 Number, has proved among them that is listed
and reselected the conditions of enterprises outside the border:
1. Accord with the national industrial policy: It
accords with the large and medium-sized enterprise of the national industrial
policy to support especially, the key technological transformation project
supported to such infrastructure, basic industry and new high-tech industry and
country as the energy, traffic, raw materials, etc. slopes, consider other
trades properly. Enterprises should belong to the country and allow the trade
which the foreign businessman invests in.
2. Being potential, enterprise need the fund badly.
Enterprises issue stocks the fund raised should have clear uses, used in
enterprise's production to develop mainly, in conformity with the request of
according with and changing to the intensive management, some fund can be used
for adjusting asset-liability ratio, supplementing the circulating fund, etc..
Enterprises should possess the fund application plan implemented basically in
principle. It is the capital construction, project construction of the
technological transformation one, should accord with the national provision that
investment in fixed assets, technological transformation are set up. There are
enterprises of an eyes of great technology import needing the foreign currency
badly with the approval of the State Council, can pay the utmost attention to.
3. Enterprises have certain scale and good economic
benefits. Apply for the profit achievement that enterprises there should be,
consider the rationality of the cost, behavior and operation after going on the
market that enterprises raise funds at the same time, it needs to reach certain
scale to reselect enterprises: The scale of net assets that enterprises invest
the part of listed company after reorganizing is generally no less than 4
hundred million yuan, the after-tax profit rate of net assets after assessing or
estimating reaches above 10, the scale of the after-tax net profit needs to be
up to 6000 more than ten thousand yuan. The state-owned stock should generally
occupy the holding position after raising capital by floating shares, proportion
of the state-owned stock should exceed 51 after issuing stocks by trade or
enterprise, and enterprise controlled interest definitely to demand as to state
policies. Support the infrastructure construction project of development to the
country, there is the one that exempts to the achievement in the external stock
exchange, needn't need profit achievement for three years in succession.
4. To pilot enterprises of modern enterprise system
confirmed of the State Council, made obvious progress, paid the utmost attention
to properly under the equal condition in pilot project.
5. Enterprise issue external listing foreign
capitals bursts of fund-raising volume expect can up to 4 A hundred million
yuan ( Or same 5000 ten thousand dollars) The above.
6. Enterprises have certain ability of earning
foreign exchange. Earn foreign exchange competence is it reach net 10 of amount
of profit under tax to need generally, is it is it send interest have reliable
foreign currency source to share out bonus after listing to guarantee,
infrastructure trade can proper to relax, but apply for the consent about the
department of foreign exchange control.
7. Enterprises have certain popularity and
managerial skill. The occupation rate of market of the enterprise products comes
out at the top in the domestic same trade, more steady for three years in
succession; The main administrative staff of enterprises should have better
professional level and experience of management, can keep the basic stability
before and after being listed.
Second, 1 financial affairs of international market
are required: Minimum financial affairs of listed company require, depend on all
different exchange or quotation system begun to merchandize to plan. For
example: There are no minimum assets or income to require in NASDAQ counter
trade market, only demand to have concrete commercial plan or goal.
2. The demand to Chinese enterprises of Canada GEM
is: Company does not take to have history writing down and achievement of sure
service life, only need there are a good management group and competitive
project. The threshold is relatively low, is the greatest characteristic of
Canada GEM. Stock exchange and A of Vancouver banked up the stock exchange of
the tower with earth and amalgamate but Canada GEM that became in November of
1999, purchased by the stock exchange of Toronto later, became the market for
the second board on the country's stock under its flag. The beginning of
establishment of Canada GEM index is that 2000 is clicked; the index has felt
high to 4457 points, about 3000 points at present. During that time, NASDAQ
index has changed radically, but the index on Canada GEM is relatively small in
amplitude.
3.Toronto Securities Exchange tightens up the
listing regulations: Toronto Securities Exchange (abbreviate as TSE) Announce
new regulation on will it be June 27 2004, one that is to stock market new to
decide Hi-Tech company put forward strict control measures. Though the
investment field was still favoured in High-tech stocks very much, TSE board of
directors has approved a series of ones that are listed Hi-Tech Company for
being new and standard. Go on the market with wireless communication, optic
fibre network and relevant Hi-Tech companies of electronic commerce constantly,
only from the beginning of this year, the company listed for the first time in
TSE has included: 360NETWORKS INC., 724 SOLUTIONS INC., CELL-LOC INC., and ONX
INC. And GT GROUP TELECOM INC., This
is still only a part among them.
According to the new rule of TSE,
any Hi-Tech company wanting to be listed on TSE must have market value of 50
million yuan at least.
Which type¡¦s enterprise of 4 is easiest to list on
TSX? Looking from tradition, the investment circle of Canada is relatively
familiar with enterprises of resource types. At present, more than 20 gold mines
related to China exploit enterprises and is listed on TSX financing. But no gold
process manufacturing enterprise appears, I think, this kind of enterprise is
sure to be very successful in Canada. The manufacturing enterprises of such
energy type as petroleum, the natural gas, etc. are that TSX welcomes very much
too. Chinese enterprises should learn to adapt to the supervision environment
of Canada first. Canadian investors and security market are very familiar with
the trade of mining industry, just because of this, Canadian investors and
requisition for enterprise of mining industry of security market are more
careful. For example, they are 43 (101) Clause regulation, must audit the
assessment to the mineral resources of enterprises by the independent geologist.
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