This news has stirred up the capital market, cheered innovative small and medium-sized enterprises, and even made legal professionals who have been serving public companies exclaim on the value and difficulty of this perseverance!

On November 15, 2021, the Beijing Stock Exchange (hereinafter referred to as "the Beijing Stock Exchange") opened, with 81 listed companies in the first batch. From the day President Xi announced the establishment of the Beijing Stock Exchange, the market was opened for trading in just over 70 days. The Beijing Stock Exchange completed a series of identity authentication, architecture construction, rules implementation, and smooth opening at an unprecedented speed. It has regained the dream of the Capital Exchange 30 years ago, standing side by side with the Shanghai Stock Exchange and the Shenzhen Stock Exchange, forming a tripartite situation in the securities trading market.

In order to give full play to the exemplary and leading role of the Beijing Stock Exchange in the basic and innovative layers of the New Third Board and maintain the market structure of the New Third Board, the innovation layer, and the "progressive layer by layer" of the New Third Board, the new listed companies of the Beijing Stock Exchange come from innovative companies that have been listed on the New Third Board for 12 consecutive months. As the trendsetters of the times, these newly added listed companies in the Beijing Stock Exchange have further realized the common development of financing and business through the capital market.

According to data on the official website of the Beijing Stock Exchange, as of the press release date, there are 84 listed companies on the Beijing Stock Exchange. A total of 203 enterprises have applied to the Beijing Stock Exchange for public offering and listing (including selected tier applications for listing). Currently, among the enterprises under review, 1 has accepted but not yet inquired, 42 have already inquired, 5 have not yet listed after the meeting, 20 have suspended the review, and 51 have terminated the review. Termination of audit is different from suspension of audit. Suspension of audit is mainly based on the update of financial data. After the reason for suspension disappears, you can apply for resumption of audit; Termination of review refers to the issuer's application for withdrawal of listing application materials or termination of the review process or issuance registration process for other reasons. In short, regardless of the reason for withdrawing applications, about one quarter of enterprises have pressed the "stop button" for listing at this stage.

Since the opening of the market in November 2021, in a short period of three months, all three companies of Beijing Jiaotong have been listed, and five have held meetings; After the meeting, the actual controller of Haili Shares, an enterprise that terminated the review, was investigated by relevant departments, and then chose to withdraw its listing application. It can be said that companies that successfully go public have their similarities, while companies that terminate the review have their own differences.

1、 Bear the brunt of "innovation"

According to the provisions of the Listing Rules Guidance No. 1 of the Beijing Stock Exchange, an issuer should fully disclose its own innovative characteristics in combination with industry characteristics, business characteristics, product uses, business models, market competitiveness, technological innovation or model innovation, research and development investment, and transformation of scientific and technological achievements. If the issuer belongs to a financial or real estate industry enterprise, it does not support listing on the Beijing Stock Exchange. An issuer shall not belong to industries with excess capacity, eliminated industries specified in the Guiding Catalogue for Industrial Structure Adjustment, or enterprises engaged in preschool education, subject training, and other businesses.

As the Beijing Stock Exchange serves innovative small and medium-sized enterprises, innovative small and medium-sized enterprises are precisely the specialized new small and medium-sized enterprises proposed for development at the Central Economic Work Conference, the "14th Five Year Plan" outline, and the Central Political Bureau meeting. "Specialized, specialized, and innovative" SMEs refer specifically to those with the characteristics of "specialization, refinement, specialization, and novelty", and are also the leading enterprises in a certain segment in the future.

Throughout the enterprises that have recently passed the meeting, including Hujiang Materials, which has been rated as the "Little Giant" of national level specialized, specialized, and new enterprises, as well as local level specialized, specialized, and new enterprises or national high-tech enterprises, most of them are manufacturing enterprises that integrate research and development, production, and sales in various segments, in line with the innovative positioning of listed companies in the Beijing Stock Exchange.

In addition, the author notes that a separate item has been added in the prospectus of the issuer compared to the overview section of the original public offering prospectus: "IX. The innovative characteristics of the issuer itself." Unlike the public offering prospectus when the selected tier was listed, which only introduces core competitiveness in business and technology, the issuer also needs to accurately explain its own innovation in the front end of the prospectus. Moreover, the primary question raised by the audit department to the issuer is essentially about technological progressiveness, innovation and core competitiveness.

It is not difficult to see from enterprises that have recently terminated their audit that Zhongrui Pharmaceutical, a pharmaceutical distribution enterprise engaged in pharmaceutical sales, earns profits through purchase and sales price differentials. The three inquiries were all faced with core competitiveness, innovation, sustainable operation ability, and many financial issues; Qiangshan Agriculture and Animal Husbandry, a representative enterprise engaged in pig breeding and breeding, the production and sales of pork and pork products, and the agriculture, forestry, animal husbandry, and fishery of the Third Board, has experienced three extensions and four inquiries, and has always been unable to avoid the decline in business performance, core competitiveness, higher gross profit margin than the same industry, and the biological asset risk issues behind the agriculture and animal husbandry industry caused by the fluctuations of the "pig cycle".

It can be seen that although it does not belong to the industries on the negative list of the Beijing Stock Exchange, it is obviously necessary to put more effort into demonstrating its innovation in the context of trade, agriculture, forestry, animal husbandry, fishing, and other industries. At the same time, it is also expected that the regulatory authorities will issue more specific "innovative guidance".

2、 You need to be hard to forge iron

The author has inquired about the listing application documents of listed companies that have passed the meeting and terminated the review of public disclosure in the past two months, as well as the review inquiry letter from the review department, The listing standard selected by the issuer without exception is the standard 2.1.3 of the Listing Rules (1): "The expected market value is not less than 200 million yuan, the net profit in the past two years is not less than 15 million yuan, and the weighted average return on net assets is not less than 8%, or the net profit in the latest year is not less than 25 million yuan, and the weighted average return on net assets is not less than 8%.". Compared to the technology innovation board and the growth enterprise board, the market value+profit standard is not high, but it is far from enough to only meet the profit standard to break through. According to the financial data disclosed by Qiangshan Farming and Animal Husbandry, the net profit attributable to the parent company after deducting non income in 2020 exceeded 140 million yuan, an increase of 155% compared to the profit of 56 million yuan in 2019, but it is still difficult to avoid industry problems; Tianwei Information is a professional enterprise that provides performance management solutions for banking financial institutions. In 2020 and 2019, the non net profit deduction was 17.76 million yuan and 16.31 million yuan, respectively. It can be said that it has just passed the line. Even if it replaces the intermediary Tiantuan represented by CITIC Securities, it is difficult to escape doubts about the stability and technical competitiveness of its business, the continuous decline in gross profit margin, and the continuous increase in accounts receivable; Jin Qilin, a service provider that provides systematic solutions for the construction and management of new energy power stations, has a net profit of 27.36 million yuan in 2018 and 74.83 million yuan in 2019. According to the 2020 annual report, the net profit has exceeded 100 million yuan and the profit is significant. However, three rounds of inquiries cannot be separated from the sustainability of the business, the sporadic nature of orders, and the compliance of obtaining orders. What is even more regrettable is that, Within 4 days after Jin Qilin's application for withdrawal of listing was approved, he turned to apply for termination of listing on the New Third Board. Currently, relevant proposals such as termination of listing have been approved by the shareholders' meeting! Bofang Environmental Protection, a comprehensive service provider for water environment governance, has a net profit of 42 million yuan in 2020. However, the issue of horizontal competition between the two companies controlled by the actual controller and the issuer has not been resolved, and questions have been raised about the authenticity of related party transactions, the issuer's growth space, and business transformation risks. In addition, the National Equities Conversion Company will still conduct follow-up inquiries regarding enterprises that have terminated the review, including paying attention to the decline in Bofang's environmental performance and issuing an inquiry letter; As well as Wendao Network, which has just withdrawn its materials, after the first round of inquiries from the review department, it applied for suspension of the review but never responded to the inquiries until the application for listing was terminated. However, it is still difficult to escape the regulatory authorities' subsequent pursuit of business compliance. As the company also has search engine marketing services and public opinion monitoring services in addition to search engine optimization services and pan optimization services, and involves studying search engine ranking rules in the process of business development To study the behavior and habits of Internet users, it is necessary for the company to explain whether the business it conducts and the technology it uses involves Internet chaos such as "bidding rankings", "online water army", and "swiping orders", whether there is a risk of violating personal privacy, and whether it complies with relevant laws and regulations such as the Advertising Law, the Anti Unfair Competition Law, and the Regulations on the Administration of Internet Information Search Services.
It is not difficult to see that in order to achieve listing, achieving profit standards is the bottom line, and sustainable operation is the key; Listing is a double-edged sword, and forging iron requires its own hardness.

3、 The importance of information disclosure

According to the relevant information disclosed by the issuer, there are situations where some issuers correct the periodic reporting information and accounting errors during the reporting period. Weizhi Co., Ltd. is a service provider that provides customers with high-precision data, software, and application solutions related to spatial information. Due to multiple corrections of accounting errors, it is questioned whether there are significant accounting error corrections.

According to the Listing Rules Guidance No. 1 of the Beijing Stock Exchange, if an issuer has any accounting error correction issues during the reporting period, the recommendation institution and the reporting accountant should focus on checking and issuing clear opinions. In particular, before and after the declaration, if the issuer causes significant accounting errors to be corrected due to weak accounting foundation, imperfect internal control, major accounting omissions that fail to timely conduct audit adjustments, misuse of accounting policies or accounting estimates, and malicious concealment or fraudulent practices, it will take self-discipline and regulatory measures or disciplinary actions in accordance with relevant systems for serious treatment; Those involving false records in financial and accounting documents will be transferred to the CSRC for investigation and punishment according to law.

Companies applying for listing on the Beijing Stock Exchange are different from the traditional listing path of companies that do not disclose information. Companies applying for listing on the Beijing Stock Exchange are public companies that have already disclosed information to investors, and have already undergone a series of capital operations such as restructuring, listing, and financing. They have performed annual financial statement auditing, regular (interim) report preparation, and information disclosure procedures. Therefore, public companies on the New Third Board should treat each information disclosure with caution, To prevent a series of issues such as imperfect internal control and weak accounting foundation caused by accounting error correction or other inconsistencies in information disclosure in the future, and strictly eliminate the occurrence of major omissions, false records, and misleading statements.

Currently, whether companies that have passed the meeting or terminated the review, the time point for the first application is before the establishment of the Beijing Stock Exchange. The applicant enterprises extend from the selected layer of the New Third Board to the Beijing Stock Exchange, and some enterprises have deviations in their understanding of the overall positioning of the Beijing Stock Exchange. The Beijing Stock Exchange is targeting listed companies, not the upgrading sector of the New Third Board. Compared to the overall innovative, normative, and sustainable operation of the New Third Board, the audit standards are stricter, and the decomposition of relevant issues is more detailed. Especially in terms of technological innovation, the inquiry strategy has approached the Science and Innovation Board. As an important link between the preceding and the following in the multi-level capital market, issuers and intermediary institutions should still "look upward" in their own requirements, layout and plan in advance, and must not underestimate or intrude.

On January 28, 2022, the last trading day before the Spring Festival, the regulatory authorities conducted inquiries regarding enterprises that had previously been accepted, and at the same time, they accepted the application of one new enterprise, and agreed to the registration application for the public offering of shares by Weimao Electronics and Hongxi Technology. In addition, the National Equities Exchange Corporation has revised and publicly solicited opinions on the hierarchical management measures, optimized the time and financial conditions for the entry, and canceled the requirement of no less than 50 qualified investors. Whether it is the review speed of the Beijing Stock Exchange or optimizing the hierarchical management of the innovation layer, it reflects the continuous acceleration of the Beijing Stock Exchange. According to relevant data statistics, there are currently more than 200 new third board companies under the guidance of listing on the Beijing Stock Exchange. The future has come, let's wait and see!