The China Securities Regulatory Commission (CSRC) issued an opinion establishing a new Sci-Tech Innovation Growth Tier within the STAR Market to better accommodate unprofitable, R&D-intensive technology companies, alongside a package of reforms spanning issuance, disclosure, investor suitability and product development. All unprofitable technology companies will be included in the new tier, with differentiated exit criteria. Newly registered companies will exit if either net profit is positive in each of the most recent two years with cumulative net profit of at least CNY 50 million, or net profit is positive in the most recent year with revenue of at least CNY 100 million; existing unprofitable companies will exit based on current rules for removing the special identifier. Stocks in the tier will add a “U” (Unprofitable) suffix, with enhanced periodic disclosure of the reasons for continued losses and prominent risk warnings on the first page of announcements. Individual investors must meet STAR Market suitability requirements, and those investing in newly registered unprofitable companies must sign a dedicated risk disclosure statement; securities firms are tasked with strengthened suitability assessments and risk communication. Complementary measures include piloting a “seasoned professional institutional investor” regime for issuers using the STAR Market’s fifth listing standard, a non-public pre-IPO filing pre-review mechanism for eligible high-quality tech firms, expanded fifth-standard coverage to areas such as artificial intelligence, commercial space and the low-altitude economy, and permission for in-review unprofitable issuers (or subsidiaries) to raise equity from existing shareholders for specified needs such as ongoing R&D. The opinion also points to improved refinancing facilitation, optimised criteria for recognising strategic investors, support for listed companies to absorb and merge STAR Market firms listed for less than three years (subject to lock-up enforcement), and further development of STAR Market indices, ETFs and related derivatives. The CSRC signalled that some incremental measures will be trialled on the STAR Market first and later extended to other segments when conditions are mature, while pairing reforms with strengthened risk monitoring, early correction mechanisms and tougher enforcement against fraudulent issuance and financial misstatement.

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