A-share market to allow listings of subsidiaries

China will allow subsidiaries of qualified mainland-listed firms to go public on the A-share market as independent entities, catering to needs of listed firms with diverse business scopes, the country's top securities regulator said on Friday.

A mainland-listed firm that satisfies a set of requirements will be allowed to get its subsidiary listed on domestic bourses via an initial public offering or a reverse merger, the China Securities Regulatory Commission (CSRC) said in draft rules issued on Friday.

Among the requirements are that the listed firm has been listed for more than three years and reported net profit, after deducting that from the subsidiary to go public, of at least 1 billion yuan ($141 million) over the recent three fiscal years.

At present, A-share listed firms are only allowed to seek floats of subsidiaries on overseas bourses or on the new STAR Market on the Shanghai Stock Exchange.

As listed firms have made their business strategies more diversified in recent years, their need for floating subsidiaries to achieve a balanced development of different businesses has increased, the CSRC said in an announcement.

The commission therefore decided to relax related rules to better serve technology innovation and high-quality economic growth, the announcement said.

The CSRC is soliciting public comments on the draft rules and will make revisions accordingly before the rules take effect.