To further strengthen the targeted support of the bond market for sci-tech innovation in China, the Shanghai Stock Exchange (SSE) issued and implemented the Guidelines of Shanghai Stock Exchange for the Application of the Rules for Issuance and Listing Review of Corporate Bonds No. 4 – Sci-Tech Innovation Corporate Bonds (hereinafter referred to as the Guidelines for Sci-Tech Innovation Bonds) on May 20. Marking the official launch of corporate bonds for scientific and technological innovation, the introduction of the guidelines is another effective measure for the bond market of the SSE to further contribute to the country’s innovation-driven development strategy and industrial transformation and upgrading.
Under the guidance of the China Securities Regulatory Commission (CSRC), the SSE has implemented the national strategies and advanced product innovation by basing the development of the bond market on the founding mission and major purpose for the financial sector to serve the real economy. Since 2017, the SSE has carried out the pilot program of entrepreneurship and innovation bonds, and in 2021, it guided high-quality companies in issuing the corporate bonds for sci-tech innovation purposes under the framework of entrepreneurship and innovation bonds. The successful issuance of the bonds with the raised funds invested in the cutting-edge fields of sci-tech innovation such as integrated circuit and artificial intelligence has played an effective role of demonstration. On the basis of the prior pilot program, the SSE has officially launched the specific type of corporate bonds for sci-tech innovation. All this aims to clarify the relevant institutional arrangements and regulate the follow-up business operations for the sci-tech innovation corporate bonds such as application for issuance, listing and transfer.
The sci-tech innovation corporate bonds refer to the corporate bonds issued by the companies in the field of sci-tech innovation with the raised funds mainly used in the area of sci-tech innovation. The Guidelines for Sci-Tech Innovation Bonds mainly make specific provisions in the following four aspects. First, the scope of bond issuers is clarified. Support will be provided for four types of issuers engaged in sci-tech innovation, upgrading of sci-tech innovation, investment in sci-tech innovation and incubation of sci-tech innovation. The support will cover companies focusing on incubation, small and medium-sized enterprises characterized by sci-tech innovation, and large-scale mature enterprises that are in urgent need of industrial upgrading. Second, the support modes are specified, taking full advantage of the flexible use of the funds raised through the corporate bonds, as the raised funds can be invested in the field of sci-tech innovation through various means such as R&D investment, project construction, mergers and acquisitions, operation and equity investment. We will also support the financing of core science and technology enterprises to feed back the upstream and downstream of the industrial chain, and allow it to be used to replace previous investment. Third, the standards for information disclosure and verification are clarified. We have worked out specific information disclosure and intermediary verification requirements for different types of entities and different purposes of raised funds, and made specific arrangements for continuous information disclosure. Fourth, supportive measures are specified. Among other things, rationalized arrangements such as the unified application and early application are offered to high-quality and mature issuers for sci-tech innovation. We will encourage the issuers to innovate in the terms of issuance and the use of raised funds, and relax the financial reporting period for the sci-tech innovation corporate bonds non-publicly issued by the companies with specific functions such as achieving breakthroughs in key and core technologies and implementing national major sci-tech programs.
Going forward, under the unified leadership of the CSRC, the SSE will fully stimulate the motivation of market players for participation, and guide qualified issuers, especially high-quality private enterprises and other main forces of China’s innovation-driven development, in issuing bonds for financing, making bond-based direct financing play a more active role in boosting the national strategy of sci-tech innovation. At the same time, with strong support for the financing of the industrial entities for transformation and upgrading, we will promote the high-quality development of the bond market with higher quality and larger scale of the SSE’s bond market.