A Case Study Of Three Stars New Materials Co’s Successful Transition From New OTC Market To Main-Board Market

The new OTC is the major OTC market in China and it is also an important part of China’s multi-level capital market.The new OTC has expanded in 2013 and in 2014 it has introduced the market-maker system.After that,it has stepped into a fast growth stage.In 2016,the number of listed companies exceeded ten thousand,more than the number of listed companies in Shanghai and Shenzhen Stock Exchanges.However,many listed companies decided to transfer to other capital markets due to the scarcity of market liquidity,the low transaction volume and poor financing ability in this large capital market.At the same time,the quality of companies listed on New OTC market is big different.Therefore,it is imperative to establish a perfect transfer system and to complete the OTC market system.This article selects Zhejiang Three Stars New Materials Co.,Ltd the first company transferred from new OTC market to the main board market as the research object.By applying the case study method,I conducted an in-depth analysis of the internal and external motivations of Samsung’s new materials before transfer to the main board,the expense cost and time cost of the transfer process,and the effect after the transfer,and have summarized the successful experience of the company.in order to provide valuable experience for companies that intend to transfer in the future.At the same time,combining with the development status of China’s new OTC market,it points out the problems existing in the current new OTC market transfer mechanism,and put forward suggestions for improving the mechanism of the new OTC market transfer mechanism in order to complete the transfer mechanism.By studying the case of this company,this paper find that Three Stars New Materials Co.started to transfer to other market because of the company needs to expand its scale and upgrade its products,and the new OTC market cannot meet its financing needs,then choose to transfer from the new OTC market to the Main-board market.However,Three Stars New Materials Co.spend a lot of expense and time in the process of transfer.Meanwhile,the transfer of the new OTC market to the Main-board also enabled Three Stars New Materials Co.to solve the financing problem of expanding the production line in the short term,financial situation has improved and enhanced the financing ability and liquidity of Three Stars New Materials Co.Based on the analysis of Three Stars New Materials Co.from the new OTC market to the Main-board process,this paper summarizes the experience from five aspects: Regulated company system,no “three types of shareholders” issues,perfect information disclosure system,reasonable choice of accounting firms and emphasis on product innovation.For the new OTC market mechanism,there are five problems,such as high transfer cost,single transfer mechanism,lack of efficient transfer channel,‘Three types of shareholder issues’ and supervision system needs to be completed.This paper believes that it can be solved by taking a policy perspective,directly reduce the transfer costs of listed companies and shorten the queuing review time,to reduce the company’s transfer costs,you can also explore a variety of transfer methods,such as backdoor listings,to help high quality companies turn to the Main-board.Then establish a convenient transfer channel for the original IPO channel to reduce complex procedures to complete the transfer mechanism.Finally,in the aspect of supervision and management,the information disclosure system and the market supervision system should be strengthened to reduce information asymmetry and enhance market liquidity and investor confidence to promote the healthy development of the new OTC market.