Research On The Motivation And Effect Of The Return Of Red-Chip Enterprises On The Science And Technology Innovation Board

In the early 1990 s,due to the strict verification system and financing restrictions in the A-share market,many domestic companies listed overseas and became red-chip enterprises.In recent years,red-chip companies began to want to return to A-shares because of the high cost of listing overseas and the harsh environment.However,before the establishment of the Science and Technology Innovation Board,the two optional return paths for red-chip enterprises--dismantling the red-chip structure and issuing China Depositary Receipts were both fatal difficulties,leading to the withdrawal intention of many high-quality red chip enterprises.For the long-term development of the A-share market,authorities introduced a series of policies in 2019 to allow red-chip companies to list directly on the Science and Technology Innovation Board without dismantling the red-chip structure.However,due to the fact that the relevant policies were officially introduced in 2019,there are few researches related to the motivation,path,effect,risk and protection of investors’ rights and interests of red-chip enterprises returning to the Science and Technology Innovation Board.This paper takes the listing of China’s first A-share + H-share red-chip enterprise SMIC on the Science and Technology Innovation Board,which retains the red chip structure and returns to the Science and Technology Innovation Board,as A case.By understanding its corporate background and other information,this paper reviews its regression path,studies and analyzes its regression motivation,analyzes its listing effect from the aspects of financing effect,short-term market reaction,financial performance and so on,and explores the risks in its listing process.In addition,the paper studies the protection of investors’ rights and interests in the return of red-chip enterprises,aiming to provide certain references for the red-chip enterprises and the regulatory authorities of the board that plan to return to A shares through direct listing on the Science and Technology Innovation Board.There are two main conclusions in this study.First,the reasons for SMIC’s listing on the Science and Technology Innovation Board include: Firstly,SMIC was listed in the Entity List by the US government,its core business was limited,and it was excluded by investors;Secondly,the existing financing channels of SMIC after its withdrawal from the New York Stock Exchange have poor financing capacity,which cannot meet its high demand for R&D investment.Finally,the direct listing of SMIC on the Science and Technology Innovation Board can save capital cost and time cost.Second,the overall financing effect,short-term market reaction and financial performance of SMIC’s landing on the Science and Innovation board are significantly positive.Based on the research conclusions,this paper puts forward the following suggestions: For red-chip enterprises planning to return to the A-share market,there are three return paths to choose at present,and the three paths have their own advantages and disadvantages,which are suitable for different enterprises.Red-chip enterprises should combine their own reality to choose their own path;For the regulatory authorities,relevant requirements should be formulated from the aspects of articles of association and case analysis,so as to solve the differences in domestic and foreign legal systems and the legal risks of VIE structure,so as to protect the legitimate rights and interests of investors in the A-share market.For investors,they should avoid blindly pursuing the stocks of hot enterprises in the market,and at the same time,they should make a rational analysis based on their own economic conditions and risk bearing capacity,and give a reasonable stock price valuation.