The Shanghai Stock Exchange (SSE) has launched a sweeping new set of business rules aimed at deepening reforms of the STAR Market and boosting its appeal to global investors and high-growth technology firms. These changes reflect China’s continued drive to position the STAR Market as a premier platform for nurturing cutting-edge innovation and channeling capital into the country's new growth engines.

At the heart of this reform is the official introduction of the Science and Technology Innovation Growth Tier—a pivotal measure designed to support high-potential, unprofitable tech companies that are still in their early stages of commercialization. Thirty-two existing firms have already been placed into this new tier, and newly listed unprofitable companies will automatically join upon debut.

To support this move, the SSE released three new business guidelines and updated two existing ones. The new rules include:

Guidelines No. 5: Governing the new Sci-Tech Growth Tier

Guidelines No. 7: Introducing a pre-review mechanism to protect sensitive company information during the IPO process

Guidelines No. 8: Defining the role of senior professional institutional investors in identifying high-quality candidates for STAR Market listing

These efforts aim to make the STAR Market more inclusive, adaptive, and investor-friendly—fostering a robust ecosystem where innovation and capital can thrive together.

Key Highlights from the New Rules

1. Sci-Tech Growth Tier: Focused Support for Unprofitable Innovators

The new tier provides a tailored framework for unprofitable but promising tech firms. Entry requirements remain unchanged for existing companies, while more stringent exit conditions for new entrants are intended to spur faster commercialization and market discipline. The “U” identifier after stock tickers, along with “Cheng” and “Cheng1” labels, will clearly distinguish between newly listed and existing companies within the tier.

Companies in this group must disclose risks more fully—particularly around profitability and technological uncertainty—while sponsors and supervisory bodies are held to higher standards of transparency and diligence.

2. Pre-Review Mechanism: Shielding Sensitive Information

Inspired by international practices, the pre-review system offers a safe pathway for select tech firms—particularly those working on core or confidential technologies—to begin IPO discussions without premature disclosure. Though it doesn’t replace the standard listing review process, it serves as a valuable filter for companies where public scrutiny too early could jeopardize operations or competitiveness. Issuers must justify their use of this route, and all communications during pre-review remain confidential until formal IPO filings begin.

3. Senior Professional Institutional Investors: Enhancing Market Validation

For companies pursuing IPOs under the STAR Market's stringent fifth listing standard, a new system encourages voluntary identification of sophisticated institutional backers. These must meet strict criteria—such as holding a minimum 3% stake for over 24 months or investing at least RMB 500 million—and have a proven track record in backing successful tech firms. This mechanism brings an added layer of professional validation without lowering listing standards.

4. Investor Suitability and Risk Disclosure

To protect retail investors while maintaining market access, the SSE is strengthening the risk disclosure regime. Retail investors must have RMB 500,000 in assets and two years of trading experience to access STAR Market stocks. Moreover, those wishing to invest in unprofitable Sci-Tech Growth Tier companies must sign a specialized Risk Disclosure Agreement, detailing potential risks ranging from financial losses to technology failure.

Securities brokers are responsible for ensuring these agreements are properly executed before investors participate in IPOs or secondary trades.

Market Feedback and Rule Refinement

The latest rules followed an open consultation period in June, during which the SSE received over 40 comments from market participants. In response, the Exchange adjusted several provisions—for instance, clarifying pre-review scenarios and refining metrics for exiting the Sci-Tech Growth Tier. The SSE pledged continued openness to feedback, promising future updates to maintain regulatory flexibility and market responsiveness.

What Comes Next?

The SSE is set to actively promote the implementation of these new rules while coordinating technical systems and public communications. It will continue to:

Align reforms with broader capital market goals

Educate investors and market participants on rule changes

Increase regulatory oversight to guard against abuses like insider trading

Ensure steady operations and protect market integrity amid reform rollout