On April 12, 2024 China’s Securities Regulatory Commission (CSRC) proposed increasing the required number of patents to list on the Shanghai Stock Exchange Science and Technology Innovation Board (somewhat analogous to NASDAQ). Specifically, the CSRC released the Guidelines for the Evaluation of Science and Technology Innovation Attributes (Trial) (科创属性评价指引(试行)) for commenting raising the number of patents related to the company’s main business to 7 from 5.

Other proposed changes include:

“the cumulative amount of R&D investment in the past three years has exceeded 60 million RMB” is changed to “more than 80 million RMB;” and “the compound growth rate of operating income in the last three years has reached 20%” is changed to “25%.“

Accordingly, Article 1 would read:

 Support and encourage companies in relevant industries and fields that meet the following four indicators to apply for listing on the Science and Technology Innovation Board:

(1) R&D investment in the past three years accounts for 5% of operating income or more, or the cumulative amount of R&D investment in the past three years is more than 80 million RMB;

(2) the proportion of R&D personnel in the total number of employees in that year is not less than 10%;

(3) more than 7 invention patents applied to the company’s main business;

( 4) The compound growth rate of operating income in the last three years has reached 25%, or the operating income in the last year has reached 300 million RMB.

While China’s National Intellectual Property Administration (CNIPA) announced in the “Notice of the CNIPA on Further Strictly Regulating Patent Application Behavior” (国家知识产权局关于进一步严格规范专利申请行为的通知) the end of all patent subsidies by 2025, other market distorting incentives remain including reducing the corporate income tax rate to 15% when a company qualifies for High and New Technology Enterprises (HNTE) program that requires, in part, IP ownership.

The deadline to comment is April 27, 2024. The announcement and full text can be found here (Chinese only).