GEM Opens Door to VC Partnership

The Issuance Review Committee of the Growth Enterprise Market (GEM) has opened the door to VC partnerships, and many of the first applicants for GEM listings have received the investments from limited partnership VCs. This marks that the issue of securities account opening by VC partnerships has been resolved on the GEM, and the IPO as an exit channel which has long distressed VC partnerships has been opened.

In the past, although China's Law on Partnership Enterprises has defined the legal status of limited partnerships, they have suffered from heavy resistance in opening shareholder accounts. As a result, a Chinese partnership had to build two systems in running projects - a partnership will engage in the early-stage investment, and transfer the investment to another system - a non-partnership company after the IPO preparation stage starts.

To date, apart from Shenzhen Nanhai Growth Venture Capital Limited Partnership - the first partnership in China, Shenzhen Oriental Fortune Capital (limited partnership), among others, have established the securities accounts for limited partnerships with China Securities Depository and Clearing Co., Ltd. Some of the recent applicants for GEM listings have received the investments from both partnerships.