Several families are happy and some are sad.

With the listing announcement of no less than 10 new shares in the selected layer of the new third board, the opening time of the Beijing Stock Exchange (hereinafter referred to as the Beijing Stock Exchange) was officially locked in November 15.

Coupled with the 71 selected layer stock enterprises that have been transferred, at least 81 selected layer enterprises will become listed companies on the opening day.

In the face of the determination of the upgrade of the selected layer, there are also some IPO declarations of the selected layer of the new third board companies, but they fall into greater uncertainty because they conflict with the existing spin-off listing rules.

On November 5, 10 days before the opening of the Beijing Stock Exchange, Zhongbing Communications (837567.NQ), a company listed in the innovation layer of the new third board, announced that it had submitted an application for a public offering and listing at the selected level to the National Stock transfer Company, and started the suspension process.

However, Zhongbing Communications is also a holding subsidiary of Northern Navigation (600435.SH). Once the selected layer is upgraded to the Beijing Stock Exchange and the stock market is opened, it means that the IPO of Zhongbing Communications will constitute a spin-off listing. However, from the perspective of Northern Navigation and Zhongbing Communications, it does not meet the conditions set out in the "provisions on domestic listing of listed companies' spin-off subsidiaries" (hereinafter referred to as "spin-off provisions"). And whether the IPO of Zhongbing Communications can be promoted as desired, obviously remains to be further clarified by the regulatory level.

Or hindered by the break-up rules.

According to industrial and commercial data, Northern Navigation is the largest shareholder with a 48.44% stake in Zhongbing Communications, while the actual controllers of Northern Navigation and Zhongbing Communications both belong to the China Arms Industry Corporation.

As a military communication equipment enterprise, the performance of Zhongbing Communications has shown a trend of rapid growth in the past year and a half.

Its reported operating income in 2020 and 2021 was 592 million yuan and 205 million yuan respectively, an increase of 31.36% and 118.54% respectively over the same period last year, while the net profit of the parent company was 202 million yuan and 24 million yuan respectively, up 110.89% and 110.64% respectively.

In the latest annual report, more than 98% of the revenue of Zhongbing Communications comes from the contribution of the military business, and the rapid growth of performance will obviously give a boost to the company's further capital operation.

However, with the opening of the Beijing Stock Exchange on November 15, the selected layer IPO, which has already been declared by Zhongbing Communications, will constitute a formal spin-off and listing operation.

According to the current financial situation of Zhongbing Communication and its controlling shareholder, Northern Navigation, it does not meet the conditions for spin-off and listing.

According to the requirements of the spin-off regulations, the parent company of the spin-off and listing has made continuous profits in the last three fiscal years and after deducting the net profit of the spin-off subsidiaries enjoyed by rights and interests, the cumulative net profit belonging to the shareholders of the listed company shall not be less than 600 million yuan.

However, even if Northern Navigation does not deduct the part of holding the communications rights and interests of Chinese soldiers, its total net profit returned to its mother in the past three years is only 192 million yuan, which obviously cannot meet the requirements of the split. Northern Navigation also admitted: "at present, the company and its subsidiary Zhongbing Communications related financial indicators do not meet the split conditions."

In the view of industry insiders, if Zhongbing Telecom can implement the selected layer IPO process before the opening of the Beijing Stock Exchange, it is still expected to circumvent the restrictions on spin-off listing, but now the opening of the Beijing Stock Exchange is imminent, making the IPO planning of Zhongbing Telecom into controversy.

"if the opening time of the Beijing Stock Exchange can be delayed, then it is possible for China Bing Communications to catch the 'last bus' of the selected layer to spin off IPO, but now that the opening of the Beijing Stock Exchange is certain, it is clear that it is impossible for China Bing Communications to complete the vetting process before then." An investment banker in Beijing said, "considering that the spin-off regulations are regulations at the CSRC level rather than those of the Shanghai and Shenzhen stock exchanges, there is no doubt that the IPO of Zhongbing Communications is more uncertain."

It is worth mentioning that Zhongbing Communications is not the only new third board company under Northern Navigation. Northern Navigation is also the controlling shareholder of a 43.06 per cent stake in another listed company, according to Wind.

The tutor is dissatisfied with the quick declaration in February.

As the controlling shareholder of Zhongbing Communications, Northern Navigation does not deny that the opening of the Beijing Stock Exchange may cause the risk of spin-off and review of Zhongbing Communications.

"whether the listing of the selected layer of the subsidiary needs to comply with the provisions on the domestic listing of listed companies in the spin-off of its subsidiaries, the subsidiary Zhongbing Communications and sponsor agencies are still under demonstration." Northern Navigation frankly said, "this subsidiary Zhongbing Communications only carries on the selected layer declaration in accordance with the current system and rules, if the relevant system and basis changes in the future, the follow-up declaration and review procedures will face significant uncertainty."

According to the person, some of the projects originally planned to be spun off in the select layer IPO once accelerated the pace of operation for fear of triggering spin-off listing restrictions in the future.

"some subsidiaries of listed companies listed on the new third board have plans to log in to the selected layer IPO, and most of them are promoting the pace, because once the selected layer becomes the Beijing Stock Exchange, it is easy to be restricted by the spin-off." "but now, once the Beijing Stock Exchange opens, the listing plans of Zhongbing Telecom and some subsidiaries of later listed companies may face scrutiny of the conditions for a spin-off listing," the investment banker said. "

As a matter of fact, the IPO planning of Zhongbing Communications did show a relatively urgent feature of "rushing to work." for example, it only submitted guidance materials to the Henan Securities Regulatory Bureau on September 7, while it started to apply on November 5, and the whole coaching period took less than two months.

"the establishment of the Beijing Stock Exchange, announced on the evening of September 2, was tutored by the issuer a few days later." A source close to Zhongbing guessed, "although there may have been plans before, from the point of view of time, the company obviously hopes to be able to go to the selected floor before the opening of the Beijing Stock Exchange."

However, according to the regulations on initial Public offering and listing guidance issued by the Securities Regulatory Commission on September 30, it is clearly stipulated that the guidance period shall not be less than three months in principle.

This means that after the opening of the Beijing Stock Exchange, it will be difficult for Zhongbing Communications to meet the above regulatory requirements, both in terms of listing conditions and tutoring time.

If the spin-off listing review is triggered with the opening of the Beijing Stock Exchange, Zhongbing Telecom is not the only listed company affected by this policy. Steel Silver ecommerce under Shanghai Steel Union and Zhuhai Port Sheng under Zhuhai Port have all started selective layer listing tutoring, and its offering plans for non-specific qualified investors are likely to be affected.

There are also industry insiders suggest that, considering that there have been companies such as 835185NQ, Sen Xuan Pharmaceutical (830946NQ), 430418.NQ, which do not meet the conditions for spin-off, and are expected to be transferred to the North Stock Exchange for listing on the new third board, considering the fairness before and after the market, we should adopt the new and old cut-off principle to exempt the subsidiaries of some listed companies that have planned for a selected layer of IPO to be exempted from spin-off examination.

"previously, some companies that do not meet the conditions for spin-off are about to achieve spin-off listing through the selected layer policy. in view of the abrupt nature of the establishment of the North Stock Exchange, consideration can be given to setting a corresponding time point, for example, with reference to the tutoring node or declaration time point, some listed companies are exempted from the review of spin-off listing in accordance with the principle of separation between the new and the old." "this will help take into account the fairness of the market, and at the same time increase the supply of high-quality companies for the Beijing Stock Exchange," said an investment banker in Shanghai. "