The China Securities Regulatory Commission ("CSRC") recently issued the Guidelines for Evaluation of Science and Technology Innovation Attributes (for Trial Implementation) (the "Guidelines"), immediately effective from the date of issuance.

The Guidelines clarify the basic conditions to be recognized as enterprises featuring science and technology innovation, as well as some exceptions in this regard, and provide a framework of evaluation indicators regarding science and technology innovation attributes. The framework of evaluation indicators contains three general indicators and five exceptions. Three general indicators are "the amount of money invested in research and development or the proportion of research and development input in the business revenues", "patented inventions", and "business revenues or the compound annual growth rate of business revenues". These general indicators are mainly used to measure an enterprise's research and development input, fruits and their actual impacts on its business operations, and could give a relatively full picture of the enterprise's research and development input, achievements, and the scientific and technological content of the achievements. According to the Guidelines, an enterprise will be recognized as one featuring science and technology innovation, provided that it satisfies all requirements under three general indicators, or that it falls in any of the five exceptions, although it does not satisfy all requirements under three general indicators.

(Source: China Securities Regulatory Commission)