Reverse Merger (III)

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Reverse Merger (III)

Difference between going public and listing

Generally, a stock will be qualified for going public upon its issuance in China and therefore, the Chinese investors are not quite sure of the difference between listing and going public. In North American capital market, “going public” means the companies issuing its stock or holding the external stock shall turn it into a public company, and its stock can be dealt in a public market—such market may be NYSE, NASDAQ, OTCBB or Pink Sheet. Moreover, going public is to allow the public to buy the stock originally owned by a private company, and such private company shall become a public company therefore. “Listing” means that, a company complying with some specific standards for going public goes to a listing service organization as designated by SEC, such as NYSE, NASDAQ, AMEX, for the sake of listing and trading. It can be seen here that, it is not doomed to gain financing when a company goes public. If a Chinese company expects to go public and to finance synchronously, it shall consult its financial adviser or intermediary company and define the necessary strategy prior to the implementation of reverse merger, while it shall not misunderstand going public as financing.

Cost and time for reverse merger

The cost and time of reverse merger is not fixed, and depend on the case as it may be. For example, the marked price of a shell company may be USD50,000 or USD0.5 million. In accordance with the specific condition of shell companies, the time for a company to apply for going public may be different. Typically it will take half a year or so to take a reverse merger, and cost USD0.5~0.7 million.