A capital market leap may be in store for as many as 500 small enterprises to list on the Growth Enterprises Market, or GEM, board on the Shenzhen Stock Exchange after meeting financial rules recently laid out by China's stock authorities.

Clearer rules for listing on GEM, the Nasdaq-style ChiNext board, from the Beijing-based National Equities Exchange and Quotations, or NEEQ, open up the potential for wider access to capital in industries seen as cutting edge such a biotechnology, software and finance.

A Nov 20 circular from the China Securities Regulatory Commission gave guidance on two key financial requirements for companies now listed on NEEQ to obtain a GEM listing, profitability and net assets.

The circular said enterprises listed on NEEQ should either be profitable for two consecutive years with combined net profit no less than 10 million yuan ($1.57 million), or be profitable in the latest year with the annual revenue of no less than 50 million yuan.

Net assets in the most recent annual results must be less than 20 million yuan without any undistributed deficit, the circular said. The guideline measures a company's financial backing of gross assets minus liabilities.

About 700 NEEQ-listed enterprises met the core financial conditions for 2013 and 2014, according to data from financial information provider Shanghai Wind Information Co Ltd, but other requirements need to be met as well.

"The actual number of enterprises which are qualified to transfer to the GEM board may be around 500, as some enterprises which met financial requirements have not yet met requirements for enterprise governance, such as stability of major executive officers, and operation terms, according to a research note from Shenzhen-based Essence Securities Co Ltd.

Still, the prospects for many NEEQ firms switching listings to GEM are high in the coming years, according to Wind Information.

An estimated 85 percent of the 2,318 NEEQ-listed firms were profitable in 2014.

However, any valuation gaps in average price-to-earnings ratios for firms that move to GEM from NEEQ, or other markets, need to be understood by investors before and after a switch.

"Investors need to focus on performance and healthy growth of a company when making investment decisions.

"And as multiple-tier capital markets are emerging and evolving in China, there are more opportunities for good values to be picked," said Li Daxiao, chief economist at Yingda Securities Co Ltd.