Subsidiaries of Chinese mainland listed companies can launch initial public offerings on the country's growth-enterprise market, according to China Securities Regulatory Commission.

The parent company must have been profitable for three straight years and not running the same business as the listed subsidiary.

A subsidiary's net income can't exceed 50 percent of its parent's and its net assets should account for no more than 30 percent of its parent's. The parent can't use any proceeds it raises from the public in the subsidiary.

Also, executives and their relatives of the parent can hold no more than a 10 percent stake of the subsidiary ahead of its IPO, the regulator said.

Stocks on ChiNext suffered widespread losses yesterday and 11 stocks dropped by the daily cap of 10 percent as the news indicated that the government will increase supplies to the board to prevent overheating.

The regulator has reviewed 106 companies which applied to float shares on ChiNext, China's Nasdaq-style growth-enterprise market that offers smaller companies more financing channels, and 86 of them have been approved.

Prices of stocks on the board have reached nearly 80 times their earnings, compared with the average 20 times of blue chips.

"The valuation is too high, and stocks on the board are expected to decline by 20 percent to 30 percent in a short term," said Liu Jingde, a Cinda Securities Co analyst.