China has decided to expand its over-the-counter (OTC) market to all qualified small and medium-sized enterprises (SMEs), according to an official statement released on Saturday.

The State Council, China's Cabinet, announced that the OTC market, a national share transfer system for SMEs that is also known as the New Third Board will be expanded to cover all innovative and promising companies.

Qualified companies can apply for listing on the board for public share transfer so as to realize equity and bond financing as well as asset restructuring, according to the statement.

The companies should ensure accurate and complete information disclosure on their operations.

The statement said that qualified enterprises can apply directly to be listed on the New Third Board through stock exchanges.

The State Council demanded the China Securities Regulatory Commission (CSRC) simplify approval procedures for higher efficiency in accordance with the reform plan for the initial public offering system unveiled on Nov. 30.

The CSRC will exempt approval procedures for applying joint-stock companies with 200 or fewer shareholders and listed ones with private placement and no more than 200 shareholders, according to the statement.

The State Council also required nurturing of institutional investors like security companies, insurance companies, investment funds and those overseas.

The CSRC vowed to enhance monitoring and strictly punish illegal activities like false disclosure, insider trading and market rigging, in order to preserve the rights of investors.

The country's OTC board was officially established in January after years of trials in several cities.

The New Third Board was initiated in 2006 as an experimental platform intended to facilitate financing for China's non-listed small, promising high-tech enterprises in Zhongguancun Science Park, allowing them to transfer shares and raise funds for specified purposes.

The trial was later expanded to cover several high-tech zones in Shanghai, Wuhan and Tianjin. As of the end of 2012, around 200 companies traded on the New Third Board.

In 2012, transactions on the board decreased 22.8 percent from 2011, and the average funding per firm came in at only 33.8 million yuan ($5.53 million), far from enough to feed China's hungry SMEs.