China to allow unprofitable firms to go public: Shanghai Sec News

[SHANGHAI] China's top securities regulator Xiao Gang said on Thursday the country was revising its securities law to allow unprofitable companies to sell shares publicly, the official Shanghai Securities News reported on its website.

Currently, companies that apply for initial public offerings (IPOs) on the mainland must have a track record of being profitable, forcing many start-ups that have yet to turn a profit, including internet firms such as JD.com Inc and Youku Tudou Inc, to list abroad.

Mr Xiao, the chairman of the China Securities Regulatory Commission (CSRC), told the newspaper that unprofitable companies were not necessarily bad companies, and the job of judging whether they could make profit in the future should be left to the market.

Although the draft of the revised securities law scraps the profit threshold, companies filing for IPOs would be required to make full disclosure to investors, according to the newspaper.

REUTERS