China securities regulator implements new IPO rules designed to boost market

CHINA’S securities watchdog has implemented new initial public offering (IPO) rules that it hopes will encourage new listings and boost corporate fundraising, while protecting information disclosure and transparency as Beijing seeks to revive a Covid-ravaged economy.

The new rules – first outlined by the China Securities Regulatory Commission (CSRC) on Feb 1 – are designed to simplify listing requirements and improve registration and vetting procedures.

The new IPO system was first adopted by the tech-focused STAR Market and later rolled out to start-up board ChiNext and the Beijing Stock Exchange. It will now be expanded to the main boards in Shanghai and Shenzhen, homes to many Chinese blue chips.

The new system also sets no administrative restrictions on the issuance price and size of new shares.

Key to the changes is the so-called registration system, which replaces the previous approval-based IPO system for the main boards in the Shanghai and Shenzhen stock markets, under which companies had to go through strict vetting process by the CSRC.

Under the new system, stock exchanges will be responsible for vetting IPOs with a focus on information disclosure, while the CSRC will only make sure listings are in line with national industrial policy.

The CSRC said the implementation of the rules marked the “extension of the registration system to the entire market”, and was “a milestone in the reform and development of China’s capital market”.

The Shanghai Stock Exchange and the Shenzhen Stock Exchange said on Friday (Feb 17) they would take responsibilities during the vetting process and take more measures to prevent the risk of corruption and build a “disciplined” IPO system. REUTERS