China unveils rules to check "excessive" additional fundraising by companies

[SHANGHAI] China's securities regulator unveiled new rules on Friday to restrict "excessive" and "frequent" fundraising by some listed companies, with a focus on private share placements.

A listed company's private share placement plan must not exceed 20 per cent of its share base, and should not be made within 18 months of a previous fundraising by the firm, the China Securities Regulatory Commission (CSRC) said in a statement on its official microblog.

In addition, non-financial companies with "relatively big" holdings in financial assets or wealth management products were barred from applying for additional fundraising.

The new rules were effective immediately.

The CSRC said that some listed companies had raised capital that far exceeded their actual needs, and had kept the money idle or invested it in wealth management products.

China's private placement market jumped five-fold from 2013 to 1.18 trillion yuan (S$244.022 billion) in 2016, dwarfing the market for initial public offerings (IPO), which raised just 147.6 billion yuan last year.

Reuters reported on Friday that many in the market had been expecting a tightening of the rules governing private placements.

REUTERS