China to resume IPOs in 2014 – CSRC

Domestic stock exchanges have been closed to new listings for more than a year. There are more than 760 firms in the queue waiting for IPO approvals and it will take about one year to complete an audit of all the applications, the CSRC said.

"After this announcement, it would take about one month of preparatory work before any firms list," the regulator said in a statement.

The move comes as the CSRC unveiled a long-awaited IPO reform plan on Saturday, advocating a market-driven system to help boost market transparency. This includes the adoption of a registration-based system for IPOs in place of the current approval-based system.

The initiative was released two weeks ago following a meeting of the Communist Party's Central Committee.

Under the registration system, the regulator will limit its influence in approving the IPO applications, while IPO sponsors, law and accounting firms will bear more responsibility for ensuring listing candidates' financial information is accurately disclosed.

"We have to emphasize that a new registration system doesn't mean that we won't supervise public offerings anymore," the CSRC said. "It also doesn't mean we don't audit the IPO application and any junk stocks could issue. Rather, it means we will reform the auditing system."

In this context, listing candidates will be required to submit their prospectuses and publicly disclose their financial documents earlier, allowing the regulator and investors sufficient time for review. Where sponsor or advisor negligence is judged to have contributed to a serious loss for investors, they will have to compensate those investors.

In a separate statement, the CSRC said it would draft rules for a pilot program allowing companies to sell preferred stock. Preference shares are intended to help deepen corporate reform, provide a flexible direct financing tool and promote mergers and restructuring.

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• Topics
• Greater China
• Regulation
• Exits
• China
• IPO
• CSRC
• Exit