China ushers in new IPO registration system but it’s likely to come with ‘Chinese characteristics’
Faster initial public offering approvals key to stability, fund manager says
Beijing officially kicked off the long-awaited “registration-based” initial public offering reform on Wednesday night in a move aimed at reducing government intervention and easing the burden on the country’s cash-strapped enterprises, but analysts said the system will be one with “Chinese characteristics”.
The China Securities Regulatory Commission said detailed rules for the new system would be released for consultation, without specifying a timetable.
“The transition to a registration-based approval system is a gradual process. The authorities will not lose control over [listing] prices and pace completely. Nor will they quicken approvals significantly,” the regulator said.
The transition to a registration-based approval system is a gradual process
The mainland is expected to speed up approval of new listings, a source close to the CSRC say, but the new process is unlikely to be free of intervention by regulators or burdensome profitability requirements in the near future.
CSRC chairman Xiao Gang is keen on pushing out the registration-based system “as soon as possible”, but a source said regulators were disagreeing strongly on the details.
Now that the new policy has been unveiled, however, the source said: “Don’t expect a US-style system. It will be a system with Chinese characteristics.”
The term “registration-based IPO” refers to a Western-style system that imposes a lower threshold and simplifies the listing process while emphasising post-listing information disclosure.
That is different from the current approval-based system, which relies on strict financial requirements and stringent reviews by the CSRC’s public offering review committee, and imposes a cap on valuations.