ExclusiveCSRC may cut profit periods to help more companies sell stocks
Internet-related companies planning IPOs must get prior approvals from the Cyberspace Administration of China, in addition to the CSRC’s approval.
China’s securities regulator is considering lowering the profitability threshold for companies to qualify for a listing on the main board of Shanghai and Shenzhen exchanges, in a move that would make it easier for new businesses to raise capital, according to two sources close to the watchdog.
The China Securities Regulatory Commission (CSRC) is considering a plan to revise its listing requirements to enable companies with at least two consecutive years’ profit track record to sell shares on the main board, shorter than the current three years, the sources told the South China Morning Post.
“Changing the requirements will unlock opportunities for both start-ups and investors and is something that should have been done years ago,” said Shaun Rein, managing director of the China Market Research Group in Shanghai.
“Many Chinese firms that would prefer to go public in China ended up listed in the US instead because of onerous profit requirements. In fact, many great companies like Amazon never would have been allowed to go public in China if they had been Chinese start-ups.”
The regulator may keep the pace of approving initial public offerings (IPOs) at about 10 per week, the sources said.
The pace of IPO approvals has accelerated in China since late 2016, in a move by financial regulators to broaden the avenues of capital raising for Chinese companies, and to reduce their dependence on bank borrowings.
As many as 134 companies raised a combined 70 billion yuan (US$10 billion) in the first quarter, the highest quarterly figure since 2014, according to data by KPMG.