Registration Based IPO System to be Launched Next Year
China is planning to launch a registration based initial public offering system by March of next year, the decision will help boost the role of the country’s stock market in providing necessary financing for these companies even with the slow economy. Top legislature have authorize the State Council to dole out the new IPO mechanism after completing the amendment to the Securities Law.
The China Securities Regulatory Commission also stated that the legislative approval to launch the registration based IPO system marks a significant development in the Chinese capital market and is an important measure that will allow market forces to determine resources allocation of resources. This is not just about delegating the IPO approval power to the stock exchange but is considered a major transformation of the regulator’s role.
The registration based IPO system is emphasizing information disclosure rather than corporate prospects and profitability. Stock regulators say that it will no longer endorse the value of prospective companies based on the new system but they will still be in control of the pace and pricing of IPOs in order to maintain market stability.