What’s new: More than two years after China first introduced the rules for registration-based IPOs, the Shanghai and Shenzhen stock exchanges are laying the groundwork for a roll-out across the A-share market.
The two bourses recently proposed updated rules governing listed companies and new listings. The rules ask intermediaries to serve as “watchdogs,” update corporate governance requirements, and encourage companies to disclose information more effectively.
The drafts of the updated rules were published on the same day as the conclusion of the annual central economic work conference, during which China’s top leaders laid out tasks for the coming year, including implementing the registration-based IPO system across the board.
The background: A registration-based mechanism is more streamlined than the approval-based one now used on Shanghai’s and Shenzhen’s main boards. The approval-based mechanism allows the CSRC to vet every IPO application, making it lengthy, unpredictable, and prone to corruption. It also imposes stringent requirements on companies and gives them little control over the price at which they offer their shares.
Shanghai’s tech-focused STAR Market became the first platform to pilot the registration-based system in 2019. Shenzhen’s tech board, the ChiNext, started its trial in 2020. The newly launched Beijing Stock Exchange, a platform for innovative small and midsize enterprises, also uses a registration-based IPO system.
Related: In Depth: ChiNext Tests Expanding Registration-Based IPOs to Overall Market
Contact reporter Zhang Yukun (yukunzhang@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)
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