China plans to implement a registration system for initial public offerings after a review of its securities laws by the country’s parliament, China Securities Journal reported today.
The decision would remove the power of the China Securities Regulatory Commission to decide which companies get to go public in China, with the decision instead taken by the individual markets as in the US.
The draft of the bill also puts forward measures that would allow foreign companies to list in China, and would enable companies to float without meeting the stringent current rules, which require them to show sustainable profit and earnings figures.
The bill is partly intended to stem issues surrounding state supervision of IPOs including suspected corruption and a tendency to slow and even halt the market completely in lean times.
China implemented a moratorium for IPOs in late 2012, leading big-name internet companies including e-commerce firm Alibaba and microblogging platform Weibo to float in the US instead.
Wu Xiaoling, a lawmaker at China’s parliament, said: “The promulgation of the share issue registration system will focus on information disclosure and thus enable market participants themselves to judge the issuers’ quality of assets and investment value. It will move toward allowing the market to play a decisive role in asset allocation.”
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