China may see IPO thaw in 2014 as regulator smoothes approval process

SHANGHAI Sat Nov 30, 2013 4:48am EST

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SHANGHAI (Reuters) - China's securities regulator could streamline its approvals process for some initial public offerings (IPO) by next January, the regulator said on Saturday, mapping out reform measures.

But firms would still need to wait for China to restart the IPO market, frozen since October last year after authorities suspended listings in a bid to stamp out equity market fraud.

"After the announcement of these opinions, there would need to be around one month of preparatory work before firms could complete the necessary procedures," the China Securities Regulatory Commission (CSRC) said on its website.

"We predict around 50 companies may be able to complete their registration procedures for IPO by January next year."

There have been prior reports of the IPO drought coming to and end, but Saturday's statement gives the strongest hint that China is contemplating the resumption of mainland listings.

The reforms were a key step in overhauling a lengthy approval process and moving it to a system based on registration to give the market a more prominent role, the regulator added.

"After our sector audit, when and how new shares are issued will be under market constraints and will be independently decided, while pricing of shares will more closely reflect true levels of supply and demand," it said in the statement.

The reform will pull China's IPO vetting process closer to those of developed countries, where firms register their IPOs and face a rigorous audit before listing.

China also announced details of a trial run for Chinese-listed firms to issue preferred shares, the government said in a separate statement on its website.

Investors have long complained that too many listed firms are required to sacrifice profits for wider policy aims. Many saw use of preferred shares as a way to dilute government influence and boost the value of other investors' holdings.

IPO reform would not mean deregulation, the regulator cautioned, saying it would toughen monitoring of the sector and step up punishments for non-compliance.

(Reporting by Adam Jourdan; Editing by Clarence Fernandez)

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