SHANGHAI Dec 21 China has lowered the bar for
companies to list overseas to ease pressure on domestic stock
markets where more than 800 companies are waiting for approval
of their initial public offerings.
Currently Chinese companies applying for an overseas IPO
must meet certain thresholds for net assets, profits and
fundraising targets and must also agree to abide by Beijing's
foreign capital investment rules.
All of these requirements have been scrapped in the revised
guidelines for overseas IPOs that were published by the China
Securities Regulatory Commission (CSRC) on its website late on
Thursday. The new rules will take effect on Jan. 1, it said.
The CSRC is encouraging Chinese companies to list overseas,
sell bonds or trade on over-the-counter equity markets as
regulators maintain a tight grip on supply on concerns over the
strength of the stock market.
More than 800 Chinese companies are currently seeking
approvals to list on the Shanghai or Shenzhen exchanges, aiming
to raise an estimated 500 billion yuan ($80 billion) in total,
Ernst & Young said earlier this week.
That means Chinese companies may need to wait up to five
years to launch a domestic IPO, which would prompt some to turn
to Hong Kong, the accountancy firm said.
According to existing CSRC rules, Chinese companies applying
for an overseas IPO must have at least 400 million yuan ($64.20
million) in net assets, plan to raise $50 million or more and
must generate a minimum of 60 million yuan in annual net profit.
During the first 10 months of the year, Chinese companies
raised a total of 103.4 billion yuan via listings in the
mainland market, down more than 60 percent compared to the whole
of 2011, according to CSRC data.
($1 = 6.2302 Chinese yuan)
(Reporting by Samuel Shen and Kazunori Takada; Editing by Matt