Regulator seeks to calm IPO jitters as reform proceeds

The China Securities Regulatory Commission on Friday dispelled market concerns over a delay in the registration-based initial public offering system and stressed its determination to move forward with reform of new-share listings.

Restart of IPOs

Protecting small investors

"Promoting the reform of a registration-based IPO system was an objective put forward at the Third Plenary Session of the 18th Communist Party of China Central Committee. It is also a vital breakthrough in the transformation of the regulation of the Chinese capital market," said Deng Ge, a commission spokesman.

Deng said the commission is working with related departments and actively studying and demonstrating problems that appear in the process of carrying out reforms of the public listing system.

"Revision of the Securities Law is the premise behind the implementation of the registration-based IPO system," said Deng.

The commission has submitted the first draft of an amendment of the Securities Law to the Financial and Economic Affairs Committee of the National People's Congress. Experts were due to discuss the development of the IPO registration system on Friday, said Liu Junhai, a law professor at Renmin University of China, on Thursday.

According to a reform plan on new share listings released on Nov 30 by the commission, it would only be responsible for examining applicants' qualifications, leaving investors and the markets to make their own judgments about a company's value and the risks involved in buying its shares.

The pricing of new shares has become more market-oriented in that issuers and underwriters can negotiate offering prices according to Chinese law. Pricing information must be released in a statement.

But problems have appeared such as that involving Chinese drug maker Jiangsu Aosaikang Pharmaceutical Co Ltd. On Jan 9 it announced plans to issue 55.466 million shares at 72.99 yuan ($12.07) per share, with 78.6 percent of the shares to be transferred from existing shareholders.

The IPO of Aosaikang, together with a further five, was halted after the commission introduced a regulation on the pricing and issuance of new shares on Jan 12.

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