registration-based ipo reform to spur innovation vitality
opening ceremony of the star market at shanghai stock exchange, jun 13, 2019. (photo: xinhua)
by zhong jianli
the china securities regulatory commission (csrc) published draft rules on february 1 to expand the registration-based initial public offering (ipo) system to the a-share market, marking a big step towards reforming the stock market.
the essence of the registration-based reform is to give the right of choice to the market, said the csrc, adding that the review process is transparent and open to public viewing.
the registration-based ipo system, first adopted by the tech-focused star market in 2019, was later rolled out to start-up board chinext in 2020 and the beijing stock exchange in 2021. it will now be expanded to the main boards in shanghai and shenzhen.
the pilot registration-based system has helped spur vitality of high-tech enterprises during the past four years, for the system considers diversified and inclusive listing conditions, allowing promising unprofitable high-tech enterprises to go public, said an official from the csrc, adding that a number of such enterprises in the integrated circuit, biomedicine, high-end equipment manufacturing and other industries, have been listed and gained capital for research and development.
the basic structure and rules of the registration-based system have now been widely agreed on by different parties in the market, so it is the opportune time to extend it to the whole market, said the official.
under the new system, stock exchanges will take the responsibility to review ipos, which will require full information disclosure by companies once they submit listing applications. the csrc will make sure listings are in line with national industrial policies.
"the reform will further improve the efficiency of the capital market and make the market more predictable, helping venture capital institutions and innovative enterprises make right decisions in the future," said guo xin, a partner of casstar, a venture capital investment company in china.
financial experts said that the adoption of the system across the board will significantly improve the ratio of direct financing in china, thereby promoting the development of the real economy.
