China Unveils Reform Plan for IPO System

The China Securities Regulatory Commission on Saturday unveiled a reform plan for the initial public offering system.

It is seen as a major step towards a market-oriented IPO registration system.

The plan, on pushing forward with reform on a new share issuance system, was released about two weeks after a reform plan unveiled by the Communist Party of China Central Committee, which promised to introduce a registration-based system.

China has an approval-based IPO system, whereby new listing firms experience a complicated application process that could take multiple rounds of reviews and take several years to receive approval from the CSRC.

A commission spokesman said that it could take about one month to complete preparations before the first to-be-listed company can begin its registration process.

He predicted around 50 companies would be able to complete their registration procedures for IPO by the end of January.

With the introduction of the registration-based IPO system, the spokesman said the securities regulator would only be responsible for qualification examination over candidate companies. The value of the companies and related risks would be left for investors and the market.