China Finalises New IPO Rules Shenzhen’s ChiNext Board

Source: Regulation Asia Editors, Regulation Asia 2020-06-15

Under the new market-based IPO pricing system, companies seeking a ChiNext listing will have to abide by stricter information disclosure rules, but will no longer require CSRC approval._

The CSRC (China Securities Regulatory Commission) and SZSE (Shenzhen Stock Exchange) have finalised rules for companies looking to list on the ChiNext board, streamlining the listing process and allowing IPO pricing to be determined by the market.

While ChiNext’s new registration-based IPO system has been in the works since soon after the launch of a similar mechanism on the SSE Star Market last July, the reform will effectively make it easier for technology firms to list domestically, thereby reducing reliance on overseas venues such as New York, where Chinese companies have recently been under heightened scrutiny.

The CSRC and SZSE solicited public feedback on the rules for ChiNext’s new IPO system in April.

In line with the SSE STAR Market IPO system, ChiNext’s will require prospective IPO candidates to abide by stricter information disclosure rules and ensure compliance with other legal and financial, but they will no longer require individual approvals from the CSRC to list.

Instead, the SZSE will vet applications based on the disclosure rules, a review process the CSRC says will be open and transparent, and paperless.

Companies with WVR (weighted voting rights) structures will be allowed to list, in addition to those that have yet to turn a profit. However, pre-profit companies may only apply after the first year of the reform.

Under the new system, no price limits will be set during the first five trading days of a newly listed stock. After the first five days, stock prices will be allowed to fluctuate a maximum 20 percent during a trading session, compared with 10 percent previously.

The CSRC said supervision over listed entities will be strengthened, whereby issuers, intermediaries and other market entities will be held accountable for any violations of laws and regulations.

The new rules took effect on Friday (12 June).

China Securities Regulatory Commission

Shenzhen Stock Exchange

ChiNext

IPO

China Finalises New IPO Rules Shenzhen’s ChiNext Board

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