China Revises Law on IPOs, Raises Penalties for Fraud
China Approves Revisions to Securities Law, Xinhua Reports
(Bloomberg) -- China’s top legislature approved changes to the nation’s Securities Law, as it eased up listing rules and stiffened penalties for violations in the country’s $21 trillion capital markets.
The revisions are effective from March 1, according to a report from a government website Saturday citing decisions made by the National People’s Congress Standing Committee.
Policy makers initiated a plan to have market participants play a greater role in IPOs as early as six years ago in order to move away from the securities regulator acting as the gatekeeper for all offerings and their pricing. The proposal for registration-based listings, thrown off course by China’s stock market rout in 2015, materialized this year through a new trading venue targeting technology firms in Shanghai.
The head of the country’s securities regulator said in November the reform would be extended to Shenzhen’s ChiNext board.
The revised law also specifies depositary receipts as securities in addition to stocks and corporate bonds for the first time, opening up a venue for many of China’s technology giants to be traded at home.
Highlights of other revisions approved by the government:
- Removal of profitability requirement for listings
- Simplifying the process for issuing corporate bonds
- Increasing the upper limit of penalties for issuance fraud to 20 million yuan ($2.9 million) from 600,000 yuan previously
- Addition of new sections on information disclosure and investor protection
- Clarifying the process for joint litigation for large numbers of claimants
To contact Bloomberg News staff for this story: Lucille Liu in Beijing at xliu621@bloomberg.net;Feifei Shen in Beijing at fshen11@bloomberg.net
To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Tom Redmond, Dave McCombs
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