China Securities regulator to restart reviews of IPO applicants

April 28, 2014

SHANGHAI - The China Securities Regulatory Commission (CSRC) has announced it will resume reviewing IPO applications after a moratorium – an announcement that caused the Shanghai Composite Index to fall 1.6%, its largest fall since March 10, due to investors’ fears that new IPOs will dilute the market by redirecting investor attention and money away from existing listed companies.

The CSRC is to examine the IPO documents of four companies - Kuaijishan Shaoxing Rice Wine, edg (China) Corp, Guangdong Ellington Electronics Technology, and Nanjing Kangni Mechanical & Electrical.

The total number of Chinese companies seeking to go public has climbed to 122 after 25 more prospectuses were posted on the website of the CSRC on April 25. Beijing ended a 14-month moratorium on IPOs in January, allowing 48 companies to list in the first two months of this year. However the new issues stopped abruptly in March, possibly due to lacklustre market conditions and loopholes which were discovered in new IPO rules issued late last year.

 In March, the CSRC adjusted IPO rules, capping the amount of old shares that can be sold via an IPO to limit the amount of money existing shareholders can get from such a deal.