ZCZC
BCN-19
CHINA-ECONOMY-STOCKS-IPO
China slashes red tape for IPOs
BEIJING, Dec 28, 2019 (BSS/AFP) – Chinese lawmakers agreed Saturday to
slash red tape for initial public offerings, approving an amendment to the
country’s securities law that also aims to better protect investors and
prevent insider trading.
Mainland authorities have recently stepped up moves to attract listings of
big tech firms, including launching a new technology board in Shanghai in
July, as the country’s economy has stuttered to its slowest rate of growth
since the early 1990’s.
“This amendment is a big breakthrough as it cuts red tape and the cost for
companies when going public,” said Dong Dengxin, director of the Finance and
Securities Institute at Wuhan University of Science and Technology.
“It is the most significant revision of the Securities Law in history.”
The new registration-based IPO system in the newly amended law — which
comes into effect on March 1, 2020 — requires strict information disclosures
from companies seeking to list.
The listings however do not need approval from the China Securities
Regulatory Commission (CSRC), according to a draft law published Saturday.
It has also removed the need for companies to be profitable before
listing.
The revised law includes better protections for minority investors, said
Gong Fanrong, director of the finance committee legal team under China’s
National People’s Congress.
It calls for companies to establish dispute resolution mechanisms to
address shareholder grievances and improve transparency, he added.
Companies found guilty of making false or misleading statements or
withholding important information from shareholders could face penalties
ranging from one to 10 million yuan ($ 143,000 to $1.4 million).
It also includes tougher punishments for securities fraud and insider
trading.
Individuals found guilty of insider trading will be fined two to ten times
the value of their ill-gotten gains.
Intermediaries and professional services firms found guilty of faking
information during IPOs will be fined two million to 20 million yuan,
compared to 300,000 to 600,000 yuan at present.
The law also says securities industry employees, including regulators and
those who work for brokerages or stock exchanges are bared from trading in
stocks.
Lawmakers have debated amendments to China’s securities law for nearly
five years.
BSS/AFP/HR/1325