THE government has drafted rules for companies’ applications for initial public offerings (IPOs) to be reviewed by the nation’s two stock exchanges, rather than regulators, Xinhua reported yesterday.

    The proposed amendments to securities laws include removing some profitability requirements for companies planning IPOs, Xinhua reported on its microblog, citing rules submitted to the standing committee of the National People’s Congress.

    Pushing forward a registration-based system for IPOs is the “most important” matter this year for the reform of China’s capital markets, China Securities Regulatory Commission Chairman Xiao Gang said in January. Planned changes would leave questions of IPO supply and timing of deals to companies, not regulators who now must approve most facets of an offering.

    China currently relies on the China Securities Regulatory Commission to act as a gatekeeper for offerings. A seven-person listing review committee examines each application, judging factors such as investment potential and profit sustainability.

    The Securities Times, a paper published by the Shenzhen Stock Exchange, reported in March that the CSRC would dissolve its Issuance Examination Committee, which approves IPOs and secondary offerings.

    The CSRC would then allow the Shanghai Stock Exchange and the Shenzhen Stock Exchange to create “hearing committees” similar to those used in Hong Kong to vet new listings, the Shenzhen-based newspaper said, citing unnamed sources within the investment banking community.

    (SD-Agencies)

An investor in front of an electronic board showing stock information at a brokerage house in Shenyang, Liaoning Province, in this file photo. China has drafted rules for firms’ applications for initial public offerings (IPOs) to be reviewed by the nation’s two stock exchanges, Xinhua reported yesterday. SD-Agencies