Firms awaiting IPO fear further delay

Companies whose IPO applications are on hold following a moratorium on new listings on the Chinese mainland are concerned that they may have to resubmit financial data to regulators, which could further delay or even scupper their listing plans.

The China Securities Regulatory Commission (CSRC) called a halt on new listings last November, leaving companies whose applications were approved but who did not receive formal permission to list in a state of limbo.

Many had hoped that, once the moratorium is lifted, they would be able to list immediately. However, a recent report by the Shanghai Securities News has led some to worry that they will need to resubmit their financial data. At best, this would involve a wait of up to one month as they undergo a new audit. But for companies that have seen a downturn in performance over the past six months, it may mean they fail to meet the criteria to be listed.

According to the Shanghai Securities News report, the CSRC has required an underwriter for one of the companies that is awaiting listing to submit up-to-date financial data on the company.

The news casts into doubt hopes that the CSRC would allow these companies to go to market immediately once the hold on listings ends, despite their financial data being from the end of last year. According to the CSRC rules, companies wishing to list must provide financial data that is no older than six months. This data will be used to assess their suitability to list.

"A company will need to postpone its IPO proceedings if it is required to provide its newest financial data," Zhang Qi, an IPO analyst at Zero2IPO Research Center, told the Global Times Tuesday.

The problem will be particularly acute for companies looking to list on the ChiNext board, which requires companies to maintain a profitable performance for two consecutive years.

The CSRC set a deadline at the end of March for companies waiting to list to hand in self-inspection reports. Some analysts regarded it as a sign that the authority would soon restart IPO approvals.

The regulator released a draft policy for continuing the reform of the stock issuance mechanism in June, and said at a press conference on July 5 that it is studying the related stock issuance system and that supportive documents will be disclosed soon.

"Resumption will probably be delayed until the fourth quarter of this year as the authority wants to improve the stock issuance mechanism first, including completing delisting rules," Li Bo, an analyst at GF Securities, told the Global Times Tuesday.

As of July 18, as many as 746 companies were awaiting IPO reviews, according to the China Securities Journal.