Backdoor listing candidates should meet requirements

Candidates aspiring for a backdoor listing should meet the requirements for an initial public offering (IPO). the China Securities Regulatory Commission (CSRC) said on Saturday.

It has also prohibited any candidates of a backdoor listing from acquiring a listed shell company on the ChiNext board and getting listed on ChiNext, China's Nasdaq-style board of more than 350 growth enterprises.

Requirements for a backdoor listing are lower than those for an IPO. Candidate companies and brokers have been seeking backdoor stock market listings as easier alternatives to an IPO.

Chinese investors have been making bets on listed companies with poor performance to become a shell company for a backdoor listing. Reports of insider trading had also occasionally hit the market.

A CSRC spokesman said the same requirement rule would help in suppressing investors' speculation activities on listed companies with poor performance. It would essentially reduce incentives for insider trading and eventually help establish an effective mechanism for de-listing.

Some companies, whose IPO applications had been turned down by the CSRC, had been seeking for a backdoor listing to dodge the IPO examination, which had raised doubt in the stock market, said the spokesman.

The same requirement rule became effective immediately, the commission said.