Reforms will have positive impact on markets: insider

China's stock exchanges will gradually shift toward being more market-oriented and law-based as a result of the government's reform plan for the initial public offering (IPO) system, in which improved disclosure of information by companies will be the key to a successful issuance, said Daniel Li, an accountant at PricewaterhouseCoopers, at a roundtable media conference Thursday.

The reform plan, unveiled by the China Securities Regulatory Commission (CSRC) on Saturday, aims to move away from the current administrative approval-based IPO system to a registration-based system.

The CSRC will have a slightly different role according to the plan, under which it will focus on verifying the legitimacy of the materials and information provided by companies, as information disclosure is the key to keeping investors informed about companies' value, resources and risks.

The profitability and potential of a company will be a matter for the market and investors to consider, under the new regime.

"High-quality information disclosure should adhere to four principles. First, it should emphasize information that has a direct impact on investors' investment decisions. Second, it should be accurate, authentic, complete and timely. Third, it should include both financial and non-financial information. Finally, the language used should be simple to read and easy to understand," Li said.

The IPO reform plan is in accordance with decisions made at the Third Plenary Session of the 18th Communist Party of China Central Committee, which stressed the decisive role of the market in China's economy.

However, there is still some uncertainty about the practical implementation of the reform plan, said Zhang Xin, an analyst at Guotai Junan Securities. "What if the market allows a high PE ratio but the regulators think it's too high and try to suppress it?"

Zhang also expressed concerns over how the occasionally irrational behavior of the market and investors will be dealt with.

"What can we do if investors deliberately drive up the stock prices? Who should be responsible then - investors, brokers or regulators? Intermediaries are likely to try and avoid responsibility if any economic losses happen."

According to a CSRC spokesman, there will be 50 companies launching IPOs in January 2014, following the resumption of IPO approvals.