An executive meeting of the State Council, or China's cabinet, passed a draft document for registration-based stock listing reforms on Wednesday.
The change will allow authorities to transform the approval-based system in Shanghai and Shenzhen bourses to registration-based within two years, according to a statement released after the meeting.
The document still needs to be ratified by the National People's Congress Standing Committee, the top legislature, as it involves adjustment of the securities law.
The pace and prices of initial public offerings (IPOs) will not be fully liberalized right away, and there will not be a large increase in IPOs, the China Securities Regulatory Commission (CSRC) said in a statement.
The CSRC will continue to handle IPO applications before the reforms are implemented.
A registration-based system will reduce the role of administrators and give the market a bigger say. Such a system is expected to help the markets become more effective as a source of business financing.
Meeting economic officials in November, President Xi Jinping urged the development of a stock market with sound financing function, regulation and investor protection.
In the same month, the CSRC introduced significant changes to IPO procedures, allowing investors to subscribe without paying into escrow accounts in advance, giving more priority to information disclosure instead of pre-IPO approvals, and simplifying procedures for smaller IPOs.
When the new system comes into force, regulators will no longer judge or endorse business performance, value and prospects, the CSRC said.
