IPO registration reform faces one more year

(ECNS) -- A new registration-based system for Initial Public Offerings (IPO) introduced last year is likely to replace the current approval system; however, it might take more than a year to be officially implemented. 

Under the current IPO system, firms set to list must undergo a complex application process that could involve multiple rounds of review before approval is received from the China Securities Regulatory Commission (CSRS). 

The fate of their IPO is still decided by the regulators, which triggers a series of problems, including malicious fabrications. 

Unlike current verification for IPOs in China, the registration-based system, which is widely used in developed states, allows investors and companies to decide the valuation and timing of new share offerings in light of the country's situation and market circumstances. 

The reform will improve transparency at every step of the listing process while reducing regulatory interference; however, this decentralization also raises concerns within the industry. 

Although the new system and the specific responsibilities of the CSRC as well as the Exchange are yet to be finalized, it would focus on information disclosure and help improve transparency of the IPO process. 

CSRC Vice Chairman Zhuang Xin says the move is one of the most surprisingly aggressive items in China's larger reform of market operational mechanisms and supervision systems. 

Huang Wei, the director of CSRC's legal department, says the new registration-based system for IPOs has been sent to the State Council for review and will be introduced in the middle of this year.