By Xie Fang
The China Securities Regulatory Commission (CSRC) paved the way for the fundraising by innovative Chinese enterprises in the A-share market by releasing an array of specific rules late Wednesday, the Securities Times reported Thursday morning.
At the center of the nine rules put in place by the CSCR are the measures for the issuance and trading of Chinese depository receipt (CDR), which will allow innovative overseas-listed Chinese companies to raise capital in China's A-share market without actually launching an IPO in the A-share market.
The CSCR made it clear that the trading of CDR would be generally subject to the existing stock trading rules for the A-share market in order to guarantee that no drastic change would happen to investors' current trading practices.
To minimize the potential risks posed by the issuance of CDRs, the CSRC will set strict standards for selecting companies which are qualified to issue CDRs. What's more, the CSRC also requires sponsor institutions to ensure the quality of their due diligence work.
Apart from clarifying the rules for the issuance of CDRs, the CSRC also revised the existing IPO and listing rules in an effort to facilitate the A-share listing of unlisted innovative Chinese companies.
According to the new IPO rules, qualified innovative companies will no longer be subject to the requirements on profitability and loss control, which are now imposed on non-innovative companies, before filing their IPO applications with the CSRC.
However, that doesn't mean that innovative companies will get access to the A-share market more easily than non-innovative ones. The CSRC promised to examine the IPO application of innovative companies in a strict and prudential manner.
The CSRC also sets up a technological innovation advisory committee which will be responsible for conducting comprehensive assessments of the innovative companies intended to go public in the A-share market.
The CSRC emphasized that supporting the IPO and issuance of CDRs by the innovative companies which are in line with the national strategy and hold key technologies in the A-share market would be crucial for China to advance its supply-side structural reforms, promote the transformation and upgrading of the Chinese economy, and improve the quality of A-share listed companies.
