China Reopens its Doors to the IPO Market

China's securities regulator ended a one-year ban on initial public offerings (IPO) and share sales by issuing newly-revised regulations on IPOs, which aim to promote the listing of large-scale and high-quality companies. What requirements must companies now meet in order to issue IPOs and apply to list on China's stock exchanges?

By Jinrong Liu and Chengwei Liu, Global Law Office, Beijing

The China Securities Regulatory Commission (CSRC) promulgated the Measures for the Administration of Initial Public Offerings of Shares and the Listing Thereof (IPO Measures), which became effective on May 18 2006. The IPO Measures reopen the People's Republic of China's (PRC) stock market after a one-year suspension of new share sales, with the aim to reshape the shareholder structure of listed companies, and to resume the market's key role of fund-raising. Following the implementation of the IPO Measures, the Shanghai Stock Exchange and the Shenzhen Stock Exchange issued new listing rules (New Listing Rules) to improve the quality of their listed companies particularly in relation to corporate governance. The IPO Measures and the New Listing Rules specify conditions under which companies can issue an IPO and apply to be listed on stock markets.