Companies must carefully consider how IPO proceeds will be used

Issuers need to ponder their use of raised funds from initial public offerings (IPOs), particularly for over-raised funds, as this will likely become a key point in the approval of offerings when further reforms are carried out by the securities regulator.

According to recent media reports, the China Securities Regulatory Commission (CSRC) has vowed to launch a new round of reforms in response to the recent drop of new share prices. Step-by-step, some new rules will be adopted to rein in the over-valuation of IPO prices and improve the pricing mechanism.