The Chinese government will no longer be involved in the approval of initial public offerings and allow a system akin to bourses in the West where stock exchange operators can perform the auditing function, in the hopes that more startups will look to list, reports Nikkei Asia. All major exchanges will transition from a licensing to a stock registration format. The IPO application process will be simplified to encourage companies with new technologies or business models to float.
China’s leader Xi Jinping has railed against monopolies, calling the phenomenon a “disorderly expansion of capital.” At the same time, Xi has expressed an agenda of supporting and developing startups that excel in specialization and innovation. Premier Li Keqiang called for a wholesale implementation of an equity registration system when he delivered the Government Work Report during the opening of the National People’s Congress on Saturday.
In 2020, China put into force revised legislation that allowed for registration-based systems for securities issuances to replace government approval processes. But this was only implemented in Shanghai’s STAR and Shenzhen’s ChiNext markets—which both serve startups—as well as the new Beijing Stock Exchange, which launched in November.
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