China’s securities regulator is mulling changes to the country’s initial public offering regulations, in an attempt to stop companies raising excessive funds when they list, the Wall Street Journal reported. China Securities Regulatory Commission assistant chairman Zhu Congjiu said that the regulator was considering allowing existing shareholders to sell their shares when a company issues an IPO. At present, a company can only sell new shares and pre-listing shareholders are subject to lock-up periods. "Currently, there’s a tendency for Chinese companies to raise more funds than necessary in an IPO, because limited share supply would drive up the IPO price," Zhu said. "If the original shareholders can sell their holdings during an IPO, this problem can be alleviated." In comments to reporters at the National Congress, Zhu was positive about China’s A-share market, arguing that as shares become more freely tradable, merger and acquisition activities would increase.
Categories