New share-sale rules implemented

The China Securities Regulatory Commission issued rules to ban listed firms from using share-sale proceeds to invest in securities as the mainland moves to curb potential bubbles in the market. Public firms will no longer be able to use the funds they collect from stock issuance to subscribe to new share sales, state media reported. Additionally, mainland-listed companies will not be allowed to use such proceeds to trade existing stocks, convertible bonds and proposed financial derivatives. The CSRC said a listed firm must now seek shareholders' approval if it plans to use more than 10% of a stock sale to shore up working capital. This year, more than 20 listed companies have already used US$1.29 billion from their stock-sale proceeds to apply for mainland initial public offerings.