More stringent rules have been introduced by the China Securities Regulatory Commission for those companies that plan to make initial public offerings. Companies that have recently undergone big management or structural changes will be barred from listing, while the size of individual issues will be limited to twice the value of the company's assets. The rules also ban listings of companies that depend on their largest shareholder for more than 30 per cent of sales, or where purchases from the largest shareholder account for more than 30 per cent of expenditure.
The Financial Timessaid the intention is to make it more difficult for unprofitable or shell businesses to list on the domestic market. However, as usual in China, its effectiveness is likely to depend on how strictly the rules are enforced. In addition, according to an analyst quoted by the newspaper, the measures do little to encourage good quality companies to list.