June 7, 2023

Volume XIII, Number 158


June 06, 2023

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June 04, 2023

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People's Republic of China: CSRC Expanding Registration Based IPO Regime

The China Securities Regulatory Commission (CSRC) released a series of rules on reform of the regulatory regime for initial public offering (IPO) on Chinese stock exchanges (Reform). The Reform essentially expands the registration-based IPO regime (Registration Regime) to the main boards at the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

The Registration Regime was initially adopted by the STAR market (i.e., the Science and Technology Innovation Board), the ChiNext market (i.e., the secondary-board market), and the Beijing Stock Exchange in China since 2018. Different from the approval-based IPO regime where CSRC reviews the listing documents and caps IPO prices, under the Registration Regime the vetting power is transferred to bourses, while CSRC checks the listing applications against national industrial policies and the positioning of different boards. The Registration Regime puts no regulatory limit on share price or offering size, aiming to “give the right of choice to the market.”

The Reform also clarifies the positioning of the main boards (for large-sized blue chip companies), the STAR market (for companies with “hard technologies”), and the ChiNext market (for innovative and high-growth companies) and provides different criteria of financial performance of applicants for each market.

As the regulator would no longer pre-vet the listing documents, the Registration Regime attaches great importance to information disclosure by the issuer and thus also emphasizes sponsors’ responsibilities to ensure the true, accurate, and complete disclosure.

The Reform is expected to provide a more transparent, efficient, and straightforward regime for IPO on Chinese stock exchanges. As of 16 March 2023, 10 applicants have been approved by CSRC for registration.

Copyright 2023 K & L GatesNational Law Review, Volume XIII, Number 86

About this Author

Chloe Duan Attorney Finance KL Gates China

Chloe Duan is a partner in the firm's Shanghai office.

Her practice focuses on investment management, venture capital investment, and cross-border M&A. Since 2007, Chloe has advised numerous renowned international financial institutions, unicorns and high technology companies on their cross-border investments.

Chloe is a dual New York/PRC qualified lawyer with experience working in PRC law firms and international law firms.

Grace Ye Shanghai Corporate Transactions Attorney KL Gates

Grace Ye is an associate at K&L Gates' Shanghai office. She is a member of the Mergers and Acquisitions practice group.

Prior to joining the firm Grace practiced in various international law firms advising multinational clients on mergers and acquisitions, joint ventures, foreign direct investments, and general corporate matters, as well as advising Chinese clients on setting up offshore investment funds. Grace also served as the director of strategic development for a technology start-up company in Shanghai. Through this role, Grace led...