The Shanghai and Shenzhen stock exchanges have unveiled a new composition of committees overseeing IPOs and M&A transactions under the newly expanded registration-based system as authorities seek to improve the integrity of such processes and stamp out financial corruption.
The exchanges have each appointed 30 people to serve on two review committees — one for new listings and the other for restructuring and mergers and acquisitions (M&A), the exchanges said on Friday.
The personnel structures of the new appointments of both exchanges are the same.
Of the 30 exchange committee members, four work in state ministries, public institutions or their research institutes, such as the State Council’s State Asset Supervision and Management Commission, the Ministry of Industry and Information Technology, and the National Council for the Social Insurance Fund.
Three of the members are from departments of the country’s top securities regulator, the China Securities Regulatory Commission (CSRC), including those that oversee public offerings and listed companies.
Another 13 members are from local CSRC branches. The remaining 10 people were already active on the Shanghai or Shenzhen stock exchanges.
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Update: Seven things to know about China’s latest IPO system overhaul
China is taking a major step in overhauling the country’s $12.7 trillion stock markets with plans to roll out its registration-based IPO system to the country’s two largest boards — main boards in Shanghai and Shenzhen — completing a shift that 2019 started when the new mechanism was first used.
Under draft regulations released Wednesday, the CSRC will no longer decide pricing or approve listings, with its role becoming increasingly regulatory. Exchanges will shoulder a lot of responsibility in scrutinizing listing applications, a CSRC official said in a Q&A on the same day, adding that the top securities regulator will strengthen overall coordination and oversight of exchanges.
The new review boards at the two major exchanges are therefore becoming what the CSRC calls “gatekeepers” for IPOs, restructurings and M&A.
The IPO process in China has long provided fertile ground for corruption. People close to the stock exchange said that none of the newly appointed board members came from capital market intermediaries, universities or industry associations, primarily to prevent the transfer of interests.
According to market participants, the new structure means greater professional challenges and higher integrity requirements for the committee members.
Contact reporter Zhang Ziyu ([email protected]) and editor Lin Jinbing ([email protected])
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