Chinese Companies and Securities Law blog @ Eastlaw.net

    BEIJING, May 25 (Xinhua) -- China CAMC Engineering Co. has become the first Chinese firm to launch an initial public offering(IPO) since the introduction of a new share issuance system on May 18.

    The firm, sponsored by state-owned enterprises specializing in international agricultural engineering projects and machinery, plans to issue 60 million A-shares on Shenzhen Stock Exchange, according to a company statement.

    The statement said the firm would publish the share price set by institutional investors on June 2, and shares would be available on the market from June 5.

    China Securities News described the IPO as the beginning of a new era of the capital market in China, while the Shanghai Securities Journal welcomed the move as a major event in the history of China's capital market.

    Under the newly revised Securities Law and Corporate Law, all public shares to be issued domestically will be tradable after a period set by the China Securities Regulatory Commission.

    In the past, only about a third of shares of domestically listed companies were floated on the market, and the rest remained under state ownership to ensure the government control of the state-run sector.

    Experts said the non-tradable shares, together with poor corporate governance, were to blame for the lackluster performance of China's stock markets during the 2001-2005 period, despite the country's booming economy.

    The markets closed flat on Thursday partly because oil giant Sinopec was down by about 2 percent despite the fact that China raised processed oil prices by about 10 percent on Wednesday.

    Analysts said many investors cashed in shares in the belief the markets may fall in coming weeks after share prices rose by about 30 percent.

    The resumption of IPOs is also blamed for the downward pressure on the markets as new shares would siphon off capital from shares already traded on the markets with investors sell to buy new stock.

    The Shanghai A-share Index was up 0.67 points at 1,671.61 on turnover of 22.86 billion yuan (2.86 billion dollars).

    Professor Li Yongsen, of the People's University, said the resumption of IPOs would have a negative impact on the stock market in the short term, but would turn favorable in the long run.

    Stable and healthy stock markets needed new blood to improve their scale and structure, he added. Enditem

    BEIJING, May 8 -- The China Securities Regulatory Commission (CSRC) proposed April 28 a series of changes in rules for initial public offerings (IPOs) aimed at promoting listings of high-quality companies.

    The proposed rules require firms planning IPOs to have three straight years of profits, at least 30 million yuan (US$3.7 million) in combined net profit in the past three years, and a minimum 300 million yuan in total revenues over the period. CSRC is seeking public comment on the proposals.

    China's current regulations only generally require IPO firms to have an ability to ensure sustained profit ability and to be in good financial condition.

    "An amendment of the rules is aimed at ensuring share issuance and listings of large-scale and high-quality companies," the proposed rules said.

    The proposed rules also included other requirements on aspects such as information disclosure, corporate connected transactions and rights issues.

    They are open to public feedback until May 14, and a final version will be formally promulgated shortly, the stock regulator said.

    Chinese investors have complained that they are deprived of the right to enjoy part of the outcome of China's surging economy, which grew 10.2 percent in the first quarter from a year earlier, because quality firms have flocked for years to more transparent, liquid markets both abroad and in Hong Kong.

    The proposed rules will also pave the way for China to allow its companies, such as Air China Co., to return home to raise capital on the domestic Shenzhen and Shanghai stock exchanges, ending a year-long suspension.

    (Source: Shenzhen Daily/Agencies)

    BEIJING, May 9 -- The China Securities Regulatory Commission (CSRC) will allow firms to resume capital raising on domestic stock exchanges from yesterday, ending a year-long ban and paving the way for companies like Air China to return to domestic exchanges.

    CSRC made the announcement on its Web site after holding public consultations with market players to seek approval for a set of rules to govern the resumption through public consultations.

    The sequence for the resumption will be private placements, rights shares and then initial public offerings, the notice said, but it did not give an exact timetable.

    Rules for companies to list will also be tightened, with stronger information disclosure demanded and preconditions for private placements and rights issues.

    Investors have complained that Chinese investors are deprived of the right to enjoy some of the fruits of China's booming economy because quality firms have flocked to more transparent and liquid markets abroad and in Hong Kong.

    Analysts say Air China Co. Ltd., the country's most valuable airline, was likely to be among the first to take advantage of the new rules.

    The mainland benchmark stock index is up nearly 30 percent this year, after a four-year slump triggered by fears of a possible deluge of new shares from the proposed flotation of government holdings in listed companies.

    But the regulator has said the reforms to convert US$250 billion in nontradable shares in listed companies into regular traded shares had been successful and the time was right to lift the May 2005 ban on stock sales.

    (Source: Shenzhen Daily/ Agencies)