China's stocks regulator has barred companies from launching initial public offerings shortly after they have acquired major assets so that investors will have time to know their operations better before they embark on selling shares.
Firms that purchase businesses which have assets, sales or earnings bigger than their own should delay their IPOs for at least one year, the China Securities Regulatory Commission said in a notice late Wednesday.
"The rules are aimed at giving (potential) investors a longer period to gain knowledge of a company's operations after its restructuring," the CSRC said.
For acquisitions valued at more than 50 percent of total assets, revenue or profit, listing candidates must conduct due diligence on the deals and make public disclosures, the regulator said.
Companies that have shifted their core businesses within the past three years would also be prohibited from going public, the CSRC said.
Chinese authorities are revving up efforts to protect interests of minority investors and shore up market confidence after the key stock index lost more than 40 percent from its October high.
The Shanghai Stock Exchange said yesterday on its Website that it would require listed firms that asked for stock-trading suspension due to a major asset transfer to offer detailed information about the planned move.
Analysts said that the move will help investors be better informed of major corporate restructuring of public firms and curb unnecessary trading suspension and possible irregularities.
The Shanghai exchange said last week that it would ban listed firms from suspending share trading for more than 30 days due to pending mergers and acquisitions.
(Shanghai Daily May 30, 2008)
