China's stock market regulator - China Securities Regulatory Commission (CSRC) - on Friday announced new set of rules for Initial Public Offering (IPO), tightening the scrutiny over IPO in a bid to weed out any unqualified shares issued by new and existing companies.

The securities regulator will now particularly look into fraudulent IPOs issued by companies that attempt to "whitewash" their financial accounts in order to receive regulatory approval or hide critical information from investors, said Deng Ge, the spokesman of the China Securities Regulatory Commission.

Like Us on Facebook

CSRC has also amended the rules for major asset restructuring by listed companies in a bid to efficiently regulate back-door listings and to curb speculation on shell companies. The new rules state that listed companies found in violation during the past three years will be banned from selling assets.

However, the stock market regulator again postponed the launch of the much-awaited registration-based IPO mechanism to replace the existing approval-based scheme for new share sales.   

Analysts say that new rules will restore some order to the stock market, which has been on a downswing since last year. Small investors will stand to benefit due the curbing of excessive speculation, and valuation of shell companies will take a further beating.               

Many experts believe that the Chinese stock market is in dire need of tough rules, as it is still not in tune with international standards. Experts' critical views were vindicated earlier this week, when MSCI declined to include Chinese shares in the Emerging Markets Index.

Tagschina, CSRC, China’s Stock Market Regulator, Chinese Economy