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Guidelines unveiled - IPOs can begin again

CHINA is ready to end a nine-month hiatus of initial public offerings on the Shanghai and Shenzhen stock exchanges, after the securities regulator yesterday unveiled the final version of guidelines for IPOs.

The China Securities Regulatory Commission said the guidelines would take effect today.

An unidentified spokesman for the regulator said the commission will give approval to firms applying any time after the guidelines become effective.

The commission announced draft guidelines on May 22 to solicit public opinions till last Friday. The new guidelines aim to improve the price-discovery function of the stock market, and help retail investors subscribe to newly issued stocks.

The finalized guidelines said a single investor is confined to use only one account to purchase new stocks, as some institutional investors have multiple accounts. The revision, one of those made to the draft following public advice, is aimed at helping more smaller investors get access to new stocks.

In addition, the commission said it would consider increasing the number of tradable stocks in response to suggestions the lock-down of too many stocks would not curb speculation.

However, the spokesperson said lock-downs of large shareholders would remain in place, as they are aimed at preventing frequent changes in managerial staff that could jeopardize a firm's operation and create risks.

The commission froze all mainland IPOs last September over concerns of a stock glut.

A total of 32 firms are on the waiting list to issue a combined more than 14 billion shares through IPOs on the A-share market. China State Construction Engineering Corp is expected to issue 12 billion shares.

Under the new rules, institutional investors would no longer enjoy the privilege of also taking part in the retail tranche of an IPO.

The mechanism also for the first time sets the maximum number of shares an investor can seek in a single IPO. An investor can apply to buy only up to 0.1 percent of all the shares available in an IPO.


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