China’s new securities law to make onshore IPO 1st choice: expert

NEW YORK, Jan. 11 (Xinhua) — The recent revision of China’s Securities Law by its top legislature has the correct positioning of various stakeholders and the law’s implementation will make initial public offering (IPO) on Chinese bourses the first choice for Chinese companies, according to an expert in this regard.

The revised Securities Law passed on Dec. 28, 2019 by the National People’s Congress (NPC) Standing Committee has profound implications for the Chinese capital market with similarity of U.S. Securities Act of 1933 and the Securities Exchange Act of 1934, said Henry Huang, professor of the Sy Syms School of Business at Yeshiva University.

The revision puts the regulator, listed companies, investors, courts and other players into correct positions with clear-cut roles, said Huang, an expert on securities law.

The liberalization of IPO mechanism in the new securities law would allow some good and even top-class companies to be listed on Chinese stock exchanges, Huang said in a recent interview with Xinhua.

China shall encourage the companies floated on overseas exchanges, especially those high-tech companies, to return to onshore bourses, and China needs to drop some restrictions on the listing of foreign-funded companies, said Huang.

If the implementation of the new Securities Law goes smooth, Chinese companies’ first choice should be getting listed on Chinese stock exchanges, Huang said.

China also needs to foster more quality companies to be listed on its bourses, and listed companies shall not be encouraged to have many connected parties. Professionals like accountants, analysts and lawyers will play an increasingly important role on China’s capital market, said Huang.

To be effective on March 1, 2020, the revised Securities Law has 14 chapters, outlining regulation details in securities issuance and trading, the takeover of listed companies, information disclosure as well as investor protection.

In April 2015, the draft revision to the law was submitted to the top legislature for the first reading. The second, third and fourth readings were conducted in April 2017, April 2019 and December 2019, respectively.