The Shanghai and Shenzhen stock exchanges have unveiled a new committee lineup overseeing IPOs and M&A deals under the newly expanded registration-based system, as authorities seek to raise the integrity of such processes and stamp out financial corruption.
The bourses have each appointed 30 people as members of two review committees — one for new listings, and the other for restructuring as well as mergers and acquisitions (M&A) — the exchanges announced Friday.
The personnel structures of both bourses’ new appointments are the same.
Among the 30 committee members in either exchange, four work in state ministries, public institutions or their research institutes, such as the State-owned Assets Supervision and Administration Commission of the State Council, the Ministry of Industry and Information Technology, and the National Council for Social Security Fund.
Three of the members are from departments at the country’s top securities watchdog, the China Securities Regulatory Commission (CSRC), including those overseeing public offerings and listed companies.
Another 13 members are from local CSRC branches. The remaining 10 people have already held positions at the Shanghai or Shenzhen stock exchanges.
Read more Update: Seven Things to Know About China’s Latest IPO System Overhaul
China is taking a major step toward overhauling of the country’s $12.7 trillion stock markets with plans to roll out its registration-based IPO system at the nation’s two biggest boards — the main boards in Shanghai and Shenzhen — completing a shift that began in 2019 when the new mechanism was first used.
According to draft regulations released Wednesday, the CSRC will no longer decide on pricing or approve listings, with its role becoming more supervisory. Stock exchanges will take a major responsibility in reviewing listing applications, a CSRC official said in a Q&A on the same day, adding that the top securities regulator will strengthen the overall coordination and supervision of the exchanges.
The new review committees at the two major bourses, therefore, will become what the CSRC termed as the “gatekeepers” for IPOs, restructuring and M&A.
The process of IPOs in China has long offered fertile ground for corruption. None of the newly appointed committee members are from capital market intermediaries, universities, or industry associations, mainly to prevent transfers of interests, people close to the stock exchanges said.
The new setup means greater professional challenges and higher integrity requirements for the committee members, market participants said.
Contact reporter Zhang Ziyu (ziyuzhang@caixin.com) and editor Lin Jinbing (jinbinglin@caixin.com)
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