Jan 24, 2018 04:19 PM

Regulator Rejects Six of Seven IPO Applications at Latest Review

China’s top securities regulator rejected six of the seven initial public offering (IPO) applications considered at its latest review session (link in Chinese), making it the biggest single day of rejections since a powerful new panel took charge of the process.

Monday’s unprecedented outcome dragged the panel’s approval rate to a new low of 53%, down from around 80% during the previous panel’s tenure.

China’s IPO review process has grown increasingly strict since the China Securities Regulatory Commission (CSRC) reshuffled its review panel in October, recruiting two-thirds of panel members from within the commission’s ranks. The move sent a strong signal the CSRC was taking a much tougher stance on stock issuance oversight, which was further supported by the results of Monday’s meeting.

The situation has baffled some companies planning to float shares on the Chinese mainland markets because the stricter supervision appears to contradict what CSRC head Liu Shiyu pledged in late 2016, when he vowed to speed up IPO approvals. However, others reckon that the current policy shows that the CSRC’s priorities lie elsewhere.

“The current policy for IPO reviews aims to clear the backlog in applications,” said a sponsor of a major mainland brokerage. “For one thing, the fast-tracking of reviews could help reduce the number of waiting applications. For another, it will set a high bar for submissions, which could lead to fewer applications in the future.”

In February, Liu vowed to reduce the backlog of applications within two to three years. Despite the rapid speed of reviews and rejections, there were still 480 companies waiting to have their applications reviewed by CSRC as of Jan. 18.

Investment bankers have started to feel the pressure since the regulator tightened oversight on applications. Brokerages have increased their internal review and compliance requirements on IPOs because they are afraid reputations will take a hit if too many of their applications get rejected.

Meanwhile, companies looking to raise money have been instead considering other funding methods such as backdoor listings.

Contact reporter Leng Cheng (

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