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China Plans Third Review of Revisions to Securities Law, But With No Final Agreement in Sight

By Liu Caiping and Zhao Runhua / Apr 15, 2019 04:18 PM / Business & Tech

Beijing plans to hold a third reading of a draft of revisions to the national Securities Law later this month, a high-level legislature meeting decided last Friday.

The last reading of revisions to the Securities Law was in 2017. China’s legislature rules require proposed amendments to be read by the country’s legislative body every two years, or else they will be abolished.

This month’s reading will likely focus on the registration-based IPO mechanism, which would allow promising yet unprofitable enterprises to register for IPOs. Currently, enterprises need to show profitability and go through an approval process before going public, with the notable exception of the new high-tech board.

However, it is unlikely that this month’s reading will reach a final agreement, a source who will participate in the meeting told Caixin. Some proposed amendments are too “controversial and immature” to be approved, the source said.

The registration-based IPO mechanism is still in a “transition period,” and trials are currently being performed on China’s new high-tech board. Therefore a rare fourth reading of the amendments is expected later, the source said.

Wang Jiyue, a veteran sponsor of Chinese IPOs, said the high-tech board will offer valuable insights into how registration-based rules might work. The board began to accept IPO requests in March.

Related: Legal Deadline Threatens Passage of Securities Law


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