Feb 03, 2021 08:29 PM

Shanghai Exchange Seeks More Concise Disclosure From IPO Applicants After Ant Group Debacle

The Shanghai Stock Exchange has unveiled a self-inspection form for IPO applicants in a step to further tighten scrutiny over new listings. Photo: VCG
The Shanghai Stock Exchange has unveiled a self-inspection form for IPO applicants in a step to further tighten scrutiny over new listings. Photo: VCG

The Shanghai Stock Exchange is putting the onus on IPO applicants to disclose information in a more concise and formatted way in a bid to smooth the listing review process on its Nasdaq-style STAR Market, which could help loosen a logjam of applications.

As of Jan. 27, as many as 199 companies were awaiting regulatory clearance to list on the STAR Market, exchange data show. Previously, several companies voluntarily withdrew applications after lengthy regulatory inquiries.

The bourse said (link in Chinese) some companies had failed to meet information disclosure requirements when filing IPO applications, which had cost regulators lots of time and energy to ask the companies to supplement key missing information.

Meanwhile, regulators have tightened scrutiny of companies going through the registration-based process in the wake of fintech giant Ant Group Co. Ltd.’s shocking IPO suspension in November.

The China Securities Regulatory Commission, the sector’s top oversight body, accused the Shanghai exchange of carrying out its review of Ant Group’s application too quickly and told the bourse to step up its scrutiny of IPO applicants, a source close to the exchange told Caixin previously.

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Now, IPO applicants, along with their intermediaries — underwriters, accounting companies and law firms — are required to fill out two self-inspection forms when filing listing applications, according to a statement (link in Chinese) released by the exchange operator on Monday.

The forms list 77 questions concerning the companies’ business operations and key technologies, shareholder structures, internal management and other aspects, information of which is generally required to be disclosed in their prospectuses or the intermediaries’ documents.

Moreover, the intermediaries are required to specify which pages of their documents regulators can look up to check the information.

By requiring these up-front self-inspections, the IPO review process promises to become more efficient and transparent, while saving time for regulators having to verify the authenticity of the information applicants disclose, the bourse said.

Launched in mid-2019, the STAR Market adopted a registration-based IPO system that is more market-oriented than the older approval-based process and more dependent on information disclosure. The reform aimed to solve China’s long-lingering headache of IPO backlogs by streamlining the review process and ease restrictions for tech-savvy candidates eyeing fundraising for further expansion.

In the Monday statement, the Shanghai Stock Exchange said it will reject IPO applications by companies whose information disclosures fail to meet requirements and contain major flaws that could seriously impact the investors’ understanding of the company and the review process. Intermediaries who do not properly implement the requirements will also be held accountable, the bourse warned.

Contact reporter Tang Ziyi (

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