CSRC Promulgates New Methods to Standardize Share Allotments and Additional OfferingsChina Securities Regulatory Commission (CSRC) recently officially promulgated and put in force the Methods for the Management of New Share Offerings of Listed Companies.According to the new regulations, the companies to apply for allotment of shares or offering of new shares must meet the requirement that the weighted average earnings to net asset ratio in recent three years should not be lower than 6%. Those companies with weighted average earnings to net asset ratios lower than 6% have to meet some restrictive conditions in order to be allowed to apply for additional offerings. The newly promulgated Methods have made all-round standardization on the share allotment and additional offering activities of listed companies. The methods stipulate that the allotted shares and the additionally offered new shares should be subscribed in cash, and the same shares have the same prices. Listed companies except those in financial sector should not invest the capital raised from the offerings of new shares in financial institutions such as commercial banks, securities companies, etc. The methods have made positive explorations in the promotion of market-orientation of new share offerings of listed companies and implementation of securities dealers recommendation system. The distinguishing feature is that the methods have made unified stipulations on the requirements for the application for share allotments and additional offerings of listed companies. Such practice will properly lower the profit indices and make the qualified listed companies to be able to choose the financing ways freely. The methods require that all the listed companies to apply for share allotments and additional offerings must be recommended by securities firms. The securities firms examine and select the items of the offerings and report the result to CSRC. Lead underwriters and listed companies fix the offering prices in accordance with the intention of subscription of investors. Source: Panorama |
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