(Yicai Global) Dec. 28 -- The rejection rate of initial public offering applications has increased this year with regulators imposing more stringent requirements and the A-share market may see a decline in new share issuances next as authorities continue to conduct strict reviews, industry insiders said.

Tougher regulations will push a growing number of firms to withdraw their IPO applications, they said. The number of companies that applied to end the review of their application has increased since September and 39 groups have taken back their IPO materials in the past three months. Some 14 had done so this month as of Dec. 21.

Sponsors need to be extremely cautious in recommending firms and should sort out all their projects under review, while companies with poor earnings, unstable performance and legal and regulatory violations during reporting periods may apply later and should not apply blindly, the China Securities Regulatory Commission department in charge of share issuance told brokerages on Dec. 20.

Firms that do not meet the requirements should withdraw their applications before Jan. 1, 2018, the department said, adding that it will pay special attention to the sponsors of problematic firms.

The IPO rejection rate has risen this year, especially in the second half, as the review committee's assessments became increasingly rigorous. A new panel that took over in October stepped up the scrutiny of internal control standards for examining the authenticity of application materials, sustainability of earnings and independence of business, employees from brokerages and investment banks said.

The committee had reviewed 478 IPO applications this year as of Dec. 24, approving 375, deferring 22 and rejecting 81, with a rejection rate of 16.95 percent. Reviews of another nine applications were canceled. The committee reviewed 270 applications last year, approving 247 and rejecting 18, with a rejection rate of less than 7 percent.

Between Oct. 17, when the new panel conducted its first review, and Dec. 24, the group reviewed 81 applications, approving 47, deferring six and rejecting 28, with a rejection rate of more than 30 percent.

After welcoming a multitude of IPOs this year, China's A-share market is likely to slow next year due to stricter regulatory requirements, Deloitte & Touche forecast in a recent report.