(Yicai Global) Dec. 5 -- The number of Chinese A-share initial public offering (IPO) applicants applying for terminations of review of their applications has jumped since the start of the year.
This is mainly because the China Securities Regulatory Commission (CSRC) has become more rigorous in its review of listing applications, forcing some problematic companies to give up.
As of Dec. 1, some 102 IPO applicants had applied for a termination of review of their applications this year, 32 with the Shanghai Stock Exchange and 70 with the Shenzhen Stock Exchange, Securities Daily reported today.
Reasons for termination range from a sharp decline in earnings to abnormal changes in financial statements, to failure to answer questions raised in reviews, to dereliction in updating materials in a timely manner. Adjustments to business strategies and listing plans may also prompt companies to apply for terminations, per CSRC rules.
The increase in the number of firms applying to end review of their applications this year correlates with the ever-more stringent CSRC regulation. By the end of November, the year had already seen some 69 companies applying for an A-share IPO rejected. The CSRC's new sub-committee in charge of examining securities issues has thumbed down 22 IPO applications and shelved five since it started exercising its functions on Oct. 17.
Applying to terminate an application review is not tantamount to an exemption from legal liability. Issuers, promoters and intermediaries remain legally on the hook if applicants have fabricated financial information, concealed debts or whitewashed other pertinent factual circumstances in their applications.