Mainland To Relax IPO Rules To Woo Start-ups

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2019-01-31 HKT 13:34

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  • The Shanghai exchange released the proposed changes for public comments late on Wednesday. Image: Shutterstock

    The Shanghai exchange released the proposed changes for public comments late on Wednesday. Image: Shutterstock

The mainland will relax rules on IPOs for a planned Nasdaq-style tech board in Shanghai as it seeks to encourage start-ups to list at home after losing the likes of Alibaba and Baidu to Wall Street.

Existing rules on initial public offerings ban companies from listing unless they have a track record of profits, and put caps on their pricing and how much they are allowed to rise or fall.

But those and other constraints will be lifted or eased under rules released late on Wednesday for the new technology board.

The guidelines, announced by the Shanghai Stock Exchange, remove the requirement of past profits as well as any restrictions on IPO pricing.

There will also be no limits on price movements for the first five days of trading, after which a daily 20 percent trading band will be imposed.

The trading band compares to the current standard 10 percent daily limits on the mainland's two main exchanges in Shanghai and Shenzhen, a measure aimed at curbing excessive volatility on the country's often rumour-driven markets.

The Shanghai exchange has put the draft rules out for public comment until February 20, but proposed guidelines are rarely changed once they go public.

A launch date for the board has yet to be given. (AFP)

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