China's securities watchdog to enhance IPO supervision

BEIJING - The China Securities Regulatory Commission (CSRC) on Sunday announced new measures to tighten the supervision of the Initial Public Offering (IPO) process.

According to the announcement on its website, the CSRC will launch spot checks on the enquiry and IPO road shows of new shares. The issuers and major underwriters that apply undisclosed information during the road shows will be subject to the suspension of their share issuance and to supervision measures, even punishment if illegal deeds are found.

Issuers and major underwriters must publish timely investment risk reports, at least once a week, during the three weeks before online subscription, if the price earning ratio (PE ratio) of proposed offering price, or the price ceiling, exceeds the average PE ratio of the peer listed companies in the secondary market, according to the CSRC.

The investment risk report shall mention the difference between the issuers and peer companies and the impacts of valuation, and warn the investors of the risks, the announcement said.

The CSRC also said it will carry out spot checks on the offering procedure of offline investors. The disqualified ones will be recorded and published in regular blacklists.