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The Registration System Reform for Stock Issuance Needs to Be Redefined and Advanced(No.160, 2017)


By Wang Yang, Research Institute of Finance, DRC

Research Report, No.160, 2017 (Total 5235) 2017-11-28

Abstract: It is clearly stated at the Third Plenary Session of the 18th CPC Central Committee that the registration system reform for stock issuance needs to be advanced. However, such a reform was slowed down by the abnormal fluctuation in the stock market in 2015 and this is mainly due to the imprecise definition of the registration system and the unsound institutional framework. Relevant policy options are suggested as follows. First, the connotations of registration system need to be redefined and the registration system reform plans need to be formulated and consistent with China’s situations and international conventions. Second, based on the revised Securities Law and the strengthened supervision, efforts need to be made to accelerate improvement of supportive systems, promulgate the new Securities Law in the nick of time, and optimize the two major systems for information disclosure and investor protection, enforce institutional oversight as order of the day and enhance supervision capacity, implement the market-delisting mechanism and increase the proportion of delisting entities, establish and flesh out the stock transfer system. Third, efforts need to be made to clarify the direction of registration system reform and implementing approach, and extend the reform duration authorized by the National People’s Congress. Besides, efforts also need to be made to properly address the issues relating to the companies ready to go public, so as to normalize the procedures for initial public offering (IPO) and listing, gradually ease the control over issuance price, financing scale and issuance frequency. When the above-mentioned matters are all well done, the registration system reform is considered to be completed.

Key words: stock issuance, registration system, capital market