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The China Securities Regulatory Commission (CSRC) announced new measures to tighten the supervision of the Initial Public Offering (IPO) process.
In a statement, CSRC said it will launch random 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 punishment if illegal deeds are found.
Investment risk reports must be published once a week by the issuers and the underwriters in advance if the proposed IPO price points to a price-to-earnings ratio that is higher than the average PE ratio of their listed peers, warned 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 regulator has stepped in at a time when the Chinese stock market is struggling, with the Shanghai benchmark ranking as Asia’s worst performer in 2013.
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.
The one-third drop in the Shanghai Composite Index in the past four years while property prices have seriously escalated has worried Chinese investors.