Companies and brokerage firms found to gone against the CSRC’s wishes will be penalised, while their IPO could also be suspended.
In addition, the CSRC is also asking companies to publish a risk alert at least once a week starting three weeks before the beginning of the IPO subscription period in the case that a deal is priced at a higher valuation than their industry peers.
Investors too are not spared from the CSRC’s iron hand and those found to have not conducted proper due diligence during the price discovery process could be blacklisted. They will be suspended from participating in subsequent IPO price discovery processes.
The stricter measures come after the regulator approved about 50 companies to conduct IPOs before the end of January. That was after the CSRC released new IPO rules at the end of last year, aimed at improving transparency and increase market participation.
Close to 20 companies had already priced their respective IPOs as of late Monday afternoon, although a few, such as Jiangsu Aosaikang Pharmaceutical, had also abandoned ship.
Aosaikang Pharmaceutical delayed its IPO plans after pricing its shares at a staggering 2012 P/E multiple of 67 times, which was a lot higher than the industry average of 40 times. Aosaikang said it was delaying the IPO because the deal was “too big.”