BIZCHINA / Top Biz News
New regulation on IPO takes effect
(Xinhua)
Updated: 2006-09-19 15:26
China's regulation on the Issuance and Underwriting of Securities, which
took effect Tuesday, make it possible for the issuer of selected initial
public offerings (IPO) to adjust the ratio of shares for institutional
and public investors.
Under the rules published Saturday by the China Securities Regulatory
Commission (CSRC), an IPO issuer and the major underwriter can create a
"greenshoe" mechanism, which allows them to re-allocate shares reserved
for institutional investors to minority investors.
According to Article 32 of the regulation, the mechanism can be used if
the number of shares offered in the IPO reaches a "certain" size, and
demand for the shares far exceeds the offering.
A CSRC said the move would give public investors more opportunities to
buy new shares.
Analysts said the mechanism will probably be used in the upcoming IPO of
the Industrial and Commercial Bank of China (ICBC), the country's biggest
commercial bank.
The commission will announce later this week its decision on ICBC's
request for an IPO on the Shanghai Stock Exchange.
(For more biz stories, please visit Industry Updates)
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