New rules designed to improve the standard of listed companies on the Chinese mainland are set to come into force in February 2004.
Under the terms of the new regulations, brokerages and banks sponsoring firms for listing will be held accountable for their clients until two years after an IPO, or one year after a follow-on offer of equity or convertible debt.
Should a listed company make misleading disclosures, display drastic falls in earnings, undertake unfair connected transactions, or change major shareholders during that period, the sponsoring bank or brokerage will be barred from sponsoring new deals for up to a year.
Sponsoring organisations are also barred from supporting the share offers of companies in which they own more than 7%.
According to reports, the regulations are a watered-down version of the original proposals for improving corporate governance, which stipulated that sponsors should pay for a second audit and valuation of listing candidates when there is a difference of opinion between them and the candidate's auditors and lawyers over valuation of the firm in question.
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