A Brief Discussion on the Registration-Based IPO System in China

In June 2019, the Science and Technology Innovation Board (STAR Market) of the Shanghai Stock Exchange was officially established, marking the inception of the pilot stock issuance registration-based system in China. By February 2023, the comprehensive registration-based system was fully implemented, signaling the end of the long-standing chartered system in China's new stock issuance market. This transition from a chartered system to a registration-based system aligns with China's economic restructuring, comprehensive reform efforts, and the maturation of its capital markets. The full adoption of the registration-based system in China's stock market is a pivotal measure for developing direct financing, fostering a healthy cycle between industry and finance, and is significant for the high-quality development of China's economy in the future. From 1990 to 2023, China's capital market has evolved through approval-based system, chartered system, and registration-based system, with the latter gradually forming a multi-tiered capital market over five years, promoting rapid growth of the private economy and increasing the proportion of direct financing. However, since the implementation of the registration-based system, several issues have been exposed, such as insufficient and incomplete information disclosure, singular listing conditions, and lax regulation. Going forward, to scientifically promote the healthy development of a capital market with Chinese characteristics, China's stock market registration-based system should adhere to the following strategic orientations. The first is to consistently maintain the information disclosure system, the second is to continually improve listing standards, the third is to enhance delisting efficiency, and the fourth is to constantly strengthen the construction of capital market regulations. As the registration-based reform continues, China's capital market has progressively entered an important phase of building a modern capital market with Chinese characteristics. The reform has moved from localized trials to comprehensive implementation, as China strives to create a standardized, transparent, open, dynamic, and resilient capital market.