(Yicai Global) March 6 -- China's securities regulators have begun to request that initial public offering applicants whose submission is under review supply a forecast explaining how the novel coronavirus outbreak will affect their business.
The new securities law has brought in a new registration system, which will provide supplementary space for applicants to furnish a damage estimate, The Paper reported yesterday, citing several investment bankers.
Authorities already asked IPO sponsors to provide official opinions on the applicants they are backing last month, and now the Covid-19 impact report will need to feature in the IPO prospectus.
The applicant will need to explain how the epidemic will impact production, operations and its finances. Some of the specific areas requiring detail include: areas affected, business closures, issues fulfilling contracts, impact on production capacity and sales in the first quarter and first half, and how annual revenue and profit will fare compared with the previous year.
If the epidemic is likely to have a significant negative effect, the applicant will need to explain whether this is temporary or not and whether it is likely to force the business to cease operations.
The epidemic has yet to hamper the approval process so far, with the China Securities Regulatory Commission approving 10 offerings since the markets reopened after Chinese New Year, and three registrations for a listing on the Star Market in Shanghai.
Editor: James Boynton