An initial public offering (IPO) is a company’s first stock sale to the public. When a business goes public, it sells shares of its ownership to investors to raise money to expand its business.
The process of going public is costly and time-consuming, and a company must meet specific requirements before it can begin selling shares.
An essential requirement is that the company must be profitable. In addition, the company must have a solid track record of growth and show that it will be able to continue growing in the future.
The Beijing IPO process is a bit different from the process in other parts of the world. The IPO process in Beijing is long and arduous, but it can be gratifying for companies that complete it.
In Beijing, companies must first go through a rigorous approval process with the China Securities Regulatory Commission (CSRC) before they can even list their shares. This approval process usually takes several months, and the CSRC has the authority to reject any company’s application for any reason.
The following is a step-by-step guide to the process:
Preliminary screening
Companies that want to list on a stock exchange in Beijing must first go through a preliminary screening process to determine if they meet the exchange requirements.
It includes submitting detailed information about the company, including its financials, organizational structure, and business operations.
Review by the China Securities Regulatory Commission
The China Securities Regulatory Commission (CSRC) will review all companies that pass the preliminary screening. This review will determine if the company complies with all applicable securities laws and regulations.
Another critical requirement is that the company have a good management team in place. This team will be responsible for running the company once it goes public. The IPO process in Beijing is complicated and can take up to a year to complete.
The company must apply with the China Securities Regulatory Commission (CSRC), and the CSRC will review the application and make a decision.
Approval by the CSRC
If the CSRC determines that a company meets all requirements, it will approve the company for listing on a stock exchange. At this point, the company will become what is known as a “publicly listed company.”
If the CSRC approves the application, the company will need to hire an investment bank to help it sell shares to investors. The investment bank will draft a prospectus, which is a document that provides information about the company and its business plan.
Application to list shares
The next step is to apply to list its shares on a stock exchange. This application must include detailed information about the proposed share offering, including the number of shares offered and the price per share.
Review by the China Securities Exchange
The China Securities Exchange (CSX) will review the company’s application to list shares. This review will determine if the proposed share offering complies with all applicable regulations.
Approval by the CSX
If CSX determines that its proposed share offering complies with all regulations, it will approve the company for listing on a stock exchange. At this point, the company will become what is known as a “traded company.”
Trading of shares
Shares of publicly listed companies can be exchanged on China’s two major stock exchanges: the Shanghai Stock Exchange and the Shenzhen Stock Exchange. The trading of shares typically starts one or two weeks after a company has been approved for listing.
The company must also hold a roadshow, a series of meetings where the management team will pitch the investment bank’s clients on investing in the company. Once these steps are completed, the company can finally go public.
Essential requirements
An essential requirement is that the company must be profitable. In addition, the company must have a solid track record of growth and show that it will be able to continue growing in the future.
Take a look at Saxo Hong Kong for more information.
