China's securities regulator plans to raise the threshold for initial public offerings by regarding stock investment gains as extraordinary gains, the Shanghai Securities News reported yesterday.
The watchdog may reclassify six items, including income from securities and real estate, as extraordinary gains, the newspaper quoted an unidentified source as saying.
Companies which plan to raise money from mainland stock markets must have three straight years of profits, excluding extraordinary gains, to meet regulatory requirements.
Investment incomes for publicly traded companies on the Chinese mainland grew 152 percent last year to more than 250 billion yuan (US$36.4 billion), accounting for 18.7 percent of total profits, according to official data.
Analysts said investment gains are not sustainable and reclassifying them into extraordinary gains can help reflect list companies' normal profitability.
The country refrained from approving fund-raising proposals on concerns of adding more pressure to the already weak market.
The benchmark Shanghai Composite Index has fallen to below 3,000 from a record high of 6124.04 in October.
The Ministry of Environment Protection of China also stipulated that companies in 14 industries, including steel, cement and coal, must pass the ministry's review before applying for IPO or new shares sales, the newspaper said.
The industries also covered thermal power plants, electrolytic aluminium, metallurgy, building materials, mining, petrochemical, chemical industry, light industry, textile, leather manufacture and pharmacy.
Companies which apply for new share sales must ensure they don't raise money for projects that could harm the environment or are for phased-out products and technologies, and the money raised should be used to improve the environment.
China has asked domestic banks to curb loans to energy-intensive industries to cut waste and improve the environment.
About one third of China's lakes, rivers and coastal waters are polluted by farming and industrial waste and pose a danger to human health, according to the Organization for Economic Cooperation.
(Shanghai Daily July 9, 2008)
