A broad social credit system is expected to rank individuals and enterprises, and violators with unethical behavior will be punished according to the rules. [Photo/IC]
Beijing -- Government approval of initial public offerings will take enterprises' credit data into consideration, as part of the nation's broader efforts to build a nationwide social credit system.
Enterprises with past records of untrustworthiness will be strictly examined by the securities regulator when applying for initial public offerings and the issuance of convertible bonds, and the government will pay close attention to the credit information of enterprises after issuing approvals, according to a memorandum of understanding issued last week by the China Securities Regulatory Commission and the National Development and Reform Commission.
The information can be found in the public database established by the NDRC.
"The new MOU does not represent a significant policy shift for the current approval procedure. It is expected to give warnings to market participants failing to obey the rules," said an official with the CSRC who declined to be identified.
The MOU comes after Jia Yueting, indebted tech conglomerate LeEco's founder, was added to the nationwide list of debt defaulters in late December. The move is part of the government's broader goal at building a system aimed to build a culture of trust in society, collecting data in a variety of fields.
The broad social credit system is expected to rank individuals and enterprises, and violators with unethical behavior will be punished according to the rules.
The scheme is expected to be fully operational by the end of 2020, according to an earlier guideline issued by the State Council.
An official with the NDRC participating in building the scheme said the overall framework has been established "as scheduled", and there will be more government agencies participating in the scheme as scores and blacklists will be run by different government agencies, while professional private companies provide support for data access.
Zhang Chun, deputy head of department of fiscal and financial affairs with the NDRC, said the scheme is expected to play a role in serving the non-financial sector and creating a fair business environment. The commission has signed more than 40 memorandums of cooperation with different regulatory authorities, and has launched more than 100 measures, both rewards and punishments, according to Zhang.
Source: China Daily
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