Qualified listed companies on the mainland may be able to get faster approvals for their merger and acquisition applications, according to a new policy that has introduced separate M&A examination paths.

The policy, which took effect on Tuesday, has set three new types of categories for M&A examination processes: exempt/fast, normal and deliberate examination.

The speed of the examination processes will be determined by the evaluations made by stock exchanges, the China Securities Regulatory Commission, the Securities Association of China and financial advisors, a spokesman for the CSRC said earlier.

The separate examination processes will support China's industrial upgrading endeavor, which aims to mitigate overcapacity in some sectors.

Companies in nine industries affected by overcapacity, such as automobile, iron and steel, cement and shipping, will enjoy priority status in getting exemptions or quick approvals.

Asset-restructuring processes will bring fundamental changes to the companies' portfolios, operation models and profit structures, and could boost their performance in the short term, said Huang Xuejun, an analyst at Guosen Securities Co Ltd.

The essence of the separation of the approval processes is to give incentives to "qualified intermediate agencies, companies and M&A projects," said Pi Haizhou, a financial commentator and independent investor.

"The companies have to not only guarantee their own honesty but also vouch for the integrity of their financial advisor, which is a big step forward compared to the former policy where standards were mixed," Pi added.

M&A opportunities are expected to rise in traditional sectors undergoing an upgrading process, particularly in environmental protection industries, as well as emerging high-tech industries, including electronic products, renewable energy, and equipment manufacturing, according to a report from Northeast Securities Co Ltd.

The separated paths will also greatly increase the examination efficiency of M&A deals, enhancing resource consolidation while eliminating outdated production capacity, said the Beijing-based Securities Daily.

To facilitate the implementation of the new examination process, the CSRC has recently introduced a rating system evaluating the capacity of securities companies to act as financial advisors for public corporations' M&A deals.

Ten companies have been rated at the A level, including CITIC Securities Co Ltd, GF Securities Co Ltd, Guotai Junan Securities Co Ltd, and Qilu Securities Co Ltd. Observers believe that their clients have bigger chances of entering the exempt/fast path track.

Some of the A-level securities companies saw their A-share prices soar on Tuesday, with a 1.06 percent increase for CITIC Securities and a 1.18 percent rise for GF Securities.

Sixty-three M&A applications had been filed as of Sept 30, according to the CSRC, and 2,979 M&A cases in the A-share market are underway or have been completed since the beginning of the year, involving 973 listed companies and combined assets of 1 trillion yuan ($163.3 billion).

Meanwhile, several companies that have recently completed M&A deals have also seen large gains in their stock prices.

ZQGame Inc - an Internet company that bought 51 percent stakes in two technology companies at the end of September - has seen a 682.27 percent surge in its share price compared with the beginning of the year, while Huayi Bros Media Group, which purchased a stake of more than 50 percent in a Guangzhou-based mobile phone game developer in September, has seen a 450.55 percent hike in its stock price compared with the beginning of 2013.

yangziman@chinadaily.com.cn

(China Daily USA 10/09/2013 page15)