'Shell'-shocked investors offload

Han Jintong, 56, a retail stock investor in Shanghai, has been selling shares of some loss-making companies of late. He owned them for years, but the decision to sell was driven by the realization that the companies have slim chances now to become shell entities.

Shell companies are those that are already listed but do not actively engage in business. They instead wait to get bought by private companies wishing to get listed. The latter do such deals to skip the time-consuming procedure and attendant approvals for initial public offerings. This process is called a reverse merger or backdoor listing.

But the imminent registration-based IPO system promises to be simple and fast, and will likely sound the death knell for backdoor listing.