Rules tightened for IPO sponsors on new board

Sponsors and underwriters of initial public offerings on China's new science and technology board in Shanghai will need to invest their own money and hold the stocks for at least two years, according to guidelines unveiled by the Shanghai Stock Exchange on Tuesday.

The new regulations are also an attempt by the capital market regulator to impose stricter controls on brokerages, said market insiders.

According to the guidelines, sponsors will need to invest between 2 and 5 percent of their money on shares floated by their clients, depending on the various sizes of the IPOs, with the cap on such investments set at 1 billion yuan ($149.5 million). The sponsors are required to hold the equity stakes in these companies for a period of 24 months.