Rules on reverse mergers relaxed

China's top securities regulator has released draft rules that will encourage mergers and acquisitions involving listed firms, a move that could improve fundamentals of listed firms and elevate the ChiNext board's valuation level, analysts said.

Companies involved in high-tech and strategic emerging industries that are in line with the country's strategies will be allowed to list on the ChiNext board - the submarket filled with growth companies - through reverse mergers, the China Securities Regulatory Commission said in draft rules issued on Thursday.

In a reverse merger, a private company takes control and then merges with a dormant public firm, or "shell corporation", to get listed and bypass the lengthy process of initial public offerings. The CSRC started to ban reverse mergers on the ChiNext board in 2013 partly to contain speculation.