China National Building Material Co Ltd., or CNBM, the largest cement producer in China, and Bank of Dalian are the latest to abandon plans for a public offering, Reuters reported.
In a market where a company must post three consecutive years of profit to be eligible to list on the Shanghai or Shenzhen Stock Exchanges, the China Securities Regulatory Commission, or CSRC, has cracked down on local companies amid allegations of accounting fraud.
While CNBM is the largest cement producer in China, Bank of Dalian is the first of the 16 banks to drop their plans of going public.
Many companies who planned to list their shares in the mainland have recently withdrawn their Initial Public Offering, or IPO, applications prior to regulatory review because of weak financial performance and lengthy waiting period for approval.
More than 200 companies have scrapped plans to list their shares domestically in the first five months of the current year.
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And, there are more than 650 IPO applications waiting for regulator's approval, although that number is down from 800 last November.
Strict rules and the lengthy process for approval have forced companies to consider other channels such as picking an overseas venue for listing or using smaller over-the-counter markets.
The Bank of Dalian’s profitability was weighed down by a rise in non-performing assets and it reported only 1.6 percent growth in profit last year despite an 18 percent surge in revenues.
CNBM's net profit plunged more than 30 percent last year due to an oversupply of building materials.
The CSRC halted approvals for IPOs since last October as concerns mounted that a stock glut would burden an already lackluster equity market.
In December 2012, the CSRC introduced a three-stage special check to improve the quality of disclosure and ferret out financial fraud.
First, enterprises under IPO review and relevant intermediaries are required to conduct self-inspections to ensure the accuracy of the financial reports they disclosed before a public offering. CSRC will then review the self-examinations in the second and third stages.
The securities watchdog has not said when it would resume approving IPOs, though media reports have said it is likely to be this month or in July, Reuters reported.