The new legislation drafted by China's Securities Regulatory Commission (CSRC) become stricter as it aims to crack down fraud and protect investors. The said rulings plan to reprimand share issuers and major shareholders from selling their stock lower than the initial public offering value.

Once lock-up ends after two years, the restrictions will be in placed according to the draft rules posted by CSRC in their website. Issuers are also mandated to prepare and disclose plans on how to stabilize their share prices once it has fallen below the net asset values giving five years after debut.

Public feedback will be sought after by the watchdog on said proposals by June 21.

Xiao Gang, the new CSCR Chairman has strengthened his campaign against fraud after taking over in March. Penalties include a three month suspension were issued to Ping An Securities Co.'s underwriting license. This was due to the company's involvement in the sale of shares of a fraudulent firm back in 2011.