BEIJING - A company is to be expelled from China's stock market following fraud during its IPO, the first time authorities have taken such action.

Delisting of Dandong Xintai Electric, an electrical equipment maker based in Liaoning province, will begin immediately as the company has been convicted of fabricating financial data in its IPO application, the China Securities Regulatory Commission (CSRC) announced on Friday.

It is the most severe penalty yet for IPO fraud in China.

The company will be barred from relisting, CSRC spokesperson Zhang Xiaojun told a regular press briefing, declaring "zero tolerance" for IPO fraud.

It is unclear when delisting will be complete, but it took less than two months for another company to be delisted for violating information disclosure rules earlier this year.

The CSRC began its investigation into Xintai last year after spot checks revealed discrepancies in its financial data. It was found to have provided fake data for receivables collected in its financial reports from 2011 to 2014, cooking up numbers ranging from 200 million yuan ($29.9 million) to over 70 million yuan by forging bank drafts and receipts, investigators said.

The company used the false information to be listed on the NASDAQ-style ChiNext board at the Shenzhen Stock Exchange in March 2014. A previous IPO application had been rejected in 2011 due to poor profits.

Investigators also found neglect by the board of directors and supervisors, with some board members confessing they never paid any attention to company meetings and were only there to sign papers.

Xintai Chairman Wen Deyi admitted fabricating financial information, but said he thought the violation did not warrant delisting. The company now has no way out but to go bankrupt, he said.

Xintai's shares were suspended on May 23. Trading will resume on July 12, according to a company statement, giving current shareholders the opportunity to divest.

The CSRC said it will punish altogether 17 people from Xintai who are involved in the case. The company will be fined 8.3 million yuan, while its chairman and chief accountant will be banned for life from conducting securities business or taking senior posts in listed firms.

Industrial Securities, the underwriter of the IPO, said Friday it would set up a 550 million-yuan fund to compensate investors.

The Xintai case comes after Shanghai-traded Zhuhai Boyuan Investment Co. was delisted earlier this year for breaking information disclosure rules, the first firm ousted for "major violations."

Previously, delistings were mostly for failure to meet requirements on profitability. The tougher regime is in answer to persistent calls for an effective delisting mechanism, crucial if the approval-based IPO system is to become registration-based and vital to restoring the stock market's credibility.

Under the current scheme, IPOs are limited in number and require approval from market authorities. While it's difficult for companies to go public, it is not much easier to delist them due to opposition from shareholders and local governments.

By the time regulators changed the delisting rules in July 2014, only 78 companies had been delisted from the two bourses since 1993, when delisting was formally introduced.