Willful "Cancellation" Difficult To Continue New Regulation Of Gem On-Site Supervision

Registration system IPO audit dead corner continues to clear.

On April 30, the Shenzhen Stock Exchange announced the guidance No.1 of Shenzhen Stock Exchange's GEM Listing review business - on site supervision of recommendation business (hereinafter referred to as the guidance) to standardize on-site supervision and enhance the transparency of on-site supervision.

In fact, on February 3 this year, the Shanghai Stock Exchange also released the guidelines on the on-site supervision of the IPO of the science and technology innovation board. However, compared with the version of the science and technology innovation board, the guidance released this time has added many new contents: for example, for the sponsor institutions that withdraw more listing application materials after on-site inspection or on-site supervision, the regulatory authorities will focus on random spot checks on the projects they sponsor and conduct on-site supervision again. In addition, if the gem has been re declared within 12 months and the relevant problems still exist, the supervision of the regulatory level will also be faced after acceptance.

"Compared with the content released by the Shanghai Stock Exchange in February, the guidance issued this time is equivalent to the upgrading of regulatory thinking. It is mainly to clear the loopholes left in IPO audit under the registration system before, and implement the regulation's statement that it is not allowed to" withdraw it once "from the rule level." There are senior investment banks in Beijing said.

The guideline is equivalent to the upgrading of regulatory thinking, which implements the regulation's position that it is not allowed to "withdraw" from the regulatory level. Visual China

On site supervision and restriction agency recommendation quality

On March 20 this year, the chairman of China Securities Regulatory Commission (CSRC), Yi Huiman, said at the China development forum that at present, there is a high proportion of withdrawal of application materials in the on-site inspection of IPO. According to the preliminary information, it is not to say how big the problems of these enterprises are, nor is it because of the false account withdrawal. One of the important reasons is that the practice quality of many sponsor institutions is not high.

"Those who" break through the barrier with illness "will be dealt with seriously and will never be allowed to withdraw." Yi Huiman pointed out that it will further strengthen the intermediary's responsibility to supervise and urge them to improve their ability to perform their duties.

For the statement of "never allow one to withdraw it", the guidelines issued by the Shenzhen Stock Exchange have also been made clear. Among them, it is indicated that for the sponsors who have been subject to administrative punishment by the CSRC or disciplinary sanctions imposed by the exchange for violation of laws and regulations in the latest 12 months, as well as the sponsors who have withdrawn a large number of sponsor projects and a high rate of sponsor cancellation after the exchange has issued the on-site supervision notice or the CSRC has issued the on-site inspection notice, Shenzhen stock exchange can randomly select the recommended projects according to a certain proportion and start on-site supervision.

The scope of randomly selected projects is composed of all the initial projects on gem that have not been reviewed by the GEM Listing Committee meeting and have not participated in the random selection.

This also means that in the future, if the securities companies continue to withdraw the listing declaration materials to avoid the inspection when the sponsor projects are faced with on-site inspection or on-site supervision, the gem projects recommended by subsequent companies will have a higher probability of being selected for on-site supervision.

On January 29 this year, China Securities Regulatory Commission (CSRC) officially issued the regulations on on on-site inspection of first-episode enterprises. On January 31, the China Securities Regulatory Commission (CSRC) released the latest round of spot checks on the quality of information disclosure of first-time enterprises. A total of 20 enterprises "won the lottery". The CSRC will inspect the quality of information disclosure and the practice quality of intermediary agencies.

However, from the implementation of the inspection, 16 of the 20 selected enterprises chose to withdraw the application materials voluntarily and terminate the audit, with the withdrawal rate as high as 80%.

In addition, according to the regulations on site inspection of first batch enterprises, the enterprises that withdraw their applications within 10 working days after being informed of on-site inspection will not carry out on-site inspection. This also led to the on-site inspection, many enterprises were directly informed by the relevant inspection "scared away".

According to the statistics of 21st century economic report, a total of six enterprises choose to withdraw their listing applications within 10 working days after being informed of on-site inspection, so as to avoid being subject to on-site inspection. Among them, except one intended to be listed on the science and technology innovation board, the other five companies are planning to be listed on the gem.

"The regulatory authorities have been very dissatisfied with the large-scale withdrawal of the listing application materials of the sponsor projects, especially the cases of withdrawing the materials immediately after receiving the inspection notice to avoid the inspection, and the securities regulatory bureaus and exchanges in various regions have also privately reiterated that they can not be arbitrarily withdrawn." According to the above-mentioned senior investment bank personage, but the previous rules have made it clear that "the withdrawal of materials within 10 working days is exempt from on-site inspection", so the supervision chose to adopt the guidance to increase the chance of on-site supervision, making up for the loophole that the sponsor can withdraw arbitrarily in the face of on-site inspection.

According to wind statistics, from the beginning of 2021 to now, 79 IPO projects have been terminated due to withdrawal of listing application materials, including 32 IPO projects on GEM.

Take a closer look at the 32 companies that intend to withdraw their materials on the gem, of which 6 are sponsored by CITIC Securities. Therefore, CITIC Securities has become the securities company with the largest number of companies to withdraw from the gem. In addition, Guoxin Securities, Minsheng securities, and Soochow securities also took the initiative to withdraw 4 gem projects, ranking the second in the industry, while Huatai United had 3 withdrawn projects. In the future, the gem IPO projects recommended by the above securities companies may receive special attention from the regulatory authorities.

No dead end left in system construction

In addition to the restriction of "one withdrawal", the guidelines also add new conditions for launching IPO on-site supervision.

Prior to that, there were significant doubts about some information disclosure contents in the application documents for issuance and listing stipulated by the Shanghai Stock Exchange, and the sponsor failed to give sufficient explanation, which affected the audit judgment; Or if the sponsor's verification procedures for important matters affecting the audit judgment are not sufficient, and there are obvious doubts about the verification conclusion, the exchange can start on-site supervision for the sponsor.

In the guidelines, the situation of triggering on-the-spot supervision after the issuer's "going to the meeting" is added. Specifically, if the Shenzhen Stock Exchange considers that the issuer does not meet the issuance conditions, listing conditions or information disclosure requirements and makes a decision to terminate the issuance and listing within 12 months from the date when the issuer re reports and the relevant problems still exist, the exchange will start on-site supervision for the sponsor.

According to the Shenzhen Stock Exchange, as of April 30, the Shenzhen Stock Exchange has organized 44 on-site supervision projects. The IPO projects that have been supervised on-site account for about 7% of the total number of IPO application projects, which are coordinated with audit and inquiry to form an effective regulatory deterrent.

In addition, in line with the on-site inspection, the listed enterprises that withdraw the listing application materials due to on-site supervision will also face on-the-spot supervision if they apply again within one year《 It is specified in the guidelines that after the Shenzhen stock exchange issues the written notice of on-site supervision and before the supervision group enters the market, the issuer withdraws the application for offering and listing or the sponsor withdraws the recommendation. If the project is re declared within 12 months after the withdrawal of the listing application, the Shenzhen Stock exchange will start on-site supervision after acceptance.

It is worth mentioning that, compared with the version of the science and technology innovation board, the guidelines issued by Shenzhen Stock Exchange also expand the reference scope of on-site supervision. In the future, in addition to gem IPO, refinancing of GEM listed companies, recommendation business of new third board companies, and independent financial consulting business of major asset restructuring will also be included in the scope of on-site supervision.

"In the past, the refinancing, merger and reorganization projects almost did not involve on-site supervision. In addition, the new third board transfer case will soon be implemented. Now the supervision is to ensure that there is no dead corner in the registration system audit process, so as to comprehensively implement the registration system, improve the supervision system, and pick up the missing points in the system." There are domestic small and medium-sized securities firms investment banking business related person in charge said.