bonuswin| Major changes in investment banking supervision: The prospectus must clarify the purpose of listing and establish a correct "listing concept"! 188 IPO projects have been voluntarily withdrawn this year

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The underwriting and recommendation business of securities investment banks is once again facing major changes. In order to implement the new "National Nine articles" and the "opinions on strict access to issuance and listing to improve the quality of listed companies from the source (for trial implementation)", to promote all parties to establish the concept of responsibility to investors, strengthen the behavioral constraints of enterprises to be listed, and effectively protect the interests of investors, on May 15, the National Investor Protection publicity Day, the Securities Regulatory Commission issued guidelines on the Application of Regulatory rules-issuance Class 10, which will be implemented from now on.

The main contents of the guidelines includeBonuswinFirst, the issuer is required to publish a statement to investors in the prospectus, clarifying the basic information such as the purpose of listing, the establishment of a modern enterprise system, and the necessity of financing, and urge issuers to firmly establish a correct "listing view." The second is to make it clear that the "key minority" can make a commitment to extend the share lock-up period in the case of a sharp decline in post-listing performance, so as to strengthen the "key minority" awareness of sharing risks with investors. The third is to improve the information disclosure rules of the post-listing dividend policy in order to help investors to form stable return expectations. Fourth, strengthen the disclosure of relevant information of non-profit enterprises, require them to disclose forward-looking information such as expected profits, and fully reveal future development prospects to investors, so as to facilitate investors to make decisions.

The SFC pointed out that the above guidelines would be implemented from now on. IPO enterprises that have been declared and have not yet been listed shall submit application documents that meet the requirements of the above guidelines when the prospectus is updated next time.

One stone stirs up thousands of waves, for brokerage investment banks and companies to be listed, the introduction of the guidelines marks higher requirements and heavier responsibilities.

A statement to investors should be published prominently on the title page of the prospectus.

The guidelines first make it clear that the issuer shall publish a statement to investors in a prominent position on the title page of the prospectus in accordance with the provisions of the "guidelines on the content and format of Company Information Disclosure of publicly issued Securities No. 57-prospectus" and in the light of the specific circumstances of the company, explain the following four contents:

(1) the purpose of the issuer's listing

(2) the establishment and improvement of the modern enterprise system of the issuer

(3) the necessity of the financing of the issuer and the plan for the use of the funds raised

(4) the sustainable operation ability and future development plan of the issuer.

The guidelines require that the information disclosed by the issuer in accordance with the provisions of the preceding paragraph shall be true, accurate, complete, concise, clear and easy to understand, avoid formatting and templating, and shall not use marketing and publicity terms, and be consistent with the information disclosed in the prospectus. The actual controller of the issuer or the chairman of the board of directors shall sign the declaration.

A decline of more than 50% in performance can extend the lock-up period of its shares at that time.

The guidelines specifically address the information disclosure requirements of commitments related to declining performance.BonuswinAccording to the regulations, it is pointed out that the controlling shareholder, the actual controller and the concerted actors of the issuer may promise that the net profit of the issuer will decline by more than 50% in the year in which the issuer is listed and in the second and third year after deducting non-recurring profits and losses compared with the year before listing, the lock-up period of its shares at that time shall be extended.

The above-mentioned commitments shall be disclosed in the annex to the prospectus "(7) commitments related to investor protection", and investors' attention shall be reminded in the "tips on major matters". If the aforementioned subject makes a commitment to extend the share lock on a regular basis, it shall objectively assess the internal and external development environment, R & D investment and related risks, and shall strictly abide by the commitment.

Unprofitable enterprises should carefully estimate and disclose forward-looking information such as the expected time to achieve profitability.

In addition, the guidelines emphasize the detailed disclosure of the dividend policy by the issuer, pointing out that the disclosure of the dividend policy in the part of the prospectus "Investor Protection" should include the following four contents:

(1) relevant provisions on profit distribution in the articles of association

(2) the special research and demonstration of the board of directors on shareholder returns and the corresponding reasons for planning and arrangement, etc.

(3) profit distribution plans such as cash dividends within three years after listing, the contents of the plan, the basis and feasibility of formulation, and explain the arrangements for the use of undistributed profits in the light of their own operating conditions; if the proportion of cash dividends is lower than the average level of dividends in the three years before listing, the reasons shall be given; non-profit enterprises and enterprises with accumulated uncompensated losses shall state the specific plans to return investors in time after meeting the conditions of dividend sharing in the future.

(4) the contents of the company's long-term return plan and the main factors to be considered in planning.

The guidelines particularly emphasize that the issuer shall remind investors of the profit distribution policy after the listing of the company, the minimum ratio of cash dividends (if any), the profit distribution plan within three years after listing and the long-term return plan in the "significant matters reminder" section of the prospectus. In addition, the issuer may disclose the relevant commitments not to pay cash dividends during the examination period in the annex to the prospectus (7) commitments related to investor protection.

The sponsor institution shall reflect the verification of the issuer's profit distribution policy in issuing the letter of recommendation, and make clear opinions on whether the decision-making mechanism of the issuer's profit distribution is in line with the regulations, whether the issuer's profit distribution policy and future dividend planning pay attention to giving reasonable returns to investors and whether it is conducive to the protection of the legitimate rights and interests of investors.

In addition, the guidelines make special provisions on the disclosure of information on the unprofitable situation of the issuer, pointing out that the issuer should disclose in detail such matters as cause analysis, impact analysis, trend analysis, risk factors, investor protection measures and commitments, and carefully estimate and disclose forward-looking information such as the expected time to achieve profitability in the light of R & D progress, commercialization prospects and other factors, explaining the relevant basis and hypothetical basis.

Sponsor institutions and accountants shall carefully check and express their opinions on whether the unprofitable situation affects the sustainable business ability of the issuer.

Since the beginning of this year, 188 projects have been withdrawn voluntarily, and the withdrawal rate of small and medium-sized investment banks is high.

It is worth mentioning that recently, the CSRC has repeatedly stressed that it should consolidate the responsibilities of intermediary agencies, strictly control IPO access, improve the quality of listed companies from the source, and issue a series of policies to support it.

On March 15, the CSRC issued the opinions on strict access to issuance and listing to improve the quality of listed companies from the source (for trial implementation). The supervision of enterprise listing is strictly controlled from many dimensions, such as the declaration standard of listed companies, the investment scale of fund-raising, the practice of intermediary institutions, the audit of the exchange, and the dispatched offices of the CSRC, and the CSRC organizes strict supervision of all links of the whole chain. improve the supervision and accountability system of the whole chain The release and implementation of the revised regulations on on-site Inspection of IPO Enterprises emphasizes that "reporting is responsible"; and the promulgation of the "regulations on guidance and Supervision of initial Public offerings and listing" compacts the responsibilities of guidance institutions, so as to form a guidance and regulatory ecology with standardized and responsible enterprises, diligent and responsible institutions, and effective supervision.

In this context, the securities investment banking business ushered in a "cold winter". Especially after the introduction of the new "National Nine articles", the listing standards of the main board and gem have been upgraded, and many projects have been withdrawn either actively or passively.

Oriental Fortune Choice financial terminal data show that 188 projects have been withdrawn voluntarily from 2024 to May 16.

Due to the large number of project reserves, from an absolute point of view, the head brokerage has become the main force to withdraw the IPO. Citic Securities ranked first with 18 withdrawals, while CITIC Construction Investment took the second place with 17. China International Capital Corporation and Huatai have taken the initiative to withdraw more than 10.

Some small and medium-sized securities firms have few reserve projects, but they have no choice but to withdraw due to various reasons, and even the rejection rate of some brokerage investment banks has reached 100%, putting pressure on the investment banking business, which is already in the cold winter.

Zhongshan Securities, Southwest Securities, Xiangcai Securities, Hengtai Changcai, Huayuan Securities, Pacific and other six brokerages all withdrew the only project, resulting in a withdrawal rate of 100%. Zhongyuan Securities recommended 7 companies to withdraw 5 of them voluntarily, with a proportion of 71%.Bonuswin.43%. Minmetals Securities recommended 6 companies and withdrew 4 of their own initiative, with a withdrawal rate of 66%Bonuswin.67%. Century Securities recommended 3 companies, withdrew 2 companies voluntarily, and the withdrawal rate also reached 66.67%.

Under strict supervision, investment banks of securities firms are constantly thinking about how to consolidate the business foundation and improve the quality of practice in order to meet the requirements of the new stage of the development of the capital market.

The relevant person in charge of the National Gold Securities Investment Bank told reporters that the securities investment bank should actively act on issues of concern to regulators, and at the same time, in view of the regularized regulatory facts of "on-site supervision" and "on-site inspection", actively interact with on-site supervision and on-site inspection, learn the concept of supervision from on-site inspection and on-site supervision, improve the method of best adjustment, and improve the quality of business.

In addition, investment banks of securities firms should strengthen their risk awareness, pay attention to major risks and strictly control the "entrance" of the project at the end of the project contractor. At the same time, carefully screening the industry and main business of the proposed listed company is in line with the positioning of the relevant sectors, which is an important content for securities firms to strictly control the "entrance" of the project. When undertaking a project, it is necessary to make a clear judgment on the industry and main business of the proposed listed company, and provide it with professional opinions and clear suggestions on the declaration plate, so as to better meet the development needs of the proposed listed company.

In the implementation of information disclosure requirements, we should pay attention to investor-oriented and improve the quality of declaration documents. Specifically, investment bank employees should be familiar with the business process of the registration system, understand the key points of the registration system audit, fully disclose the verification process, conclusions and basis of important matters, and strive to improve the quality of declaration documents; in addition, while emphasizing full information disclosure, we should also pay attention to the conciseness and clarity of information disclosure, avoid templates and too many technical terms, and provide investors with more valuable investment decision information.

In addition, the above-mentioned responsible person also stressed that the investment bank recommendation business should pay more attention to the "investability" of listed companies. "We require investment bankers not only to consolidate the basic financial and legal knowledge system, but also to constantly strengthen the cultivation of valuation pricing and underwriting ability of sponsors, and further strengthen the driving role of industry research in the transfer of recommendation business. enhance the ability of value discovery."

Source: visual China-VCG211300009285

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