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Original title: Intentional “cancellation” of the IPO may become a landmark reform of the registry system that was carried out on a constant basis
“Prepare the conditions for the reform more fully and promote the smooth implementation of this important reform.” Speaking about the reform of the registry system, the chairman of the China Securities Regulatory Commission, Yi Huiman, said in a keynote address at the recent China Development Forum. Round table.
The reform of the registry system is undoubtedly a new round of comprehensive deepening of the “bull-nose” capital market reform project. Since the establishment of the Scientific and Technological Innovation Board and the pilot registration system in 2019, the above traditional A-share IPO thresholds, such as performance loss, red chip structure, VIE structure and rights of Differentiated vote, have been broken and no longer an obstacle to the listing of companies. Driven by the reform of the registry system, the China Securities Regulatory Commission has also adjusted the refinancing and merger and reorganization policies, further optimized the transaction settlement and share reduction system, and issued and implemented new delisting regulations. of the list.
However, while the reforms continue to deepen, many market concerns have also been raised. In the face of frequent on-site inspections, companies intending to go public have withdrawn their IPO application materials and queues for IPOs have also started to get congested. The market has yet to come to a conclusion on the scope of the chart record review and disclosure.
“President Yi responded to the most controversial issue in the IPO market recently. Before the currently exposed issues are adequately resolved, the reform of the comprehensive national registry system is expected to be in a period of stable progress,” said a banker investment company in Beijing. .
IPO cannot “withdraw it once”
According to Wind data, since early 2021, 77 companies have canceled their IPOs and most companies have voluntarily withdrawn their IPO application materials. Among them, 92% of the companies that are going to register in the registry system, 43 of the ChiNext and 28 of the Council for Innovation in Science and Technology.
In the opinion of investment brokerage banks, the main reason for prompting relevant companies to withdraw their solicitation materials is the tightening of on-site supervision and inspections. “Currently, there is no problem with the on-site inspection,” said an investment banker at a large national brokerage firm.
On January 29, the China Securities Regulatory Commission officially issued the “Regulations on On-Site Inspection of First Issuing Companies”. From the content point of view, the new regulations clarify the basic requirements, standards, procedures and follow-up of on-site inspections of the initiating companies, as well as make the on-site inspections that were previously classified as a guide window. rules to follow. Subsequently, the China Securities Regulatory Commission quickly released the latest batch of random inspections on the quality of disclosure of information from early issuers, and a total of 20 companies “successfully won the lottery.” Among them, 16 companies have voluntarily withdrawn the application materials and the withdrawal rate reaches 80%.
On the phenomenon of a high percentage of recalls of application materials in the IPO market, Yi Huiman bluntly said: “It is not that the problems of these companies are serious, and it is not that they are withdrawn due to fraudulent accounts. The important reason. is that many sponsors have poor quality practices. “Judging from the current situation, many intermediary agencies still do not have the ideals, organizations and capabilities that match the registration system, and are still” wearing new shoes and walking through old ones. road.”
“Why are companies and intermediaries now starting to consider removing materials as soon as they encounter on-site inspections? On the one hand, the quality and the company’s working papers cannot stand the test, and for On the other hand, the current system also reserves space for the removal of materials. ” The above-mentioned senior investment bank The person pointed out. According to the “Initial Company On-Site Inspection Regulation”, after being notified of the on-site inspection, companies that withdraw their applications within ten business days will not be subject to supervisory on-site inspections.
“From an investment bank brokerage perspective, withdrawing application materials from the issuer just means the project cannot be listed in the short term. Rework and review the manuscript to re-declare it, and the fees for sponsorship and subscription can still be However, if the problem is not removed, the supervision will issue a warning. Letter or more serious consequences, at least one year of individual bonuses will be gone. ” Said the large-brokerage investment banking staff mentioned above.
However, judging from recent regulatory statements, the phenomenon of IPO materials being “retired” may become a thing of the past.
Yi Huiman clearly pointed out that companies that “break down barriers with disease” will be treated seriously and will never be “retired.” Recently, some local securities regulatory agencies also stated at a meeting on advisory and oversight that they would not accept advisory agencies to voluntarily release materials after encountering an on-site inspection of the exchange, or if problems were discovered during on-site inspections. , otherwise. the relevant sponsors would be treated differently.
Furthermore, according to the staff of the aforementioned large-scale brokerage investment bank, the exchange also raised concerns about the withdrawal of materials from the IPO project to the brokerage investment bank. “For some typical cases, the exchange indicated that even if the materials are removed, on-site inspections will be carried out.”
“Prepare yourself more fully for the conditions of reform”
In addition to responding to the phenomenon of a high percentage of withdrawal of application materials in the IPO market, Yi Huiman also noted that from the approval system to the registration system, the role of sponsors, accounting firms and other intermediary agencies has experienced great changes. .
“The main objective in the past was to improve the issuer’s listing” approability “, that is, to gain approval; now it should be to ensure the issuer’s” investment capacity “, that is, to provide investors with more valuable targets. Requirements for the ‘goalkeeper’ are actually higher, “Yi Hui said in full.
However, in the opinion of industry insiders, the transition from “approval” to “investment capacity” of intermediaries still needs to be optimized in the IPO review mechanism.
“Approval is the primary task of an IPO, and near-zero proceeds are not approved. Of course, approval is the most important thing.” Wang Jiyue, a senior investment banker, noted that the current A-share market is also devoid of issue failure cases. “There is no pressure to issue. Investors do not pay for investment capacity, so why invest costs in the issuance process to increase investment capacity?”
Furthermore, in Wang Jiyue’s view, the current IPO review pays too much attention to the authenticity of compliance, which has caused investment banks and other intermediaries to invest a lot of energy in financial verification and penetration verification of assets. shareholders. Investors do not care about the vast content of the prospectus and the readability of the prospectus needs to be improved. “The review does not pay attention to investment capacity and investors do not pay attention to the prospect. It is unrealistic for intermediaries to put investment capacity first.”
Therefore, Wang Jiyue believes that for intermediaries whose purpose is to make a profit, the shift from the emphasis on “approval” to “investment capacity” cannot depend on their spontaneous motivation. Instead, supervision should increase the audit indicators of “investment capacity” in the price review process and accelerate the commercialization of the issuance of new shares, forcing investors to pay attention to the investment capacity of companies. that will be listed. Finally, an accountability mechanism should be implemented to severely punish intermediary agencies that have problems with the quality of practice, and transfer the pre-audit of authenticity and compliance to the internal self-discipline of the intermediary.
“The regulation now proposes that the registry system definitely does not mean relaxing the audit requirements. But for investment bankers, the audit requirements need to be further clarified. Now, ‘not being diligent and responsible’ has become a panacea for punish investment banks. “In the future, the review criteria for new shares under the registry system will need to be further adjusted.
As Yi Huiman said, the reform of the registry system is something new. “Regarding the connotation and extent of the registry system, all parties in the market should discuss further, to eliminate falsehood and preserve the truth, increase consensus, and ensure that the reform is stable and far-reaching.” . In the Fifth Plenary Session of the XIX Central Committee In addition to the Central Conference of Economic Work and the “XIV Five-Year Plan” that has just been reviewed and approved, It is clearly stated that “the full implementation of the registration system for the issuance of shares” it is also required by all parties in the market to create the most suitable conditions for reform to ultimately promote this important reform. The reform has been implemented steadily.
(Author: Man Music Editor: Zhang Xing)
