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Upon the approval of the China Securities Regulatory Commission (CSRC), the Shanghai Stock Exchange (SSE) published today the newly revised Measures of Shanghai Stock Exchange for Implementation of Issuance and Underwriting of Shares on the STAR Market and the Guidelines No. 1 of the Shanghai Stock Exchange for the Application of the Rules for Issuance and Underwriting on the STAR Market - Initial Public Offerings, aiming to optimize the mechanism for issuance and underwriting of new shares on the SSE STAR Market and enhance the equilibrium between buyers and sellers. The revised rules (hereinafter collectively referred to as the STAR Market Issuance and Underwriting Rules) shall come into effect on the date of publication.
From August 20 to September 5, the SSE solicited public opinions from the market on revising the STAR Market Issuance and Underwriting Rules, and a total of 63 threads of feedback were received through the official website, letters, conversations at meetings and other means. In general, the market participants supported the arrangements for optimizing and adjusting the IPO mechanism for the SSE STAR Market, believing that the revision of relevant rules would facilitate reaching equilibrium and enhance the issuance efficiency. Meanwhile, they also put forward opinions and suggestions on some specific clauses. Upon deliberation, the SSE adopted of some of the opinions and further improved the corresponding clauses.
The main revisions are made in the following four aspects. First, the percentage of the highest quotes to be rejected is adjusted from “not less than 10%” to “not more than 3%”. Second, it is clarified that if the issuance price is set higher than the average of the prices offered by offline investors upon the completion of the initial inquiry, it is only necessary to issue a special announcement on investment risks once before the subscription, without the need to make arrangements for delaying subscription. Third, the requirement is cancelled for the issuer and the lead underwriter to provide explanations if the issuance price is not set within the valuation range in the research report on investment value. Fourth, the supervision is enhanced on the conduct of quotation, the requirements for offline investors to participate in quotation for new stocks are further clarified, and the possible violations are included into the scope of self-regulation. If any violator is suspected of breaking laws or rules in the issuing and underwriting business or in the process of inquiry and quotation, the SSE will report relevant clues to the CSRC for investigation; and if any violator is suspected of committing a crime, the judicial authorities will investigate the criminal responsibility according to law. With regard to the transition between the new and the previous rules, if the prospectus and the preliminary inquiry announcement were published and the offering was initiated before the publication of the revised rules, the previous rules shall apply; and the new rules shall apply if the offering is initiated after the publication of the new rules.
In addition, at the first working meeting held recently by the Second SSE Self-regulatory Committee for Public Offering of Shares on the STAR Market (the “Self-regulatory Committee” for short), the targeted measures were discussed to facilitate the implementation of the revisions of the STAR Market Issuance and Underwriting Rules and a smooth transition, including the practical business arrangements for the percentage of the highest quotes to be rejected, prudent assessment of whether and how far the issuance price exceeds the lowest of the “four values”, and compliance in the stock issuance business. The Self-regulatory Committee also proposed guiding suggestions for the industry. The SSE expressed its support for those guiding suggestions put forward by the Self-regulatory Committee, calling on all market participants to comply with them, and will pay special attention to the issuers and lead underwriters’ compliance with the guiding suggestions during the filing of the issuance plans.
Going forward, under the guidance of the CSRC, the SSE will follow the working guideline of “establishing the system, non-intervention, and zero tolerance” and the regulatory concept of “standing in awe of the market, the rule of law, professionalism and the investors, and forging synergy in comprehensive support for reform, development and stability of the capital market”. To this end, the SSE will continue to enhance the regulation on the issuance and underwriting process, and urge both buyers and sellers to earnestly perform their duties and fulfill their responsibilities. The SSE is committed to supporting the steady development of the STAR Market by working with all market participants to jointly maintain the order of stock issuance.
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