Q: Can you brief us on taking self-regulatory measures for the relevant misbehaviors in the information disclosure?
A: Tightening the responsibilities of issuers, intermediaries and related personnel is practically necessary for implementing the information disclosure-centered registration-based IPO system and ensuring the smooth operation of the SSE STAR Market. While advancing the issuance and listing review for the SSE STAR Market in an orderly manner, recently, the Shanghai Stock Exchange (SSE) has intensively imposed self-regulatory measures on the information disclosure misbehaviors of the issuers and their intermediaries found in the earlier process of review, based on relevant facts and rules. The disciplinary actions involve the projects of application for IPO on the SSE STAR Market submitted by Beijing Papaya Mobile Technology Co., Ltd., Shanghai Wisemedia Technology Co., Ltd., Amlogic (CA) Co., Inc., and Guizhou BaishanCloud Technology Co., Ltd. (“Papaya Mobile”, “Wisemedia”, “Amlogic” and “BaishanCloud” respectively for short) Specifically, Papaya Mobile and Wisemedia had withdrawn their application for IPO earlier, and the SSE terminated the review. According to the circumstances of the violations, the SSE issued regulatory warnings to issuers Wisemedia and BaishanCloud, and regulatory work letters to Papaya Mobile and Amlogic. The three sponsoring institutions involved, including ZTF Securities Co., Ltd., TF Securities Co., Ltd. and Guotai Junan Securities Co., Ltd., received the regulatory work letters. The regulatory warnings were sent to sponsor representatives Chen Jiao and Chen Dongyang for Papaya Mobile, sponsor representatives Xu Gang and Wang Yugui for Wisemedia, and sponsor representatives Xun Guoliang and Li Dong for Amlogic, and the regulatory work letter was issued to sponsor representatives Lu Pin and Song Gui for BaishanCloud.
According to the relevant rules, the regulatory work letters are directly sent to the relevant market participants, pointing out the problems existing and requiring them to rectify the misbehaviors and timely submit the implementation reports to the SSE; the regulatory warning letters will be announced to the market on the SSE website and put into the integrity records.
Q: Can you brief us on the characteristics of the misbehaviors subject to the self-regulatory measures?
A: The misbehaviors on which the SSE intensively imposed the self-regulatory measures were mainly the behaviors lacking regulation, rigorousness and diligence that were made by the relevant market participants in preparing the application documents such as the prospectus for the SSE STAR Market, replying to the review inquiries, etc. For example, the prospectus of Papaya Mobile (draft for application) failed to objectively reflect the contents of the issuer's main business, fully disclose the basis for setting the position in the industry, adequately reveal the risk factors that may have significant impact on the company's continuing operations, and explain the reasons for the differences between the relevant business data and the public information; the prospectus of Wisemedia (draft for application) did not present the process of changing the actual controller and related information on the shareholding by the shareholders previously disclosed in other public markets, and failed to make reasonable explanations; in the prospectus of Amlogic (draft for application) and its replies to the review inquiries, the disclosed domestic and overseas income data were adjusted several times, the sales amounts of the rebate products before and after the disclosure were inconsistent, and the amendments to the relevant contents of the prospectus were not reported to the SSE; BaishanCloud failed to timely report the major lawsuit-related matters during the project review. The above-mentioned misbehaviors violated the SSE’s rules for the issuance and listing review for the SSE STAR Market and the information disclosure standards and specific work requirements in the relevant rules, were not conducive to investors' understanding of the issuer's relevant information, and affected the normal progress in the review work to a certain extent.
Q: What are the principles for imposing the self-regulatory measures on relevant misbehaviors?
A: The self-regulatory measures were imposed on the above-mentioned misbehaviors on the basis of earnestly verifying the facts and strictly implementing the self-regulatory procedures. Two principles were mainly followed. The first principle was distinguishing the circumstances and seeking truth from facts. The improper behaviors handled intensively this time were mainly the irregular behaviors such as failure to strictly follow the work requirements in preparing and submitting the IPO application documents. On one hand, the misbehaviors were different from financial fraud, false disclosure and other violations, but on the other hand, the market participants strictly abiding by relevant work norms is an objective condition for ensuring the normal IPO review for the SSE STAR Market and the quality of information disclosure. When adopting the self-regulatory measures, the SSE fully considered the above-mentioned actual situations and ensured that the measures taken were in line with the degree of violation. The second principle was classified handling and implementation of responsibilities. The sponsor representatives are the direct undertakers for the tasks such as preparing and submitting the IPO application documents, and the relevant misbehaviors were directly related to the sponsor representatives failing to work in an earnest and diligent way. Therefore, based on the specific circumstances of the relevant cases, the SSE imposed stricter regulatory and warning measures on the relevant sponsor representatives, and corresponding self-regulatory measures on the responsible issuers, and issued the regulatory work letters to the relevant sponsoring institutions, requiring them to strengthen the management of the sponsor representatives and the sponsorship projects, tighten the work standards, and report the relevant rectifications in writing to the SSE.
Q: In the issuance and listing review under the registration-based IPO system, how will the SSE continue to tighten the responsibilities of the issuers as the main players and the responsibilities of the intermediaries for checking?
A: The issuance and listing review under the registration-based IPO system adheres to the focus on information disclosure, and strives to present a real company in the market. The principle first requires the issuer to “make it clear” and at the same calls for the “definite verification” by the intermediaries. While carrying out strict open inquiry-based review, the SSE will continue to require the issuers to ensure that the disclosed information is true, accurate and complete, and assume the primary responsibility. The SSE will continue to tighten the responsibilities of the intermediaries and urge the intermediaries to check and verify the authenticity, accuracy and completeness of the disclosed information so as to effectively play the role in checking.
In the course of the review, the SSE has continued to take measures for the misbehaviors of the relevant market participants in the early and budding stage, so as to prevent “minor diseases from becoming serious ones”. Since the launch of the issuance and listing review for the SSE STAR Market, the SSE has urged the issuers to improve the information disclosure quality and the intermediaries to enhance the practice quality by timely requiring talks for inquiry, reminding in conversation, issuing regulatory work letter and other means, with the measures taken more than 20 times. The SSE will further step up accountability for the market participants who still have misbehaviors after receiving the regulatory requirements. The SSE will seriously deal with the major violations in information disclosure such as suspected financial fraud in accordance with the rules and relevant procedures.
