Picture source: Visual China
On June 28, the China Securities Regulatory Commission’s official Weibo released the "Relevant Persons in charge of the Securities Regulatory Commission Answers Questions about the Establishment of the Sci-tech Innovation Board and the Pilot Registration System", which gave detailed responses to 15 issues of concern to the outside world. The full text is nearly 1.2 Million words.
1. Question: How to understand the registration system of the Sci-tech Innovation Board?
Answer: The registration system is a securities issuance supervision system that is different from the approval system and the approval system. Its basic feature is centered on information disclosure. It requires securities issuers to disclose company information truthfully, accurately, and completely. Investors can obtain necessary information to judge the value of securities and make decisions about whether to invest. Securities regulatory agencies do not make substantive judgments on the value of securities and their prices.
The registration system originated in the United States. In the State Blue Sky Act of 1911, Kansas State established a "substantial supervision" securities issuance approval system, authorizing the registration authority to make substantive judgments on whether the securities issuer's business plan is fair, just and reasonable to investors. After the "Great Depression" in 1929, the United States enacted the "Securities Act of 1933" and did not adopt a "substantial supervision" securities issuance system, but established a securities issuance registration system based on "mandatory information disclosure". At present, the registration system has become a common practice in the supervision of securities issuance in mature overseas markets. In addition to the United States, the United Kingdom, Singapore, South Korea, my country's Hong Kong and Taiwan regions all adopt a securities issuance system with the characteristics of a registration system. Due to the large differences in the development history, investor structure, rule of law traditions and judicial guarantees in various countries or regions, the specific practices of implementing registration systems in different markets are not completely the same.
In 2013, the Third Plenary Session of the Eighteenth Central Committee of the Communist Party of China proposed to "promote the reform of the registration system for stock issuance." In January 2019, with the approval of the Party Central Committee and the State Council, the China Securities Regulatory Commission announced the "Implementation Opinions on the Establishment of the Sci-tech Innovation Board and the Pilot Registration System on the Shanghai Stock Exchange", marking that my country's securities market has begun to start with the establishment of the Sci-tech Innovation Board and steadily pilot projects. Registration system, and gradually explore a securities issuance registration system that suits my country's national conditions. The sci-tech innovation board pilot registration system draws on the relevant practices of mature overseas markets, optimizes and streamlines the registration conditions to linear and principled requirements, and realizes the disclosure of the entire process of review standards, review procedures, and inquiries and responses, which reflects the use of information in the registration system. Disclosure is the core, the basic characteristics and overall direction for investors to make value judgments. In accordance with the requirements of the Sci-tech Innovation Board registration system, the issuer is the first person responsible for information disclosure, and is responsible for fully disclosing the information necessary for investors to make value judgments and investment decisions to ensure that information disclosure is true, accurate, complete, timely and fair Obligations; intermediary agencies, mainly sponsors, use professional knowledge and expertise to fully understand the issuer’s business conditions and risks, conduct a comprehensive verification and verification of the issuer’s information disclosure, and make professional judgments for investors to make investment decisions. ; The issuance and listing review department mainly conducts review work by asking questions, answering questions and other necessary methods, with the purpose of urging the issuer to improve the content of information disclosure. The issuer’s business quality, whether the stock is worth investing in, and the investment price and value of the stock are subject to value judgments made by investors. The price, scale, and pace of stock issuance are mainly determined by market-oriented methods. Market participants such as issuers, sponsors, underwriters, institutional investors, etc., are determined through market mechanisms such as price inquiry, pricing, and allotment. The regulatory authority does not set any Administrative restrictions.
Considering that the development time of my country's securities market is relatively short, the basic system and market mechanism are not yet mature, and the market restraint force and judicial guarantee mechanism are not perfect., The sci-tech innovation board registration system still requires the department responsible for the registration and review of stock issuance to put forward some substantive requirements and play a certain role as a gatekeeper. One is based on the sci-tech innovation board positioning, and put forward requirements on the industry category and industry direction of the issuance applicant. The second is that for companies that obviously do not meet the sci-tech innovation board positioning and basic issuance requirements, the stock exchange can make a review decision to terminate the issuance and listing. Third, the China Securities Regulatory Commission, on the basis of the review and approval of the stock exchange, makes judgments on whether the issuance review work and the issuer's major aspects of the issuance conditions and information disclosure requirements comply with the regulations, and the registration may not be granted to those who do not comply with the regulations. In the future, as investors gradually mature, market constraints are gradually formed, and the level of integrity is gradually improved. Related requirements and specific practices will be gradually adjusted and improved in accordance with market practices.
2. Question: How to understand the functional positioning of the Securities Regulatory Commission and the Exchange in the implementation of registration review on the Sci-tech Innovation Board?
Answer: In countries or regions where the securities issuance registration system is implemented, due to factors such as market environment, administrative system, historical inheritance, etc., the division of securities issuance review functions is adopted differently between the regulatory authorities and the stock exchanges. However, it is generally believed that the registration right of securities issuance has the attribute of public power. Therefore, some regulatory agencies or special public institutions are responsible for the issuance review; some adopt the review by the stock exchange, but in order to ensure the appropriateness of the registration power In practice, the regulatory authorities will often use a certain mechanism to supervise the stock exchange’s implementation of the registration review work. It is generally believed that the right of the stock exchange to decide whether to approve the listing of the company’s securities is of a civil nature.
The pilot sci-tech innovation board registration system draws on relevant overseas practices and ideas behind it, and clearly divides the relevant responsibilities of the Securities Regulatory Commission and the Shanghai Stock Exchange in implementing the registration of stock issuance. Among them, the Shanghai Stock Exchange is responsible for the review of stock issuance and listing. After the Shanghai Stock Exchange accepts applications for companies to publicly issue shares and go public, it will mainly base on the positioning of the Science and Technology Innovation Board to review and determine whether the company meets the issuance conditions, listing conditions and information disclosure requirements. The audit work is mainly carried out by asking questions to the enterprise and answering the questions. After the SSE reviews that the company believes that the company meets the issuance conditions, listing conditions, and information disclosure requirements, it shall submit the review opinions and the issuer's registration application documents to the China Securities Regulatory Commission to perform the issuance registration procedures.
The SFC mainly undertakes the following three responsibilities:
One is responsible for the registration of stock issuance on the Sci-tech Innovation Board. Registration is not a re-review or double review. The CSRC focuses on whether there are omissions in the review content of the exchange’s issuance, whether the review procedures are in compliance with the regulations, and whether the issuer is in compliance with the regulations in major aspects of the issuance conditions and information disclosure requirements. The quality control of the review work of the Shanghai Stock Exchange makes it more in line with the relevant requirements of the sci-tech innovation board registration system reform. Its main purpose is to urge issuers to further improve the content of information disclosure, not to return to the old path of administrative approval.
The second is to supervise the review work of the Shanghai Stock Exchange. In addition to monitoring the exchange’s issuance review content through the registration procedures for omissions and whether the review procedures are in compliance with the regulations, the CSRC can also continue to track the issuer’s information disclosure documents and the SSE’s review opinions, and conduct random checks on the SSE’s review work on a regular or irregular basis. And check. Under the sci-tech innovation board pilot registration system, the exchange is the statutory issuance review subject, performing social public affairs management functions in accordance with the law, but at the same time the exchange is also the market organizer of the sci-tech innovation board stock trading, and there are social public interests and exchange markets. The conflict of roles is also a common problem faced by global exchange supervision. The pilot registration system for the Sci-tech Innovation Board resolves conflicts of interest by establishing a monitoring mechanism for the Exchange by the China Securities Regulatory Commission.
The third is to implement the supervision of the whole process before and after the fact. In the process of issuance and listing review, registration and new share issuance, if the CSRC discovers that the issuer is suspected of major violations of laws and regulations, it may request the SSE to deal with it, or announce the suspension of the issuance registration, or suspend the issuance of new shares until the issuance registration is cancelled, and the relevant Administrative enforcement measures shall be taken for violations of laws and regulations.
Picture source: Visual China
3. Question: How does the Sci-tech Innovation Board reflect the concept of information disclosure as the center?
Answer: The establishment of the Science and Technology Innovation Board on the Shanghai Stock Exchange and the pilot registration system are an incremental reform of the capital market. This reform is not only the establishment of a new section, but more importantly, it adheres to the direction of marketization and rule of law, establishes and improves a stock issuance and listing system centered on information disclosure, and plays the role of the science and technology innovation board reform test field to form a replicable market. Promotional experience. The science and technology innovation board takes information disclosure as the core principleReading, prominently reflected in:
First, always insist that the issuer is the first person responsible for information disclosure. The information disclosed by the issuer has a significant impact on the value judgments and investment decisions made by investors. Therefore, the Science and Technology Innovation Board puts forward higher requirements on the issuer’s fiduciary duties and legal responsibilities. The issuer not only needs to fully disclose the information necessary for investors to make value judgments and investment decisions, but also must ensure that the information disclosure is true and accurate. , Complete, timely and fair.
The second is to establish a more comprehensive, in-depth and accurate information disclosure system. Combining the gains and losses of overseas stock issuance market access, the Science and Technology Innovation Board systematically sorts out the current issuance conditions, retains the most basic issuance conditions, and gradually transforms matters that can be judged by investors into information disclosure requirements.
The third is to pay more attention to the quality of the issuer’s information disclosure during the issuance review process. In addition to paying attention to whether the information disclosure is true, accurate, and complete, the issuance review of the Sci-tech Innovation Board will also disclose the review process and review opinions to the public and accept social supervision.
Fourth, in terms of continuous information disclosure, the Science and Technology Innovation Board has also made differentiated arrangements. The Science and Technology Innovation Board combines the characteristics of science and technology enterprises to further strengthen the information disclosure of industry information, core technologies, business risks, corporate governance, performance fluctuations, etc., and for information disclosure quantitative indicators, disclosure timing, disclosure methods, and suspension of exemption disclosure More flexible institutional arrangements should be made for commercial sensitive information and non-transactional time for the release of major information to maintain the commercial competitiveness of science and technology enterprises.
4. Question: How is the sci-tech innovation board trading system arranged?
Answer: The stock trading system of the Sci-tech Innovation Board is generally the same as that of other sectors. Based on the characteristics of listed companies on the Sci-tech Innovation Board and investor suitability requirements, the Sci-Tech Innovation Board has established a more market-oriented trading mechanism. One is that there will be no price limit for the 5 trading days before the listing of new shares, and thereafter the price limit is set to 20%; the second is to increase the minimum number of stocks for each transaction, and the number of single declarations should not be less than 200 shares; the third is According to the characteristics of the science and technology innovation board stocks, adjust the selection criteria for the underlying stocks of margin trading; fourth, on the basis of auction trading, introduce a market maker system when conditions are ripe; fifth, introduce after-hours fixed-price trading, which will be used every trading day After the closing call auction ends, from 15:05 to 15:30, the exchange trading system will match the closing pricing declarations in the order of time priority, and transactions will be made at the closing price of the day.
5. Question: How to understand the unique trading system arrangements of the Sci-tech Innovation Board?
Answer: The unique trading mechanism of the Sci-tech Innovation Board effectively guarantees market liquidity, effectively improves pricing efficiency, and promotes the better functioning of market price formation mechanisms. At the same time, efforts are made to set up corresponding risk prevention and control mechanisms to prevent non-compliance. Rational speculation promotes the smooth operation of the market. Highlighted in:
First, in the initial stage of the issuance and listing, the Science and Technology Innovation Board removed the 44% limit on the maximum price increase or decrease on the first day of listing of new shares, and there was no limit on the price increase or decrease in the first 5 trading days of the listing of new shares. From the perspective of overseas markets, the first five trading days of new stocks are usually the price formation period, and the stock price fluctuates greatly, and thereafter it has stabilized. In order to prevent a situation where stock prices may fluctuate sharply if the price limit is not set, the Science and Technology Innovation Board has set up a temporary suspension mechanism for the 5 days before the listing of new stocks. When the intraday transaction price rises or falls by 30% or 60% from the opening price of the day for the first time, trading will be suspended for 10 minutes respectively. In addition to giving the market a cooling-off period and reducing irrational speculation, the temporary suspension of trading during the intraday trading system can also prevent the formation of wrong orders such as "Oolong Finger".
Second, during the continuous trading phase, the Science and Technology Innovation Board appropriately relaxes the current 10% price limit to 20% to improve the efficiency of the market price discovery mechanism. In order to prevent the easing of the limit on price fluctuations and cause the stock price to rise and fall sharply, the Sci-tech Innovation Board introduced an effective declaration price range (ie "price cage") mechanism during the continuous bidding phase, and stipulated the limit price declaration requirements, and the purchase declaration price must not be higher than The purchase price is 102% of the benchmark price, and the sale declaration price shall not be lower than 98% of the sale benchmark price. Any declaration that does not meet the requirements will be rejected by the system and cannot be traded. The market price declaration is not subject to this restriction.
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6. Question: How do you think that the science and technology innovation board has not introduced the T+0 trading system?
Answer: T+0 (Intraday Turnaround) trading system means that stocks bought on the same day can be sold on the same day. It is generally believed that the T+0 trading system can improve market liquidity and activity, and overseas markets such as the United States and Hong KongMore used. However, from overseas experience, the effective operation of the T+0 trading system requires the joint guarantee of a reasonable investor structure, appropriate hedging tools, and complete transaction monitoring methods. Otherwise, it is very likely to aggravate market volatility and cause systemic risks. .
At this stage, my country’s capital market is still immature, with a relatively large proportion of small and medium-sized retail investors in the investor structure, the characteristics of unilateral markets have not fundamentally changed, and market monitoring and monitoring methods are still insufficient. At this stage, the T+0 system is introduced. The following risks may be triggered: One is to increase market volatility. At present, the turnover rate of my country's A-share market is relatively high, and the phenomenon of "small speculation, poor speculation, and speculation in new" is still relatively common. According to statistics, from January 1, 2018 to May 17 this year, my country’s A-share turnover rate reached 819%, with an average daily turnover rate of about 2.9%. In the same period, the turnover rate of listed US stocks was about 344%, with an average daily rate of 1.12%, and the turnover rate of Hong Kong stocks was about 62%, with an average daily rate of 0.25%. The turnover rate of A shares was much higher than that in overseas markets. The introduction of the T+0 system may induce small and medium-sized investors to trade stocks more frequently, inflating the supply of funds in the market, and having the effect of helping securities prices rise and fall. Second, it is not conducive to protecting the interests of investors. Under the T+0 trading system, stocks bought on the same day can be sold on the same day, providing conditions for high-frequency trading. Compared with professional investors engaged in high-frequency trading, small and medium investors are at a disadvantage in terms of trading technology and trading equipment. The rash introduction of the T+0 system will cause unfairness in the securities market and harm the interests of small and medium investors. The third is to provide space for market manipulation. Under the current trading system, it takes at least two trading days to manipulate the price of stocks by buying and selling. Under the T+0 trading system, stocks can be changed multiple times within a trading day, and frequent trading is manipulation The behavior of the market provides more convenience. Therefore, the Science and Technology Innovation Board, starting from maintaining the stable operation of the market and protecting the interests of small and medium investors, has not yet introduced the T+0 trading system.
Seven. Question: How can the Sci-tech Innovation Board improve the rationality of issuance pricing?
Answer: In the issuance pricing process, corporate valuation is affected by the company’s fundamentals, market capital, market trends, investor sentiment and other factors. Technological innovation companies’ business technology, profitability, etc. There is a certain degree of uncertainty, the difficulty of valuation is relatively high, and the market’s valuation of science and technology companies is more likely to diverge. To this end, the Science and Technology Innovation Board has established an inquiry, pricing, and allotment mechanism with institutional investors as the main participants. The mechanism is mainly reflected in the following aspects:
The first is to inquire and set prices for professional institutional investors. Taking into account the higher investment experience and risk tolerance of investors on the Sci-tech Innovation Board, the Sci-Tech Innovation Board has cancelled the direct pricing method, adopted a market-based inquiry pricing method, and restricted the IPO inquiries on the Sci-Tech Innovation Board. In seven types of professional institutions such as securities companies and fund companies.
The second is to give full play to the role of investment value research reports. In order to further develop the research and analysis capabilities of lead underwriters, the Science and Technology Innovation Board draws on the mature experience of domestic and foreign markets and requires lead underwriters to provide investment value research reports to offline investors during the inquiry stage. In the report, the lead underwriter shall adhere to the principles of independence, prudence, and objectivity, conduct a comprehensive analysis of the factors that affect the issuer's investment value through reading prospectus, field research, etc., and fully disclose the investment risks at the same time. Offline investors should thoroughly analyze the issuer’s information, give full play to their professional pricing capabilities, make rational quotations, make independent decisions, and take risks on the basis of full research and strict implementation of the pricing decision-making procedures.
The third is to encourage strategic investors and issuer executives and core employees to participate in new stock offerings. According to domestic and foreign practical experience, allotment to strategic investors can introduce stable and incremental funds in the market and help the issuer to successfully issue; while the issuer’s senior management and core employees subscribe for shares, which is conducive to sending a positive signal to market investors. Therefore, the Science and Technology Innovation Board has also made relevant institutional arrangements.
In the next step, the Shanghai Stock Exchange will strengthen the supervision of the securities issuance and underwriting process on the Sci-tech Innovation Board, urge all parties to make reasonable prices, and promptly adopt regulatory and disciplinary measures for violations of laws and regulations. Where issuance underwriting is suspected of violation of laws or regulations or abnormal circumstances, the CSRC may request the Shanghai Stock Exchange to investigate and deal with relevant matters, or directly order the issuer and the underwriter to suspend or suspend the issuance.
8. Question: How do you view the trial implementation of the "follow-up investment" system of sponsored securities companies' subsidiaries on the Science and Technology Innovation Board?
Answer: The sci-tech innovation board is piloting a registration system, emphasizing that information disclosure is the center and giving full play to the role of market self-discipline mechanism. However, at this stage, my country’s capital market is still dominated by small and medium investors. The number of institutional investors is relatively small and the pricing power is insufficient.Disclosure is difficult to understand and pricing is difficult, and both small and medium investors and institutional investors need a process. In the initial stage of the establishment of the Science and Technology Innovation Board, it is necessary to further strengthen the authentication and pricing functions of market intermediaries such as sponsorship and underwriting in order to form an effective mutual check and balance mechanism. To this end, the Science and Technology Innovation Board refers to the existing practice of the KOSDAQ market in South Korea and introduces a sponsorship "follow-up investment" system to increase the sponsor's gatekeeping responsibilities. In terms of operational arrangements, one is that the “subsidiary of the sponsor” should be the relevant subsidiary of the sponsor; the second is that the source of funds for the follow-up investment of the sponsor’s subsidiary should be its own funds; the third is that the relevant subsidiary of the sponsor that participates in the allotment should open Set up a special securities account to deposit allotted stocks; fourth, there is a 24-month lock-up period for the shares subscribed by "co-investment".
In order to effectively prevent and control potential conflicts of interest that may exist in "following investment", the Sci-tech Innovation Board has made targeted arrangements on the system: first, to prevent sponsors from using the "following investment" system to interfere with stock pricing. The Pioneer Board restricts the "following investment" entities to the subsidiaries of the sponsor institution, and properly isolates them from the sponsoring institution. The "following investment" entities do not participate in stock pricing, but passively accept prices determined by professional institutional investors' inquiries; The second is to prevent the transfer of co-investment responsibilities and the transfer of benefits. The Science and Technology Innovation Board restricts the source of "co-investment" funds to its own funds, and funds raised by asset management plans and other funds must not participate in the subscription of shares; the third is to prevent "co-investment" entities The shareholding ratio is too high, which affects the control of listed companies. The Science and Technology Innovation Board limits the proportion of "co-investment" entities to subscribe to 2% to 5% of the number of issued shares; the fourth is to give play to the leading role of long-term funds in the market and prevent short-term Arbitrage impulse, the lock-up period of the "following investment" subject is longer than all other shareholders except the controlling shareholder and the actual controller.
The trial implementation of the “follow-up investment” system at the initial stage of the Sci-tech Innovation Board is an institutional innovation in the process of setting up the Sci-Tech Innovation Board and piloting the registration system. In the next step, the China Securities Regulatory Commission will pay close attention to the operation of the Sci-tech Innovation Board, and guide the Shanghai Stock Exchange to evaluate the effect of the implementation of the system in a timely manner and make adjustments in due course. At the same time, the China Securities Regulatory Commission will further strengthen the daily supervision of sponsors and underwriters, urge securities companies to establish effective internal management and control systems, and impose penalties in accordance with the law on the transfer of benefits and unfair transactions that occur in the process of "following investment".
Picture source: Visual China
9. Question: How to understand the institutional arrangements for the listing of companies with special equity structures on the Science and Technology Innovation Board?
Answer: Sci-tech innovation companies have their own growth paths and development laws. The differentiated arrangement of voting rights is an inherent requirement for the development of science and technology enterprises, and it is also a practical choice for the corporate governance of science and technology enterprises. The Party Central Committee and the State Council attach great importance to the development of science and technology enterprises, and propose to improve the rules of the capital market and allow science and technology innovation enterprises to have a special equity structure. For a long time, my country has always adhered to the basic principle of "same share and same power" in corporate governance, but the "Company Law" also authorizes the State Council to make special provisions for companies issuing new classes of shares. The "Implementation Opinions" established a new class of shares system in accordance with the relevant provisions of the "Company Law", allowing technological innovation companies to issue classes of shares with different voting rights and be listed on the Science and Technology Innovation Board. At the same time, in order to balance the interest relationship between shares with special voting rights and ordinary shares, the Science and Technology Innovation Board has made corresponding institutional arrangements.
One is to set strict applicable conditions. If the issuer sets up a voting right difference arrangement before the IPO, it shall be approved by the shareholders attending the general meeting of shareholders holding more than two-thirds of the voting rights. If the issuer has a voting right difference arrangement, it must meet certain market value standards or financial indicators, specifically the expected market value is not less than RMB 10 billion, or the expected market value is not less than RMB 5 billion, and the operating income in the most recent year is not less than RMB 500 million.
The second is to restrict the qualifications of holders of special voting shares. The Science and Technology Innovation Board requires that shareholders holding special voting shares should make significant contributions to the company's development or business growth, and continue to serve as the company's director or its actual controlling shareholder before and after the company's listing. Shareholders holding special voting rights in the listed company have a total of more than 10% of the total issued shares. If the holder no longer meets the aforementioned conditions or transfers special voting shares, the special voting shares shall be converted into ordinary shares at a ratio of 1:1.
The third is to set the upper limit of the number of voting rights for each special voting share. The Science and Technology Innovation Board requires that the number of voting rights for each special voting share is the same, and shall not exceed 10 times the number of voting rights for each ordinary share. Except for the difference in the number of voting rights, the rights of other shareholders of special voting shares and ordinary shares are exactly the same. CompanyAfter the city, except for some special circumstances, the proportion of special voting rights may not be increased.
The fourth is to clarify the matters and calculation methods of the shareholders' general meeting for voting shares with special voting rights. The Science and Technology Innovation Board requires that when voting on specific major company matters such as amendments to the articles of association, mergers and divisions, the number of voting rights enjoyed by special voting shares and ordinary shares shall be the same. In addition, the Science and Technology Innovation Board has also made special institutional arrangements for convening shareholder meetings and proposing shareholder meeting proposals for the required shareholding ratio and calculation methods.
The fifth is to strengthen the role of internal and external supervision mechanisms such as information disclosure. The Sci-tech Innovation Board requires that companies with special voting rights arrangements should fully and in detail disclose relevant information, especially risk, corporate governance and other information, as well as implement various measures to protect the legitimate rights and interests of investors in accordance with the law, and continue to disclose special voting rights in regular reports. Implementation and changes of voting rights arrangements during the reporting period. The board of supervisors of the company shall issue a special opinion on the establishment and operation of the arrangement and operation of the voting rights difference.
10. Question: How to understand the institutional arrangements for the Sci-Tech Innovation Board to reduce shareholder holdings?
Answer: The shareholding reduction system aims to further guide the shareholders, directors and supervisors of listed companies to reduce their shareholding in a standardized, rational and orderly manner, and guide industrial capital to focus on industry. A sound shareholding reduction system can not only maintain market stability, but also promote market liquidity. Technological innovation companies are highly dependent on founders and core technical personnel, and their future development is uncertain. This requires that the sci-tech innovation board reduction system not only pays full attention to the reasonable demand for share reduction, but also pays attention to maintaining the relative stability of the equity structure of sci-tech innovation enterprises to ensure the sustainable development of the company. In this regard, the Science and Technology Innovation Board has made more targeted institutional arrangements.
The first is to maintain the control of science and technology enterprises and the stability of the technical team. On the one hand, within 36 months from the date of listing of the company’s shares, controlling shareholders and actual controllers shall not reduce their holdings of pre-IPO shares. Even if the shareholding reduction is carried out after the sales restriction is lifted, the impact of the shareholding reduction behavior on the company's control rights and subsequent arrangements should be fully disclosed to ensure the continuous and stable operation of the listed company. On the other hand, the company’s core technical personnel shall not reduce their holdings of pre-IPO shares within 1 year after listing and within 6 months after leaving their posts. After the one-year lock-up period expires, the pre-IPO shares to be reduced each year shall not exceed 25% of the pre-IPO shares held at the time of listing.
The second is to restrict the reduction of shareholders of companies that have not yet made a profit. For companies that are not profitable at the time of listing, before the company achieves profitability, its controlling shareholders, actual controllers, directors, supervisors, and core technical personnel shall not reduce their holdings of pre-IPO shares within 3 full fiscal years from the date of listing of the company's shares. If there is still no profit in the 4th and 5th fiscal years, the controlling shareholder and actual controller shall not reduce their holdings by more than 2% of the company’s total shares each year before the IPO.
The third is to further optimize the method of share reduction. Guide shareholders of listed companies to transfer pre-IPO shares through non-public transfers and allotments, and the exchange will make specific regulations on the transfer methods, procedures, prices, proportions, and subsequent transfers, so as to further improve the rationality of the shareholding reduction system.
The fourth is to provide more flexible ways to reduce holdings for other shareholders such as venture capital funds. After the expiration of the pre-IPO share sales restriction period, in addition to the existing centralized bidding and block transactions, venture capital funds, etc. may also adopt non-public transfers and allotment methods to implement reductions in order to facilitate the exit of venture capital funds and promote the formation of innovative capital .
The fifth is to strengthen the disclosure of information on shareholding reduction. On the basis of pre-disclosure of the number of shares to be reduced, sources, and time intervals for the reduction in accordance with existing regulations, the controlling shareholder and actual controller of a listed company should also check whether the listed company exists before reducing its holdings of pre-IPO shares. Major negative events, major risks and other content are disclosed to fully disclose relevant risks to the market.
In response to the frequent occurrence of illegal shareholding reduction issues in practice, the China Securities Regulatory Commission will continue to implement strict regulatory requirements and intensify the crackdown on illegal shareholding reduction activities, especially for suspected false information disclosures, insider trading, and Market manipulation and other behaviors shall be strictly enforced and punished to ensure that market entities strictly abide by the system and regulations, effectively protect the legitimate rights and interests of investors, especially small and medium investors, and effectively maintain market order and stability.
Picture source: Visual China
11. Question: How to understand that the Sci-tech Innovation Board strictly implements the delisting system?
Answer: Sci-tech innovation companies have new technological models and great development potential, but there are also great uncertainties in their profitability. If business fails, it is often difficult to get out of the trough by relying on the original model, and continuing to stay in the market may intensify speculation and form market expectations of "small speculation and poor speculation", which may easily lead to market decision-making on the science and technology innovation board.The price function is disordered, and the goal of optimizing resource allocation cannot be achieved. To this end, it is necessary to implement a delisting system commensurate with the characteristics of the science and technology sector and the characteristics of listed companies.
On the one hand, the criteria for delisting are more diverse and objective, reducing the space for adjustment and decoration. First, in terms of standard delisting standards, the latest delisting system reform results have been absorbed, and delisting situations such as major violations of information disclosure and major violations of public security have been clarified. Second, in terms of transaction delisting standards, the standard for delisting 20 consecutive trading days with a market value of less than 300 million yuan has been added, and a set of transactions consisting of four major indicators including trading volume, stock price, number of shareholders and market value has been constructed. Class delisting standards, the index system is more abundant and complete. The third is that in terms of financial indicators, a single continuous loss delisting indicator is no longer used, but quantitative regulations are made on a qualitative basis, and the basic characteristics of the "hollowed" main business that have lost the ability to continue operations are described in multiple dimensions. The delisting indicator of "negative deduction of non-net profit and less than 100 million operating income" (the indicator is pegged to *ST in the first year, and the indicator is delisted in the second year), which reflects the requirements for continuous operation ability. Fourth, in terms of other compliance indicators, compliance delisting indicators such as information disclosure or major deficiencies in standardized operations have been added.
On the other hand, the delisting process is more compact and predictable. One is to learn from the arrangements for delisting systems in mature overseas markets such as the United States and Hong Kong, simplify the procedures for delisting, cancel listing suspension and resumption procedures, and directly terminate listings for companies that should be delisted to avoid major violations of laws and "hollow core businesses". Companies that have stayed in the market for a long time have disrupted market expectations and pricing mechanisms. The second is to reduce the time for delisting, and for companies that touch financial delisting indicators, they will implement delisting risk warnings in the first year, and they will be directly delisted if they are still touched in the second year. The delisting time is significantly shorter than the current standard. The third is that no special re-listing link will be set up. Enterprises that are forced to delist due to major violations of the law are not allowed to file new issuance and listing applications and permanently exit the market.
In the next step, the Securities Regulatory Commission will urge the Shanghai Stock Exchange to further strictly fulfill the main responsibility of delisting decision-making, effectively strengthen the overall coordination of the delisting implementation work, resolutely implement the delisting system's normative requirements, take effective measures, and resolutely maintain the seriousness of the delisting system It is reliable and authoritative to effectively protect the legitimate rights and interests of investors.
12. Q: How does the Sci-tech Innovation Board severely crack down on fraudulent issuance from the administrative and criminal aspects?
Answer: The stock market is essentially an information-based trading market. The quality of information determines the direction of capital flow and the efficiency and effect of resource allocation. To truly implement the securities issuance registration system centered on information disclosure, the Sci-tech Innovation Board must further strengthen information disclosure supervision and severely crack down on illegal acts such as fraudulent issuance. At present, the China Securities Regulatory Commission is actively taking advantage of the opportunity to amend the law to promote the national legislature to further strengthen the administrative and criminal legal responsibility for fraudulent issuance. At the same time, make good use of the social credit system to increase the cost of fraudulent issuance. Specifically:
The first is to strengthen administrative penalties. At present, the relevant rules of the Science and Technology Innovation Board clearly stipulate that within 5 years from the date of confirmation of the fraudulent behavior, the CSRC will no longer accept the issuer’s public offering application, and may determine the relevant responsible person as inappropriate or adopt a market ban. Measures. In addition, compared with the current "Securities Law", the third reading draft of the "Securities Law", which has been publicly solicited for comments, has further improved the penalties for fraudulent issuance and increased the amount of penalties. At the same time, strengthen the legal responsibilities of issuers, listed companies and their major shareholders, actual controllers, and intermediaries. In particular, the scope of application of market prohibition measures has been expanded, and it has been clarified that those responsible for serious violations of regulations can be prohibited from engaging in securities transactions within a certain period of time.
The second is to increase the cost of criminal liability. In response to the short sentence for fraudulent issuance in the current Criminal Law, the China Securities Regulatory Commission is currently cooperating with the legislature to revise and improve the relevant provisions of the Criminal Law on fraudulent issuance crimes, and has proposed amendments and suggestions to relevant departments. Including extending the sentence for criminal acts of fraudulent issuance, increasing the amount of fines, etc., in order to increase criminal liability for related criminal acts.
The third is to make full use of the joint punishment mechanism for dishonesty. Integrity supervision is an important means for the China Securities Regulatory Commission to innovate supervision methods in recent years and increase the cost of illegal and dishonest. On the basis of the preliminary work, the China Securities Regulatory Commission is working with other members of the social credit system to prepare to issue special documents on strengthening the pilot information sharing and joint punishment of the sci-tech innovation board registration system. In response to fraudulent issuance, punishments for dishonesty can be imposed by restricting them from serving as directors and supervisors of the company or the legal representative of state-owned enterprises, enjoying government-funded project arrangements and other preferential policies in investment fields, and taking high-level seats on trains, so as to effectively increase the illegality of fraudulent issuance The cost of behavioral dishonesty.
Picture source: Visual China
13. Question: How to understand the higher investor suitability requirements set by the Sci-tech Innovation Board?
Answer: Compared with the main board and the ChiNext, the Sci-tech Innovation Board aims to complement the shortcomings of capital market services for technological innovation, focusing on innovative enterprises. On the one hand, the business model of innovative companies is relatively special, and is quite different from mature companies in terms of development potential and operating risks. On the other hand, the sci-tech innovation board issuance and listing conditions are more inclusive, support the listing of companies with a certain operating income scale but not profit, allow special companies such as voting rights differences and red chip companies to go public, and a pilot registration system for stock issuance. In addition, the Science and Technology Innovation Board has also carried out institutional innovations in various aspects such as issuance and underwriting, market transactions, and delisting. Compared with other sectors, the market mechanism of the Sci-tech Innovation Board is more complicated and market risk is higher, and it has higher requirements for investors' risk identification ability and risk tolerance.
In order to ensure the stable operation of the Sci-tech Innovation Board market and effectively protect the rights and interests of small and medium-sized investors, we learn from the past experience in the suitability management of innovative businesses such as Southbound Stock Connect and stock options. The investor suitability management system is implemented in aspects such as affordability. When individual investors apply for the opening of the science and technology innovation board stock trading authority, the assets in the securities account and capital account shall not be less than 500,000 yuan per day except for the first 20 trading days of the opening. Should also have more than 24 months of stock trading experience. Individual investors who have not yet met the aforementioned requirements can also indirectly participate in the Science and Technology Innovation Board by purchasing public fund shares. According to laws and regulations and fund contracts, most stock funds and hybrid funds on the market can participate in the science and technology innovation board investment. Departmental fund companies have also specially initiated the establishment of science and innovation theme funds and other products. Investors can choose according to their own circumstances. , Participate in stock investment on the Science and Technology Innovation Board through public funds.
In the next step, the Securities Regulatory Commission will effectively strengthen investor suitability management, strengthen suitability management obligations and accountability of operating institutions, ensure that suitable products are sold to qualified investors, and fully protect the legitimate rights and interests of investors. At the same time, it is hoped that investors will further enhance their risk awareness and participate in the science and technology innovation board investment in accordance with laws and regulations.
14. Question: How can individual investors prepare to participate in the science and technology innovation board stock trading?
Answer: The Science and Technology Innovation Board is quite different from other sectors in terms of listing standards and trading rules, and the trading risk is also greater than that of other sectors. This requires individual investors to further enhance their awareness of risk prevention when participating in stock trading on the Sci-tech Innovation Board, focusing on the following aspects:
First, in the application of rules, the online issuance ratio of sci-tech innovation board stocks, the ratio of offline to online callbacks, subscription units, investment risk special announcements, etc. are different from the current SSE main board stock issuance rules. Investors should be fully aware of the differences And pay attention to relevant rules.
Second, the sci-tech innovation board’s new share issuance price, scale, and rhythm adhere to the market-oriented orientation. Inquiries, pricing, and allotment are led by institutional investors. All new shares are issued using the inquiry pricing method, and the inquiry is limited to securities. Seven types of professional institutional investors, including companies, and individual investors cannot directly participate in the pricing of issuance.
Third, there are fewer comparable companies on the Science and Technology Innovation Board, and traditional valuation methods may not be applicable. It is difficult to issue pricing. After the stock is listed, there may be risks of stock price fluctuations or even breakage. Similar situations often occur in overseas markets.
Fourth, as far as sci-tech innovation board companies are concerned, on the one hand, their industries and businesses often have large scale of R&D investment, long profit cycles, fast technological iterations, high risks, and heavy reliance on core projects, core technical personnel, and a few Suppliers and other characteristics, the company’s ability to continue to innovate after listing, the sustainability of its main business development, the company’s revenue and profitability, etc. have greater uncertainties; on the other hand, there may be recent In the three fiscal years that have failed to make a profit, have not yet made a profit at the time of public offering and listing, have accumulated uncovered losses, etc., they may still be unable to make a profit, continue to lose money, or be unable to distribute profits after listing.
For individual investors, before participating in the Sci-tech Innovation Board stock trading, they should carefully read the relevant laws and regulations, exchange business rules and the "Technical Innovation Board Stock Trading Risk Disclosure Statement" and other regulations to fully understand and grasp the possible existence To avoid unbearable losses, ensure adequate risk assessment and financial arrangements, and prudently participate in sci-tech innovation board investment.
15. Question: How does the Science and Technology Innovation Board consider investor civil rights relief arrangements?
Answer: If the legitimate rights and interests of investors on the Sci-tech Innovation Board are infringed, they can voluntarily file a lawsuit in the court. In order to help investors protect their rights and interests in accordance with the law, in view of the imperfect civil rights relief mechanism in practice, special arrangements will be made in the following aspects:
The first is to strengthen the construction of a diversified dispute resolution mechanism. Investor protection agencies and other securities and futures mediation organizations established by the state accept applications from investors and other parties to help investors properly resolve securities disputes through professional, efficient and convenient mediation services.
The second is to actively carry out supporting litigation practices. In view of the dilemma that the cost of rights protection for small and medium investors is higher than the benefits of rights protection, special investor protection agencies support small and medium investors to protect their rights in accordance with the law, and provide free legal consultation, litigation agency, loss calculation, evidence collection and other services, from time, energy, and economics. Effectively reduce the cost of investors' rights protection and increase the enthusiasm of rights protection.
The third is to innovate and practice model judgment mechanism. In the sci-tech innovation board mass disputes, the court first hears the model cases and makes judgments in a timely manner, and guides the parties to resolve disputes through multiple dispute resolution mechanisms such as mediation, arbitration, and litigation through the identification of facts and legal application standards established by the model judgments. Further reduce the cost of investor rights protection and improve the efficiency of conflict resolution.
The fourth is to establish a repurchase order system. The repurchase order system is an administrative supervision method specifically designed for fraudulent issuances that can provide investors with direct economic compensation. It can not only reduce the burden of investors’ burden of proof, save huge litigation costs, but also greatly shorten the amount of compensation. time. At present, if there is a preliminary consideration of fraudulent issuance against the issuer and the issuer has already been issued and listed, the listed company and its controlling shareholder and actual controller may be ordered to repurchase the shares of this public offering within a certain period of time.
The fifth is to promote the establishment of a securities class action system. A securities class action is a lawsuit filed by an investor whose rights have been compromised in his own name and on behalf of a person who has the same legal facts as himself. The core of the class action system lies in the "declaration of withdrawal" mechanism. Unless a class member clearly expresses to the court that he does not want to be included in the class action within a certain period of time, the legal consequences of the class action will directly bind the member. Strength, more convenient for investors to protect their rights. The securities class action system is a basic system for improving the quality of listed companies, protecting the legitimate rights and interests of investors, and maintaining market order. It is especially necessary to speed up the establishment of the system in the case of a pilot stock issuance registration system.
Protecting the legitimate rights and interests of investors is an eternal theme of capital market supervision. However, it needs to be pointed out that investor protection lies in establishing an open and transparent market environment so that investors can obtain fair trading opportunities and receive fair treatment, rather than protecting investors' investment profits. Securities trading inherently has risks. Investors need to be responsible for their own investment decisions and bear the corresponding investment risks. It is hoped that investors will further enhance their self-protection capabilities, improve their awareness of self-protection, and earnestly safeguard their legitimate rights and interests.