J & T Capital Watch... IPO shareholder verification requirements in the era of registered 2.0.
Published:
2021-08-27
With the implementation of the new "Securities Law", capital market regulations have emerged one after another, and the responsibilities of the gatekeepers of intermediary agencies have been continuously compacted. The capital market has entered the era of registration 2.0. Since the beginning of this year, in response to the shareholder verification requirements in the IPO process, whether from the CSRC level or the exchange level have issued relevant documents and regulations, this article on the IPO process shareholder verification requirements are organized as follows:
1Summary of provisions on shareholder verification
2Main aspects and requirements of verification
(I) verification requirements for shareholding
Regarding the issue of stock holding, the sponsor institution and the issuer's lawyer are required to check and explain whether there are such situations as stock holding in the issuer's history, if so, whether it is dissolved according to law, whether it is verified and disclosed in the prospectus, lawyer's work report and other documents the reasons for formation, evolution, dissolution process, whether there are disputes or potential disputes, etc.; and, the sponsor and the issuer's lawyer are required to verify and explain whether the issuer's disclosure of shareholder information is true, accurate and complete.
(II) Verification Requirements for Assault Shares
Regarding the issue of sudden shareholding, the sponsor institution and the issuer's lawyer are required to verify and explain:(1) whether to add new shareholders through capital increase and share expansion, equity transfer and other circumstances within 12 months before the declaration, if so, whether to verify and disclose in the prospectus and lawyer's work report The basic information of the new shareholders, the reasons for the shareholding, the shareholding price and the basis for pricing, whether there is a relationship between the new shareholders and other shareholders, directors, supervisors and senior managers of the issuer, whether there is a relationship between the new shareholders and the intermediary institutions of this issue and their responsible persons, senior managers and managers, whether there is a situation of holding shares on behalf of the new shareholders;(2) the new shareholders added through capital increase and share expansion, equity transfer and other circumstances within 12 months before the declaration, whether it is promised in accordance with the third provision of the Guidelines that the new shares held shall not be transferred within 36 months from the date of acquisition; whether the new shareholders who have transferred shares from the controlling shareholder or the actual controller within 6 months before the declaration shall be locked in accordance with the shares held by the controlling shareholder and the actual controller.
[Note: Item (2) does not apply to enterprises accepted before the date of issuance of the Guidelines]]
(III) verification requirements for the entry price
On the issue of the share price, the sponsor institution and the issuer's lawyer are required to verify and explain: the background and reason of the previous shareholders' share purchase, the form of share purchase, the source of funds, the payment method, the share purchase price and the pricing basis; Whether there is any obvious abnormality in the issuer's history; If there is any abnormality, the specific situation of penetration verification shall be explained in accordance with the provisions of items 4 and 5 of the Guidelines. If there is no abnormality, sufficient reasons and objective basis for determining that the entry price is fair should be stated.
(IV) verification requirements for shareholder eligibility
Regarding the eligibility of shareholders, the sponsor institution and the issuer's lawyer are required to verify and explain whether the subject directly or indirectly holding the issuer's shares has the shareholder qualification stipulated by laws and regulations, and whether there is any kinship, association, entrusted shareholding, trust shareholding or other interest transfer arrangement with the issuance intermediary institution and its responsible person, senior management personnel and handling personnel; Whether the issuer's shareholders use the issuer's equity to transfer interests improperly; whether to verify and disclose the special undertakings issued by the issuer in the prospectus in accordance with the second provision of the Guidelines; whether financial products such as private investment funds hold shares of the issuer, and if so, whether to verify and disclose the inclusion of financial products in the prospectus and the lawyer's work report.
It should be noted that: for the above four categories of issues, the sponsor and the issuer's lawyer are required to further explain the specific basis for issuing verification opinions, and whether to conduct a comprehensive and in-depth verification of the shareholder information disclosed by the issuer in accordance with the requirements of the guidelines, including but not limited to objective evidence such as shareholder investment agreement, transaction consideration, source of funds and payment method, Whether the documents issued are true, accurate and complete.
(V) requirements for share lock-up
Regarding the issue of share lock-up, first, the issuer should disclose shareholder information in a true, accurate and complete manner. If there are situations such as share holding in the issuer's history, it should be lifted in accordance with the law before submitting the application, and the prospectus, lawyer work report, etc. The documents disclose the reasons for formation, evolution, dissolution process, whether there are disputes or potential disputes, etc. Second, when submitting the application materials, the issuer shall issue a special commitment to explain whether the shareholders of the issuer have the following circumstances, and disclose the commitment to the public:(1) laws and regulations prohibit the holding entity from directly or indirectly holding the shares of the issuer;(2) the intermediary institution or its responsible person, senior management personnel and handling personnel directly or indirectly hold the shares of the issuer;(3) Improper transfer of benefits with the shares of the issuer. Third, if the issuer adds new shareholders within 12 months before submitting the application, it shall fully disclose in the prospectus the basic information of the new shareholders, the reasons for joining the shares, the price of joining the shares and the basis for pricing, whether the new shareholders have an associated relationship with other shareholders, directors, supervisors and senior managers of the issuer, and whether the new shareholders have an associated relationship with the intermediary agencies of the offering and their responsible persons, senior managers and managers, whether the new shareholder has a share holding situation. The above-mentioned new shareholders shall undertake that the new shares held by them shall not be transferred within 36 months from the date of acquisition.
(VI) verification requirements for shareholding platforms
Regarding the shareholding platform, the sponsor and the issuer's lawyers are required to fully check the establishment background, specific personnel composition, price fairness, articles of association or agreement of the employee stock ownership plan, employee reduction commitments, standardized operation and filing of the employee stock ownership plan, and express clear opinions on whether the implementation of the employee stock ownership plan is legal and compliant and whether there is any damage to the interests of the issuer.
(VII) verification requirements for financial products
With regard to the verification of financial products, where private investment funds and other financial products hold shares of the issuer, the issuer shall disclose the inclusion of financial products in the supervision. Regarding this issue, in August 2014, the China Securities Regulatory Commission issued the "Interim Measures for the Supervision and Administration of Private Investment Funds" (CSRC Order No. 105), requiring all forms of private equity funds to be filed. On January 23, 2015, the China Securities Regulatory Commission issued the ''Issue Supervision Q & A- Answers to Questions on the Filing of Private Investment Funds Related to Issuance Supervision Work'', requiring intermediaries to subscribe to the non-public offerings of shareholders and listed companies before the initial public offering. Whether the object is a private equity fund, whether the filing procedures are performed in accordance with regulations, and the verification results are explained in the report of the intermediary agency. On March 6, 2015, the China Securities Regulatory Commission issued the "Questions and Answers on the Filing of Private Investment Funds Related to the Administrative License Review of Mergers and Acquisitions and Reorganizations", which included the issuance objects of mergers and acquisitions and reorganizations in the scope of intermediary review of whether they are private equity funds. The SEC system's requirements for private equity funds to be filed have been fully unified, and private equity funds should be filed for regulation.
(VIII) exemption from verification and lockdown
Regarding the exemption from verification and lock-up, the issuer's shareholders who are listed in the national small and medium-sized enterprise share transfer system and listed on overseas stock exchanges through call auction and continuous bidding transactions, as well as due to inheritance, enforcement of court judgments or arbitration awards, and implementation Shareholders who are required by national laws and policies or are led by the people's government at the provincial level or above to acquire the issuer's shares may apply for exemption from the verification and share lock-up requirements of the Guidelines.
(IX) definition of "ultimate holder"
With regard to the definition of the ultimate holder, in addition to natural persons, the "ultimate holder" also includes the following types: public companies such as listed companies (including overseas listed companies) listed on the New Third Board, or through verification to state-owned holding or management entities (including public institutions, industrial funds controlled by state-owned entities, etc.), collectively-owned enterprises, overseas government investment funds, university endowment funds, pension funds, public welfare funds, and public offering asset management products; in addition to foreign shareholders, if the intermediary can confirm that the investors of foreign shareholders do not have domestic entities by appropriate verification methods, and fully certify that there is no obvious abnormality in the price of the foreign shareholder's shares in the issuer, and the foreign shareholder can be regarded as the "ultimate holder".
(X) verification requirements for shareholders with fewer shares
With regard to the verification of shareholders with fewer shares, it is required that the penetration verification of intermediary shareholders should grasp the principle of importance and avoid exemption and simplistic verification. For those who hold less shares and do not involve violations of laws and regulations, such as "creating wealth", the sponsor, together with the issuer's lawyers, may not penetrate the verification after expressing their opinions in a realistic manner. Among them: the determination of a small shareholding can be made in combination with the number and proportion of shares held; in principle, if the number of shares held directly or indirectly by the issuer is less than 100000 shares or the proportion of shares held is less than 0.01 per cent, the determination can be made as a small shareholding.
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