On May 13, 2009, the China Securities Regulatory Commission (CSRC) revised certain provisions of the Administrative Measures on the Sponsorship Business for the Issuance and Listing of Securities. The revision will take effect on June 14, 2009. The purpose of the revision was to make the Measures consistent with the Provisional Measures on the Administration of Initial Public Offerings and Listings on the Growth Enterprise Market, issued by CSRC on March 31, 2009 and effective as of May 1, 2009. CSRC’s spokesman indicated that, since the general requirements for the sponsorship of securities on the main board and the growth enterprise market are the same, only a few provisions needed adjustment to account for the nature of companies listed on the growth enterprise market and make the Measures applicable to the sponsorship business therein.
Previously, Article 36 of the Measures required that companies making an initial public offering (IPO) go through a period of heightened supervision and guidance following the offering, but did not differentiate between companies listed on the main board and those listed on the growth enterprise market. The revised Measures provide that, with respect to stocks on the main board, the period of heightened supervision and guidance lasts for the remainder of the IPO year, and the next two complete fiscal years; as for a listed company that issues new stocks or convertible corporate bonds, the period of heightened supervision and guidance lasts for the remainder of the IPO year and the following one complete fiscal year. With respect to IPOs of stocks on the growth enterprise market, the revised Measures clarify that the two periods are extended to three complete fiscal years and two complete fiscal years, respectively.
In addition, the revised Measures add a paragraph to Article 36 requiring sponsor institutions to publish supervision reports within 15 working days after companies listing on the growth enterprise market publish their annual and mid-term reports. If companies listing on the growth enterprise market temporarily disclose material information regarding financing, trusts, guarantees, connected transactions, or the like, the sponsor institutions must publish independent analyses and opinions within 10 working days after the disclosure.
Article 72 of the Measures describes certain situations in which sponsor institutions may be punished. For instance, if in the year that a company makes its IPO, its business profit decreases by more than 50 percent from the previous year, CSRC may refuse to consider any recommendation that the company’s sponsor makes for three to 12 months, or even revoke the sponsor’s accreditation. However, the revised Measures clarify that this situation is only applicable to companies listed on the main board, since companies listed on the growth enterprise market are inherently less stable in terms of performance.
The revised Measures aim to promote the sound administration of the sponsorship business, while adapting to the specific characteristics of companies listed on the growth enterprise market.