Implementation of new IPO pre-disclosure policy strengthens social supervision

　　Following the arrangements of the China Securities Regulatory Commission (CSRC), starting today, the pre-disclosure time for issuers will be advanced from the previous 5 days before the issuance review meeting to approximately 1 month before the meeting. Simultaneously, the CSRC will publish a list of companies under review. This means that all market participants will have ample time to analyze, research, and supervise companies intending to conduct an initial public offering (IPO).
　　On December 30th last year, the Issuance Department and the Growth Enterprise Market Department of the CSRC jointly issued a "Notice on Adjusting Pre-disclosure Time and Other Issues," requiring issuers to advance the pre-disclosure time to after the feedback is implemented and before the initial review meeting. The notice came into effect on February 1st, 2012. Simultaneously with the implementation of the notice, the CSRC will publish a list of companies under review, and the list of newly accepted companies will also be published as soon as possible in the future.
　　It is understood that for a company intending to conduct an IPO, the time from submitting materials to receiving review by the issuance review committee is approximately 3-6 months. The process generally includes five steps: application document acceptance, meeting, feedback, initial review meeting, and issuance review meeting. Since the implementation of the pre-disclosure system in 2005, many companies have been rejected by the issuance review committee after problems were discovered by investors and the media before the meeting.
　　Relevant personnel from the investment banking department of Zheshang Securities stated that with the pre-disclosure time advanced by approximately one month, the supervisory power of the media and investors will undoubtedly strengthen. Some companies intending to conduct an IPO will face stricter supervision, and the pressure on the sponsoring institutions will also increase, which is conducive to improving the quality of listed companies.
　　A CSRC official previously stated that advancing the pre-disclosure time further strengthens the supervisory role of the public in the issuance applicants, allowing the public to more effectively supervise the issuance review work. After the pre-disclosure time is advanced, issuers, intermediary institutions, and the public can learn about the situation of companies under review earlier and supervise whether the review department is conducting the review work according to procedures. Advancing the pre-disclosure time helps strengthen the legal responsibility of the prospectus and the supervision of intermediary institutions.
　　In addition to stipulating the disclosure time, the notice also makes requirements for application materials such as the prospectus. The notice clarifies that sponsoring institutions should fulfill their verification obligations according to law for the issuer's prospectus and other application documents, urging the issuer to disclose information truthfully, accurately, and completely, and avoid the advertising tendency of the prospectus content. The aforementioned investment banking personnel stated that after the implementation of the notice, investment banks will be more cautious in verifying the content of the prospectus.
　　It is understood that while implementing the new pre-disclosure policy, the CSRC will simultaneously publish a list of companies under review, and the list of newly accepted companies will also be published as soon as possible in the future. At the same time, the CSRC will continue to pay attention to the implementation of the "Notice," conduct timely evaluations and summaries, gradually improve the pre-disclosure system and the public disclosure system related to issuance review work, and continuously improve the transparency of issuance review work.