Measures for the Administration of Registration of Securities Offering by Companies Listed on the STAR Market (for Trial Implementation)

Measures for the Administration of Registration of Securities Offering by Companies Listed on the STAR Market (for Trial Implementation) Order of the China Securities Regulatory Commission (No. 171) The Measures for the Administration of Registration of Securities Offering by Companies Listed on the STAR Market (for Trial Implementation), as deliberated and adopted at the fourth executive meeting of the China Securities Regulatory Commission for 2020 on May 14, 2020, are hereby issued, and shall come into force on the date of issuance. Chairman of the China Securities Regulatory Commission: Yi Huiman July 3, 2020 Annex 1: Measures for the Administration of Registration of Securities Offering by Companies Listed on the STAR Market (for Trial Implementation) Annex 2: Explanation for the Legislation of the Measures for the Administration of Registration of Securities Offering by Companies Listed on the STAR Market (for Trial Implementation) Measures for the Administration of Registration of Securities Offering by Companies Listed on the STAR Market (for Trial Implementation) Chapter I General Provisions Article 1 For the purposes of regulating the securities offering by companies listed on the STAR Market (hereinafter referred to as “listed companies”) and protecting investors' lawful rights and interests and the public interests, these Measures are developed according to the Securities Law of the People's Republic of China (hereinafter referred to as the “Securities Law”), the Notice by the General Office of the State Council of the Work Concerning the Implementation of the Revised Securities Law, the Implementation Opinions on Setting up the STAR Market and Launching the Pilot Registration System on the Shanghai Stock Exchange, the Notice by the General Office of the State Council of Forwarding the Several Opinions of the China Securities Regulatory Commission on Implementing the Pilot Program of Domestic Issuance of Stocks or Depository Receipts by Innovative Enterprises (hereinafter referred to as the “Several Opinions”), and other relevant laws and regulations. Article 2 A listed company applying for domestic offering of securities shall be governed by these Measures. For the purpose of the Measures, “securities” means the following varieties of securities: (1) Stocks. (2) Convertible corporate bonds (“CB”). (3) Depository receipts. (4) Other varieties recognized by the China Securities Regulatory Commission (“CSRC”). For the purpose of the preceding paragraph, CB means corporate bonds that are legally offered by a listed company and that may be converted into shares within a certain period as agreed. Article 3 A listed company may offer securities to non-specific objects or specific objects. The offering of securities to non-specific objects shall include rights issue by a listed company to original shareholders (hereinafter referred to as “rights issue”), seasoned offering of shares to non-specific objects (hereinafter referred to as “seasoned offering”), and offering CB to non-specific objects. Securities offering to specific objects shall include offering stocks and CB by listed companies to specific objects. Article 4 A listed company offering securities shall comply with the Securities Law and meet the offering conditions and the relevant information disclosure requirements as prescribed in these Measures, be subject to the offering and listing examination by the Shanghai Stock Exchange ( “SSE”) according to the law, and report to the CSRC for registration, except for the lawful implementation of option incentives, conversion of capital reserves into share capital, and scrip issue. Article 5 A listed company shall have good faith, and fully disclose the information required for investors to make value judgments and investment decisions according to the law. The information disclosed must be authentic, accurate, complete, concise and clear, and straightaway, without any false record, misleading statement or major omission. A listed company shall, according to the requirements of the sponsor and securities service institution, provide authentic, accurate, and complete financial and accounting materials and other materials for them according to the law, and cooperate with the relevant institutions on carrying out due diligence investigation and other relevant work. A listed company's controlling shareholder, actual controller, directors, supervisors, and senior executives shall cooperate with relevant institutions on carrying out due diligence investigation and other relevant work, and shall not request the listed company to conceal or assist the listed company in concealing the materials that shall be provided or the information that shall be disclosed. Article 6 A sponsor shall have good faith and perform duties in a diligent manner, and in accordance with the requirements of legally developed business rules and industry self-regulatory rules, fully understand a listed company's business operation and risks, conduct comprehensive inspection and verification of registration application documents and information disclosure materials, independently make professional judgments on whether the listed company meets the offering conditions, make recommendation decisions in a prudential manner, and be responsible for the authenticity, accuracy and integrity of the prospectus or other information disclosure documents and relevant documents issued by it. Article 7 A securities service institution shall strictly comply with the laws and regulations, the regulatory rules and business rules developed by the CSRC, and the business standards and norm of morality recognized in the industry, establish and maintain an effective quality control system, protect investors' lawful rights and interests, perform duties prudently, make professional judgments and determinations, and be responsible for the authenticity, accuracy, and integrity of the contents relevant to its professional duties in the prospectus or other information disclosure documents as well as the documents issued by it. The securities service institution and its relevant practitioners shall perform special duty of care for business matters relating to the profession, perform ordinary duty of care for other business matters, and assume corresponding legal liability. A securities service institution and its practitioners shall, when providing securities services, cooperate with the supervision and administration of the CSRC, provide, submit or disclose the relevant materials or information within the prescribed time limit, and ensure that the materials or information provided, submitted or disclosed by them are authentic, accurate, and integral, without any false record, misleading statement or major omission. A securities service institution shall appropriately keep clients' entrustment documents, inspection and verification materials, working papers, as well as information and materials concerning quality control, internal management, and business operation. Article 8 Approving registration of a listed company's application for securities offering does not indicate a substantial judgment or guarantee of the CSRC or the SSE on the investment value of the securities or investors' return, or the guarantee of the CSRC or the SSE on the authenticity, accuracy or integrity of the application documents. Chapter II Offering Conditions Section 1 Offering Stocks Article 9 To offer stocks to non-specific objects, a listed company shall comply with the following provisions: (1) It has a sound and well-operated organizational structure. (2) The incumbent directors, supervisors, and senior executives satisfy the job requirements prescribed by laws and administrative regulations. (3) It has a complete business system and ability to operate independently in the market, and does not fall under circumstances with significant adverse impact on it as a going concern. (4) Its basic accounting work is standardized, its internal control system is perfect and effectively implemented, and its financial statements are prepared and disclosed in accordance with the Accounting Standards for Business Enterprises and the provisions of the relevant information disclosure rules, and have fairly reflected its financial status, operating results and cash flow in all important respects, for which audit reports with unqualified opinions are issued in the most recent three years. (6) Except financial enterprises, it made no financial investment with relatively significant amount at the end of the most recent reporting period. Article 10 A listed company falling under one of the following circumstances shall not offer stocks to non-specific objects: (1) It changes the use of the proceeds raised previously without permission, and fails to make correction or obtain approval of the shareholders' meeting. (2) The listed company and its incumbent directors, supervisors and senior executives have received administrative punishment imposed upon by the CSRC in the most recent three years, are denounced by the SSE in the most recent year, or are under official investigation by the judicial authority for any suspected crime or by the CSRC for any suspected violation of laws and regulations. (3) The listed company and its controlling shareholder or actual controller fail to fulfill the public commitments to investors in the most recent year. (4) The listed company and its controlling shareholder or actual controller commit a criminal crime of corruption, bribery, embezzlement of property, misappropriation of property, or disruption of the socialist market economic order, or any major illegal act that seriously harms the interests of the listed company, investors' lawful rights and interests, or public interests in the most recent three years. Article 11 A listed company falling under one of the following circumstances shall not offer stocks to specific objects: (1) It changes the use of the proceeds raised previously without permission, and fails to make correction or obtain approval of the shareholders' meeting. (2) The preparation and disclosure of financial statements for the most recent year do not comply with the Accounting Standards for Business Enterprises or the relevant information disclosure rules in material respects; an audit report with adverse opinions or disclaimer of opinion is issued for the financial statements for the most recent year; and an audit report with qualified opinions is issued for the financial statements for the most recent year, and the material adverse impact of the matters involved in the qualified opinion on the listed company has not been eliminated, except when the offering involves a major asset restructuring. (3) The incumbent directors, supervisors and senior executives have not been subject to administrative penalties imposed upon by the CSRC within the most recent three years or have not been publicly condemned by the SSE within the most recent year. (4) The listed company and its incumbent directors, supervisors and senior executives are under official investigation by the judicial authority for any suspected crime or by the CSRC for any suspected violation of laws and regulations. (5) The controlling shareholder or actual controller commits a major illegal act that seriously harms the interests of the listed company or investors' lawful rights and interests in the most recent three years. (6) It commits major unlawful act that seriously harms investors' lawful rights and interests or public interests in the most recent three years. Article 12 When a listed company issues a stock, the use of proceeds raised shall comply with the following provisions: (1) Investment is made in business in the field of scientific and technological innovation. (2) It complies with the provisions of the national industrial policies and other laws and administrative regulations on environmental protection and land management. (3) After the implementation of the proceeds-raising project, there will be no affiliated transactions that constitute horizontal competition with and are evidently unfair to the controlling shareholders, actual controllers and other enterprises under their control, or that seriously affect the independence of the company's production and business operation. Section 2 Offering CB Article 13 A listed company offering CB shall comply with the following provisions: (1) It has a sound and well-operated organizational structure. (2) The average distributable profits in the most recent three years are sufficient to pay the interests of the corporate bonds for one year. (3) It has a reasonable asset-liability structure and normal cash flow. Besides the conditions prescribed in the preceding paragraph, a listed company offering convertible bonds to non-specific objects shall also comply with the provisions of items (2) to (5) of Article 9 and Article 10 of these Measures; and a listed company offering convertible bonds to specific objects shall comply with the provisions of Article 11 of these Measures as well. However, conversion of corporate bonds by a listed company through acquisition of the company's shares according to the measures for the raising of corporate bonds is excluded. Article 14 A listed company falling under one of the following circumstances shall not offer CB: (1) The company violates the contract on the corporate bond offered to the public or other debts, or has postponed the payment of the principal and interest, and such status still exists. (2) The company changes the use of proceeds raised through public offering of a corporate bond in violation of the Securities Law. Article 15 A listed company offering CB shall comply with the provisions of Article 12 of these Measures as well, except when the proceeds raised shall not be used to make up for losses and non-productive expenditures. Chapter III Offering Procedures Article 16 When a listed company applies for securities offering, the board of directors shall make resolutions on the following matters in accordance with the law and submit a request to the shareholders' meeting for approval: (1) The plan for this securities offering. (2) The demonstration analysis report on the offering plan. (3) The feasibility report on the use of the proceeds raised. (4) Other matters that must be specified. Where the board of directors of the listed company intends to introduce strategic investors, the introduction of strategic investors shall be regarded as a separate proposal, which shall be deliberated separately for each strategic investor and submitted to the shareholders' meeting for approval. The board of directors shall make a resolution in accordance with the preceding two paragraphs, and the time interval between the date when the board of directors makes the resolution and the date of IPO and listing of the stock shall not be less than six months. Article 17 When preparing the feasibility analysis report on this offering plan, the board of directors shall, in consideration of the listed company's industry and development stage, financing planning, financial status, capital needs, and other situations, and conduct demonstration and analysis, and independent directors shall issue special opinions. A demonstration and analysis report shall, at a minimum, include the following: (1) The necessity of the securities offering and the selection of their varieties. (2) The appropriateness of the scope, quantity and standards for the selection of investors this time. (3) The rationality of the pricing principles, basis, methods and procedures of this offering. (4) The feasibility of this offering method. (5) The fairness and rationality of the offering plan. (6) The impact of this offering on the original shareholders' equity or the dilution of immediate returns and the specific measures for supplement. Article 18 A decision made by a shareholders' meeting on securities offering shall, at a minimum, include the following matters: (1) The type and quantity of securities offered this time. (2) The method of offering, investors, and arrangements for allotment to original shareholders. (3) The pricing method or range of prices. (4) The uses of proceeds to be raised. (5) The validity period of the resolution. (6) The authorization to the board of directors for handling the specific matters concerning the current offering. (7) Other matters that must be specified. Article 19 A decision made by a shareholders' meeting on offering of CB shall, at a minimum, include the following matters: (1) The matters set forth in Article 18 of these Measures. (2) The interest rate of bonds. (3) The maturity of bonds. (4) The terms of redemption. (5) The put provision. (6) The time limit and method for repayment of principal and payment of interest thereon. (7) The conversion period. (8) The determination and revision of the conversion price. Article 20 A resolution of the shareholders' meeting on the securities offering must be adopted by two thirds or more of the voting rights held by shareholders present at the meeting and the votes of small and medium investors shall be counted separately. For securities offering to specific shareholders of the company and its affiliates, the affiliated shareholders shall be disqualified, when votes are casted at the shareholders' meeting for the offering plan. Where the shareholders' meeting makes a resolution on a proposal of introducing a strategic investor, votes shall be casted separately for each strategic investor. A listed company that convenes a shareholders' meeting for securities offering shall provide online voting and may facilitate shareholders' attendance at the shareholders' meeting through other methods as well. Article 21 The annual shareholders' meeting of a listed company may, in accordance with the provisions of the company's bylaws, authorize the board of directors to decide on offering of stocks to specific objects to raise proceeds totaling no more than 300 million yuan and 20% of the company's net assets at the end of the most recent year, but the authorization shall become invalid on the day when the next a......