Provisions on the On-site Inspections of IPO Enterprises (2024 Revision)

Provisions on the On-site Inspections of IPO Enterprises (2024 Revision)


Announcement of the China Securities Regulatory Commission

(No. 1 [2024])

The Provisions on the On-site Inspections of IPO Enterprises are hereby issued and shall come into force on the date of issuance.

Annexes: 1. Provisions on the On-site Inspections of IPO Enterprises

2. Explanations on Revising the Provisions on the On-site Inspections of IPO Enterprises

China Securities Regulatory Commission

March 15, 2024

Provisions on the On-site Inspections of IPO Enterprises

Chapter I General Provisions

Article 1 These Provisions are developed in accordance with the Securities Law of the People's Republic of China, the Company Law of the People's Republic of China, the Measures for the Administration of the Registration of Initial Public Offerings of Stocks, the Measures for the Administration of Offering and Trading of Depositary Receipts (for Trial Implementation), among others, for the purposes of regulating on-site inspections of IPO enterprises, strengthening the regulation of IPO enterprises' information disclosure, supervising the dutiful fulfillment of duties by sponsors, and securities service institutions, protecting the lawful rights and interests of investors, and maintaining the order of the securities market.

Article 2 For the purpose of these Provisions, “on-site inspections” means supervisory inspections of the information disclosure quality of enterprises that apply for the initial public offerings of stocks or depository receipts and listing on domestic stock exchanges (hereinafter referred to as “exchanges”) (hereinafter referred to as “inspectees”) and the practicing quality of sponsors and securities service institutions conducted by the China Securities Regulatory Commission (hereinafter referred to as the “CSRC”) or its local offices or exchanges which act as inspection institutions by certain means at inspectees' production, operation and management premises and other related places.

Article 3 On-site inspection is an important supplement to written examination and an important means of judging whether an issuer meets the offering and listing conditions, information disclosure requirements and the practicing quality of intermediaries, among others. Inspectees and sponsors and securities service institutions shall effectively assume corresponding responsibilities, fully disclose the information necessary for investors to make independent investment value judgments, and ensure that the information disclosed is authentic, accurate, and complete.

Article 4 Inspectees and sponsors and securities service institutions shall support on-site inspections, and ensure that the relevant documents and materials provided and the contents of statements made by them when accepting inquiries are authentic, accurate and complete, and shall not refuse or obstruct on-site inspections.

Article 5 On-site inspection staff members shall be devoted to their duties and be honest and fair, and ensure that on-site inspections are conducted in an independent, objective, fair and efficient manner, and shall neither intervene with the normal production and operation activities of inspectees nor take advantage of their positions to seek illicit benefits.

The work of inspectors shall be subject to the supervision by inspectees and sponsors and securities service institutions.

Article 6 Before inspection results are disclosed to the public, the personnel participating in on-site inspections and handling shall have the obligation to keep the inspection information confidential.

Article 7 The registration department of the CSRC shall be responsible for the overall coordination and guidance of on-site inspections, including determining inspection institutions, transferring inspection materials, organizing inspection communication, coordinating regulatory cooperation, following inspection progress, handling inspection problems, strengthening the application of results, unifying handling standards, sharing inspection information and organizing inspection trainings, among others.

Article 8 The CSRC shall notify the information on the implementation of on-site inspections and the handling of problems found during inspections.

Chapter II Determination of Inspectees

Article 9 Inspectees shall be determined by two ways, namely, random selection and problem orientation.

After inspectees are determined, the time for organizing and implementing on-site inspections and the time for issuers to supplement and modify application materials based on the inspection results shall not be included in the time limit for examination or registration.

Article 10 Randomly selected enterprises shall consist of all IPO enterprises which have not been deliberated at meetings of listing committees and have never participated in random selection as summarized by the registration department of the CSRC.

In principle, the registration department of the CSRC shall organize a random selection activity every three months, and all enterprises whose applications have been accepted shall be included in the scope of random selection once, except for those that have been listed as the inspectees determined by problem orientation before random inspection.

The Securities Association of China shall randomly select inspectees by means of drawing lots in accordance with relevant provisions, and the process of drawing lots shall be subject to the on-site supervision by independent third parties. After inspectees are determined, the Securities Association of China shall announce the results of random inspections in a timely manner through its website.

Article11 The inspectees determined through problem orientation shall be determined by the examination departments of exchanges or the registration department of the CSRC (hereinafter collectively referred to as “examination or registration departments”).

Where, at the stage of IPO and listing examination or registration, there are any major doubts or abnormalities relating to the offering and listing conditions or information disclosure requirements as for IPO enterprises, and no reasonable explanation is given and examination or judgment is affected, examination or registration departments may list them as inspectees determined through problem orientation.

If an IPO enterprise being under examination by an exchange falls under any of the above circumstances, the registration department of the CSRC may list it as an inspectee determined through problem orientation.

Article 12 After inspectees are determined, examination departments of exchanges shall notify inspectees and sponsors and securities service institutions in writing within three working days.

After inspectees are determined, the withdrawal of offering applications by inspectees neither affects the implementation of the inspection work nor affects the handling of problems found during inspections by the CSRC and exchanges in accordance with laws and regulations.

Chapter III Organization and Implementation

Article 13 The registration department of the CSRC shall determine the inspection institutions that undertake inspection tasks. In principle, inspection institutions shall be local CSRC offices outside the jurisdictions where inspectees are located or the exchanges other than those on which inspectees apply for being listed.

Article 14 After an inspection institution is determined, the registration department of the CSRC shall issue an inspection task assignment notice to the inspection institution, and, at the same time, send the copies of the task assignment notice to the local CSRC office under the jurisdiction where the inspectee is located and the exchange on which inspectee applies for being listed.

The local CSRC office under the jurisdiction where the inspectee is located, the exchange on which inspectee applies for being listed, and other relevant local CSRC offices shall support the inspection institution in conducting inspections.

Article 15 When the registration department of the CSRC issues an inspection task assignment notice to an inspection institution, it shall also provide the information on issues of particular concer......